Focus on the Precautionary Principle

Comments at Book Launch of Julian Morris'
Rethinking Risk and the Precautionary Principle
(in conjunction with Butterworth-Heinemann)
28 November 2000

PRECAUTION has long been a basis for taking action to prevent harm, and where dangers are well characterised there are clearly merits in this:  it is not advisable, for example, to build a house on the edge of a volcano that is expected to erupt imminently;  nor indeed to build a house on the banks of a river likely to flood on a regular basis.  But the "precautionary principle" goes way beyond this conventional look-before-you-leap prudence.  Indeed, the precautionary principle is cited as a justification for taking action primarily in those circumstances when dangers are not well characterised.

Consider this statement by Jeremy Leggett of Greenpeace:  "The modus operandi we would like to see is:  'do not admit a substance unless you have proof that it will do no harm to the environment' -- the precautionary principle".  This requires the proof of a negative, which is a philosophical impossibility (it is always possible to imagine harms that might result from the release of a substance into the environment, not all of which can be disproved).  As a result, the precautionary principle becomes an excuse for arbitrary restrictions on technologies.

Take the threat of human-induced climate change, which is presented by a broad range of groups as a possibly catastrophic problem.  Governments justify fuel taxes, as well as subsidies to wind, wave, solar, and biogas energy schemes, on the grounds that they will reduce emissions of carbon dioxide, the primary putative cause of human-induced climate change.  But the effects of man's emissions of carbon dioxide on the global climate are unclear.  Global mean temperature appears to have risen over the past 140 years by somewhere between 0.4 and 0.8 °C.  Much of this warming, however, occurred between 1860 and 1940, which was before most of mankind's emissions of carbon dioxide were put into the atmosphere.  Moreover, there appear to be inconsistencies between the ground-based temperature data (which show a significant warming over the past 20 years) and the data collected by weather balloons and satellites (which show no such warming).

A simple doubling of atmospheric carbon dioxide concentrations (such as might be expected to occur some time between 2050 and 2100) would result, all other things being equal, in about a 0.3°C rise in temperature.  Predictions of future catastrophic warming therefore rely upon assumptions of strong positive feedback effects, particularly from water vapour.  However, some of the world's leading experts on cloud formation question this assumption.  Richard Lindzen, Sloane Professor of Meteorology at MIT, has consistently pointed out that the evidence does not support the hypothesis of strong positive feedbacks and indeed argues that there may even be negative feedback effects from clouds -- limiting the warming.

Others point out that increases in carbon dioxide concentrations would increase growth rates of most plants, whilst any warming would also lengthen growing seasons in both northerly and southerly latitudes.  In other words, human-induced climate change could actually be beneficial!

Perhaps most importantly, the evidence from the temperature record of the past suggests that climate is going to change with or without man.  This means that man must adapt if he is to survive.  The people most susceptible to such change are those engaged in weather-dependent activities such as farming, for whom two adaptive strategies might be adopted:  diversification and the adoption of new technologies.  Diversification requires that there be other activities available.  This is not a problem in developed countries, but in developing countries it means that development is absolutely essential;  and with current technologies that means using carbon-based fuels to generate electricity, plant and harvest of crops, and process and transport goods.  New technologies might include new varieties of crop, but also new production processes, which are likely to require carbon-based fuels.  Restricting emissions of carbon dioxide would therefore limit man's ability to adapt.

Applying the precautionary principle to climate change tells us on the one hand that we must limit emissions of carbon dioxide, in order to prevent change, and on the other that we must not limit emissions of carbon dioxide, in order to enable man to adapt.  Not very helpful, I think you will agree.

The European Commission has on several occasions used precautionary reasoning to impose bans on technologies in spite of an absence of evidence of harm.  In 1985, it banned the use of all animal growth promotion hormones even though its own inquiry had concluded that use of three natural hormones posed no risk to human health.  Last year it instituted an emergency ban on the use of phthalate plasticisers in baby toys, in spite of protests from the head of the scientific committee charged with analysing their impact.  The committee had concluded that following 40 years of use there was no evidence of ill effects.

The precautionary principle has become a convenient catchphrase by which environmentalists and consumer organisations justify calls for restrictions on the use of technologies they dislike.  In so doing, they threaten to stultify technological progress and consequently perpetuate human suffering.  A good example is biotechnology or "genetic modification" (GM).

Environmental and consumer organisations campaign vigorously against the use of GM in agriculture (Greenpeace, for example, wants a ban on GM food).  Yet, GM plants are likely to have many benefits, including reduced use of fertiliser and pesticide, increased yields, better adaptation to more extreme conditions (such as saline soil, high and low temperatures, and low precipitation), and reduced allergenicity (hypoallergenic wheat and milk are already in the pipeline;  allergy-free nuts are a few years away).  Of course there may be costs (such as out-crossing of certain characteristics), but these can be (and to a large extent are) dealt with by obliging the producers of GM plants to test their products before they market them.  A simple common-law liability regime would create incentives for GM producers to make appropriate pre-market assessment and also ensure compensation for any harms that might arise.  Such a regime would also be considerably less opaque than the current regulatory framework.

An outright ban on GM foods would be counterproductive.  If people are really concerned about human health and the environment, then they should be encouraging more rapid adoption of GM technology, especially in the developing world where yield enhancements and greater adaptive potential would be most beneficial.  Yet, sadly, the Cartagena Protocol on Biosafety, signed this year and justified on "precautionary" grounds, achieves the opposite by imposing unnecessary bureaucratic hurdles in the way of trade in GMOs.

As these examples demonstrate, the precautionary principle is already having perverse effects.  If applied widely, it would have quite the opposite effect to that intended, subjecting us to more risk and uncertainty.  By preventing us from using newer, safer technologies, the precautionary principle would both limit our ability to cope with the risks we already face, and make life more uncertain, undermining our capacity to cope with risks that might arise in the future.

A Controlling Agenda: The Attempt to Protect Unions by Re-regulating the Labour Market

An Address to the Annual General Meeting of the H.R. Nicholls Society,
27 November 2000

Mr President, ladies and gentleman.

Unions are losing the battle for the hearts and minds of Australian workers.  The unions' collective loss of market share has accelerated to the point where, not only is the share of the workforce who are union members continuing to fall, but the actual number of union members is falling.

Less than one fifth of private sector workers are union members.  To put it another way, eighty per cent of private-sector employees do not think that union membership is worth the cost and bother.  In August 1990, union membership peaked at nearly 2.7 million members.  By August 1999, union membership had fallen to just under 1.9 million, a fall of almost 800,000 or 29 per cent in a mere nine years.

In Victoria, the fall has been particularly notable, union membership falling from 719,000 in August 1990 to 456,000 in August 1999, a fall of over 260,000 or 36 per cent -- the largest percentage decline of any State over that period.

If one presumes that workers are being rational, it would follow that circumstances are changing in ways which makes union membership not worth it for more and more workers.  If that is so, then any revival of union fortunes will either require them to improve the services they offer or to change the institutional circumstances or both.

There is a line of argument which holds that the liberalisation and other changes in the labour market which have occurred over the 1990s have fundamentally undermined the situation of ordinary workers.  The first problem with this argument is that, given it is illegal to discriminate against union membership, it ultimately presumes workers are being stupid.  If institutional circumstances are moving against them, then surely union membership should become more attractive.  Indeed, the argument that labour market liberalisation worsens the situation of workers is, in fact, an even stronger condemnation of the failure of unions to hold their membership.  Either that, or Australian workers are being very dumb.

There is no serious evidence, however, that workers are being undermined by liberalisation.  Real wages have increased, labour has maintained its share of national income (while ownership of capital has become much more widely spread) and, despite many claims to the contrary, polling data and the stability of the pattern of job duration over the last three decades do not suggest a more insecure labour market.  The rate of increase in the income of low-skilled workers has been much the same as middle- and high-skilled workers -- the measured increase in inequality in earned income has come about largely via an increase in the number of high-skilled workers (hardly a bad thing and a natural result of the shift to a human-capital-based service economy).

There are a range of institutional changes which make the situation of unions more difficult, or at least less central.  The number of people in the labour market who might be called either "residual claimants" of income or those in the contract-for-services market -- employers, own-account workers and family helpers -- now outnumber private-sector union members.  These and other modes of employment not conducive to union membership -- casual, subcontracting, labour hire -- have been increasing though, in the case of casual employment, more in the 1980s than since labour market liberalisation began.  (Which, of course, suggests casualisation may be a form of refuge from excessive regulation of the labour market:  international comparisons provide further support for this).

More broadly, there has been a range of changes which have tended to increase the bargaining power of workers.  Changes such as:

• the expansion of the welfare state (pensions and benefits effectively set the minimum wage);
• the expansion of personal grievance avenues (private advocacy services now provide real competition to unions);
• the increase in educational qualifications;  and even
• the operation of investigative media

With the increasing importance, and recognition of the importance, of "human capital" in the success of firms, there has also been a widespread trend of businesses putting more resources into managing employees.  All these factors make it harder for unions to provide services of sufficient value that workers are willing to pay for them.

But far from impossible.  The Shop Distributive and Allied Employees Association operates in an industry with a lot of female, young and casual workers.  Despite operating in an environment which, on economy-wide trends, militate against union membership, it is one of only two ALP-affiliated unions which has increased its membership over the last 10 years.  The way it has done this is by concentrating on providing services for its members that they actually want.  What, in other industries, is known as "maintaining customer-focus".  For example, their attitude to casual employment is that, if the member wants to work casual, that's fine.  If they want something more permanent, the union will see what it can do to arrange that.  The retail industry superannuation fund is barred from direct investment in the retail industry, to ensure that there is no conflict of interest.

This contrasts with the attitude in some other unions, where they will represent workers -- but on the unions' terms.  The Amalgamated Manufacturing Workers' Union, for example, takes the attitude that casual workers are not the sort of workers they wish to represent.  When a senior mining executive recently asked a senior ACTU executive why the unions don't just also represent workers on individual contracts the official, apparently, went ballistic at the suggestion.  There have also been games played with union-controlled superannuation funds with industrial disputes.

Which brings us to the issue of institutional changes within unions.  The most obvious is the long-term trend of capture by unions by officials.  The above examples provide instances of this capture in operation.  Some other indicators of such official capture include:

• From 1968 to 1996, the ratio of union officials to members trebled;
• From 1971 to 1989, union membership fees' increased at a faster rate than wages;
• The "super union" amalgamations took place on the basis that no official would lose their position;  and
• With the downturn in membership since 1990, there have been cuts in clerical and administrative staff:  but the number of officials has increased marginally.

The unions' action plan unions@work ranks campaign activity, talking to journalists, wages policy and dealing with a changing labour market above responding to members (which is followed by "international unity").  This is not an ordering which grasps unions' essential problem -- ordinary workers don't think the cost of union membership is worth the benefits received.  It is an ordering which makes sense in terms of "official capture" of unions, however.

It is also worth keeping in mind that the operation of the "conveniently belong" rule keeps unions from competing with each other for members, leaving exit as the only effective strategy for individual workers to deal with inadequate service.

The first wave of union response to their declining market share was the Kelty strategy of the Accord, the social wage and super-unions.  This was very much a politically-focused strategy.  It can now be seen to have been a complete disaster for the union movement.

• It provided benefits via political mechanisms which workers did not have to belong to unions to participate in.  (Indeed, the tax-and-transfer system in Australia has completely negated the increase in inequality in earned incomes and incomes in the bottom tenth of the population had the highest rates of growth from 1982 to 1996-97).
• It co-opted unions into supporting a specific political agenda, reducing their capacity to operate as an independent voice.
• It expanded the routes for personal grievances not requiring union activity -- the WA IRC, for example, has seen a greatly expanded proportion of applications by individuals who can just as easily be represented by solicitors or other private advocacy services as unions.
• It created centralised "super unions" much more removed from ordinary workers.  This has proved to be particular problem for the outlying States, whose workers have defected with notable speed from the "super unions".

Faced with an imploding membership, the Combet-Burrows leadership is undertaking a new strategy to revitalised the union movement.  And they are proceeding to make the Kelty mistake in new forms.  Once again it is politics -- not customer-focus, not value-for-money -- to the rescue.

The politics in question is the labour market re-regulation agenda.  There are two key texts for this agenda:

• Australia at Work, published by Prentice Hall in 1999 by the Australian Centre for Industrial Relations Research and Training (ACIRRT) -- an organisation of about 20 staff originally funded by taxpayers but now supported by consultancy work, often from major corporations;  and
• Sydney University Law Professor Ron McCallum's 1997 Whitlam Lecture Crafting a New Collective Labour Law for Australia, available on the ACTU website.

This agenda has inspired the Queensland Industrial Relations Act 1999, attempts this year to amend the New South Wales Industrial Relations Act, an attempt currently going through the Tasmanian Parliament to amend their Act and, in Victoria, the Fair Employment Bill now before the Victorian Parliament.

The agenda starts with a misdiagnosis of current trends.  They take the view that markets have an inherent tendency towards wickedness, that businesses inherently exploit workers, that unequal bargaining power is endemic, that labour market liberalisation must have had bad effects and that union membership is inherently a rational choice for workers unless pernicious institutional factors are operating.  Thus, in his Whitlam Lecture, Prof. McCallum blames labour market liberalisation for the decline of unions, even though it was clearly underway well before the limited liberalisations that took place from 1993 onwards.  If you take such views as axiomatic, a whole range of alternative explanations are going to be ruled out.  As Professor Mark Wooden from Melbourne University said in his review of Australia at Work

... it is their passion for the subject matter that is the key weakness of this work.  It would appear that ACIRRT believe so deeply in their cause that nothing, and certainly not facts (or the absence of them), was going to stop them from reaching the conclusions they did.

"Journal of Industrial Relations", September 1999.

But if you diagnose the problem is in those terms, then the obvious response is political action to change the institutional structure.  Which is what we see in the labour market re-regulation agenda.

The high point of the re-regulation agenda is the Victorian Fair Employment Bill as originally tabled in the Victorian Parliament on 25 October 2000.  It is such a high point, that I will concentrate on it because all the other versions are just lesser examples.

Some features of the original Bill are:

• Section 4 defines an employee for Chapter 3 of the Bill (Sections 101 to 114 dealing with workplace grievances and related matters) as including a person engaged to perform work under a contract for services and as an employer those for whom the services are contracted;
• Section 5, defined as an employee any person who is in a partnership larger than three (while such a deeming provision is in other legislation, it is the interaction with other provisions of the Bill one has to keep in mind);  it also defines an outworker to be an employee;
• Section 6 gives the Tribunal the power to declare persons to be employees;
• Section 7 declares those in receipt of labour hire services to be an employer in respect of the individual providing the services;
• Section 8 defines an outworker as including a clerical worker working from home;
• Section 45 establishes a legislative right to long service leave;
• Section 49 provides a very generous definition of "one employer" for consideration of length of services;
• Section 51 provides a very generous definition of "continuous service";
• Section 53 provides additional considerations for length of service for casuals;
• Section 57 narrows the capacity to exclude persons from the above provisions;
• Section 77 voids any contract whose provisions are less than those of an industry sector order issued by the Tribunal;
• Section 93 made the principal contractor liable for the remuneration payable to employees of a subcontractor;
• Section 101 provides a broad definition of a workplace grievance;
• Section 107 gives Tribunal broad powers to revolve such grievances;
• Section 108 grants Tribunal power to declare and to rewrite contracts deemed unfair;
• Section 109 gives Tribunal partial power to override Fair Trading Act with respect to unfair contracts;
• Section 110 provides a six year limit for former employees to bring a workplace grievance action;
• Section 114 gives the Tribunal wide ambit for its conciliation and mediation services;
• Section 155 gives the Tribunal wide investigative powers;
• Sections 225-9 grant extensive powers of entry to registered organisations (such as unions)

The Bill also sets up a wide range of prosecutable offences

What the Bill is about is trying to draw the IR net so widely that no-one can escape.  In the past, as legislation has loaded more and more costs and liabilities on the mode of employment known as permanent employment, people have moved to other modes of employment.  (This is standard Coasian economics:  increase the transaction costs of a particular mode of operation -- such as permanent employment -- and other modes -- such as casual employment -- will become increasingly used, including moving transactions outside the firm entirely -- such as through contracting out and labour hire).  So the Bill has been set up in such a way as to cover all modes of employment.  This is also Federal Labor policy:  item 76 of the decisions of the recent Hobart Conference says

The protection of the industrial relations system should be extended beyond a narrow definition of employees to include those in employment type relationships.

The effect in the Fair Employment Bill as originally tabled is to cover all commercial contracts relating in any way to the provision of services except those elements protected by Federal law.  Attempting to effectively re-write the law of contracts in such a fashion and in such a way was bound to create all sorts of stupidities and anomalies:  such as long service leave for babysitters and housecleaners, fights between partners in a family farm going to the Tribunal with someone suddenly claiming all their back and holiday pay, etc.  What the Bill does is set up a whole series of loaded guns in the hands of entrepreneurial lawyers.

There seems to be two prongs to the motivation.  The first is that the unions' problem is seen in terms of shifts to other modes of employment which are less friendly to them.  As a diagnosis of their basic problem, this strikes me as simply false.

The second prong is that, by creating a Tribunal which they can expect to functionally dominate -- or which, at least, gives them much wider range of operation -- they can effectively herd workers back into the union movement.

Again, I think this is just false.  I see no particular reason why unions will be advantaged against lawyers and other private advocacy services.  Any benefit to unions on either account is likely to be far smaller than they expect.

The social costs imposed, however, are likely to be very large.  Everyone in the debate admits the Bill will cost jobs:  the only question is how many.  The problem here is that estimating lost jobs is difficult since the prime variable used to do so is increase in wages or in total labour costs, and I don't believe that will be the main effect of the Bill.  The main effect of the bill will be to massively increase commercial uncertainty and transaction costs.  People will not know whether the arrangements they enter into in good faith will stand up under Victorian law or not, whether they will be suddenly re-written and so forth.  (For example, to return to the family farm case, under the original Bill, arrangements made on the basis that partners were "residual claimants" to income could suddenly become employment arrangements).  While the effect will be particularly strong if and when the Bill first becomes law, I see no reason why it will not be a continuing one.

That being the case, the effect on Victorian employment could be very deleterious indeed, though it may take quite a while to show up.  It will only take a few horror cases for firms thinking of establishing or expanding operations in Victoria to move elsewhere and the slow accumulation of non-arrivals will eventually show up in higher unemployment.

So Victorian workers will pay in reduced employment prospects, with these costs likely to be extensive.  But they will also pay in other ways.  First, the union movement will continue to be focused on politics and regulatory-games, rather than customer service.  Even if workers are, as I doubt, herded back into unions, it will not be because unions are providing better services or are less official-captured or more customer-focused, it will be because of legislative privilege.

Second, the costs of this vast new regulatory structure (which will extend way beyond the administrative costs of running the new Tribunal and its officers) will have to be paid for, and they will be paid for by reducing the potential returns to capital and to labour.  A key reason why mining companies have been able to offer individual contracts to workers which increase their wages is that, by sidestepping complex arrangements, resources are released which can be shared between labour and capital.  The orders of tribunals do not, except in the short-term, increase the returns to labour, they merely re-arrange them, since employers make hiring decisions on the basis of the total cost of labour.  And regulatory impositions and expenses are included in that total cost.  (It is in the interests of union officials to separate out the returns to labour into a variety of "bits" -- a variety of leaves, special allowances, etc -- so they can laud what a good job they are doing getting the latest extra bit:  when managers and workers deal more directly, it is in their interests to bundle them up into as simple an arrangement as possible, to minimise the administrative expense).

A group of workers who will be particularly disadvantaged will be workers in regional Victoria, since the imposition of rules to suit Melbourne on the whole of Victoria cannot but disadvantage regional workers.  Consider what would happen if petrol could only be sold in the country at the same price as it was in Melbourne:  petrol availability would drop dramatically.  Given the lower shelter costs of regional Victoria, regional workers do not have to be paid as much to have an equivalent income.  Forcing the same rates across the State will mean that a range of cost differences will not be taken into account, disadvantaging regional Victoria.

The public claim in support of this Bill is that a lot of low-wage people, particularly in regional Victoria, are slipping through the cracks in the current system.  When examined, this proves to be spurious.  First, there are plenty of avenues in the current system to deal with such issues -- better enforcement and approaches to the AIRC, for example.  Second, the average wage on the Schedule 1A system which this Bill seeks to replace is actually higher than those on federal awards and, given the different levels of coverage, there are actually slightly more people on low wages under federal awards than Schedule 1A.  Third, the Bill is just a more complete version of the re-regulation agenda which has been working it ways around the States and which has nothing to do with the specifics of the situation in any particular State and everything to do with using political privilege to revive the union movement.  That the agenda is an Australian-wide one -- as Robert Gottliebson set out in The Australian a fortnight ago -- is not something, however, that The Age has seen fit to inform its readers:  but that would involve treating its readers with respect rather than as an audience for its staffs' moral preening.

Looking further at the data, we can see a pattern of higher wages in Melbourne and lower wages in regional Victoria under Schedule 1A -- which indicates that the system is responsive to different costs structures in different parts of Victoria.  Finally, the attempt to race the Bill through the Victorian Parliament as quickly as possible shows that the advocates are fearful of closer examination of the actual provisions of the Bill.

The attempt to co-opt the language of public debate by use of the term "Fair Employment" is certainly one of the problems those who wish to preserve the integrity of the commercial contract system in Victoria have to deal with.  There has also been a program of moral and other intimidation -- the alliance forged over the WEF demonstrations between union movement and the SII activists network being seen with the FairWare campaign and scenes of attempted intimidation in the Legislative Council chambers.  This program has proceeded in the normal modern moral vanity style (with The Age, of course, leading the way) using what I call the motivational fallacy -- this Bill is about fairness, you are a critic of this Bill, therefore you are against fairness.

But the Bill is not about fairness, it is about power.  As originally drafted, it is about creating the power of third parties to intrude into just about any commercial contract in Victoria pertaining to the provision of services and re-arrange it if it is convenient for them do so.  But that is not only an assault on the integrity of the whole structure of contract law, it is an assault of property rights of a most basic kind, since if one cannot use one's property as one sets fit within a secure and clear ambit of law, those property rights have been gravely reduced or, in the extremity, voided.

As my colleague Jim Hogget points out, it is also an assault on individual rights.  Individuals need to be able to contract freely with each other to suit there own specific and changing needs.  This is a personal freedom that allows them to optimise their own lives and is the basis of an efficient economy and society.  The existence of the new obligations in this legislation may appear to be a one-way bet for individuals, but not if it leads to the disappearance of opportunities to contract on a basis that suits individual needs.  It is facile to contend that the legislation does not limit individual rights if that outcome is because one party to the equation (the deemed employer) withdraws.  Loss of employment is not just a lost economic opportunity but arises more fundamentally from an attack on individual rights.

Many of the new class of deemed employers will themselves be individuals who also lose the right to contract on agreed terms.  They have the choice of accepting the uncertainty associated with a contract revocable at any time, including well after its conclusion, or not contracting at all.  In either case, there will be a loss of creative activity and employment as the deemed employer seeks to write complicated and expensive defensive contracts for those he does contract for services or employment -- or decides that it is not worth the effort and sits still or migrates.

Nor can Victoria wait for standard practices to evolve out of the new arrangements.  With the increasing range of telecommuting, the opportunities for migrating jobs without moving the business means that the most vibrant and modern service industries will be best placed to use avoidance strategies against this ring-fence legislation.  That does not just mean migration to NSW but also to Singapore and China.  Victoria is writing the script to ensure that it fulfils the worst fears of the unions, that it will retain the low-skilled low-paying jobs that cannot migrate -- the so-called Macdonalds economy.

Consider the situation of an IT worker operating from home at 2am for a client in London.  Does it make any sense at all to require that worker to charge, say, double or triple time?  Or do we treat them as mature adults able to make their own decisions?  Having Victorian IR law regulating our international transactions in such a way is just ludicrous.

As originally drafted, this Bill would make Victoria the place not to be, if you wanted any reasonable certainty in your contractual arrangements:  or even if you just wanted to be treated as a competent adult in your ordinary undertakings.  It remains an attempt to create legislative privileges to protect unions whose own members are deserting them.  What does it say about the Bracks Government that it is prepared to rewrite basic commercial law on the advice, and in the interests, of a union movement not competent enough to keep its own members?  That it is prepared to do so when the number of people in the "contract for services market" exceeds those who are private sector union members?  And what does it say about the Victorian business community if it cannot preserve the basic sinews of its existence, the integrity of commercial contracts?

On the last point, the early indications are, at best, mixed.  With the advent of organised opposition from employer groups, what started as an urgently needed structure to address manifest injustice suddenly became a negotiable ambit claim.  Negotiations then proceeded -- typical for a power grab -- on the basis of divide-and-rule.  About two weeks ago, the Victorian Government suddenly started floating amendment suggestions.  It has already moved amendments prior to the Bill passing the Legislative Assembly on 16 November and more are in the offing.  On Monday 20 November, the Bracks Government reached agreement with the HIA, the MBA, the VACC and the Road Transport Association (i.e. the housing, construction and car industries) that they would support the Bill, subject to promised amendments.  AIG, Retail Traders, VECCI and VFF all said it was news to them and currently still oppose the Bill.  (The MBA did say it would prefer that a State system not be re-introduced at all).  The Opposition has held the Bill over in the Legislative Council until March 6 2001, saying the sudden waves of amendments showed the Bill was flawed and required adequate time to consider.

The various amendments limit the capacity of the Tribunal to review "unfair contracts" to four specific groups of workers -- security guards, owner-drivers, cleaners and child-care workers.  The liability of principal contractors for remuneration payable to employees of sub-contractors is to be limited to outworkers.  (Of course, a principle established for specific groups is easily extendable at a later date:  the strategy of thinning the edge of the wedge).  The right of entry for union officials is to be limited to that applying in the Federal Workplace Relations Act.  The definition of employee has been tightened by dropping the provision covering persons in a partnership of more than three persons while the power of the Tribunal to declare persons to be employees has been limited to natural persons who consent in writing to such a declaration.  Such a declaration also will not be able to apply before the date of the decision.

These amendments simply further indicate the fundamental problems involved in trying to re-write basic contract law in such a way.  They can be classified as "but we didn't intend that" or as "oops, that upsets people too much" amendments.  By setting up limitations to general principles, or establishing principles for particular groups, the amendments leave the basic structure intact, and it is the basic structure which is fundamentally flawed and objectionable.

Whatever happens in the Victorian Legislative Council -- and it is to be hoped that the Bill is killed in its entirety -- Victorian events have revealed the full nature of the labour market re-regulation agenda.  It is an assault on the basic sinews of commercial operations and property rights which goes way beyond anything we saw with the traditional arbitration structure.  It reveals a power-obsessed union officialdom, presiding over an imploding union movement being destroyed by being captured by that officialdom, which is completely shameless in its willingness to grab for legislative privilege to protect its position.  It also reveals the ill-effects of having a party of government -- the ALP -- so beholden to a union movement which now represents a mere quarter of the workforce.

Australia and New Zealand share the dubious distinction of having the lowest rates of per capita economic growth in the developed world over the 120 years from 1870 to 1990, with economic growth rates per head less than half the developed world average.  It is open to doubt whether one can continue to have long-run growth rates that comparatively low without eventually sliding out of the ranks of developed countries.  Our comparative economic performances have been particularly bad since 1913 -- that is, after the full introduction of arbitration systems in both countries.  (Australia's performance in the 1960 to 1990 period was a bit less bad, largely due to the advent of a strong export mining sector).

In his brilliant book The Mystery of Capital, Hernando de Soto identifies six characteristics that well-ordered system of property rights have which allow assets to be turned into capital, thus creating the basis of sustained prosperity.  A well-ordered system of property rights:

• fixes the economic potential of assets;
• integrates dispersed information;
• makes people accountable;
• makes assets fungible;
• networks people;  and
• protects transactions.

The traditional arbitration structure violates most of those principles.  The new labour market re-regulation agenda, in its full form, attacks them directly.  The traditional arbitration system was perhaps the most destructive element in the public policy regime which gave Australia and New Zealand the lowest rates of per capita economic growth in the developed world.  Adoption of the full labour market re-regulation agenda by either country would mean that we really were choosing to become Third World countries by adopting a Third World institutional structure:  one where property rights are denied or fundamentally corrupted to suit the interests of narrow elites.

And to do so to suit the interests of a narrow clique of union officials which cannot retain the support of its own membership would not merely be a stupid act, it would be criminal one.

We Think We Have Electoral Problems

The stakes were not as high of course, but fifteen years ago an Australian state faced an election result that bears some comparison to America's current predicament over the battle for the presidency between George W. Bush and Al Gore.

In the 1985 Victorian state elections, Premier John Cain and his Labor government were returned to office for a second term.  But Labor's ability to implement its legislative program without hindrance depended on wresting control of Victoria's upper house, the Legislative Council, from the conservative parties.

It soon became clear that this would hinge on a single seat, Nunawading, in Melbourne's outer eastern suburbs.  Everyone knew it was going to be close, but no-one anticipated the actual result.  With well over one hundred thousand votes cast, after preferences from the minor parties were distributed the Labor and Liberal candidates ended up in a dead heat.

So the returning officer followed the only path open to him.  He drew a name out of a hat, and declared the Labor candidate the winner.  Labor was elated, and Premier Cain told the media that the party had won the seat "fair and square".

Not surprisingly, the Liberals and many commentators thought that this outcome was far too arbitrary.  The matter went to the Court of Disputed Returns, which ordered a new election for Nunawading.  Labor lost, ending the government's dream of governing without obstruction from the conservatives.

But despite the uproar over the initial result, and the ALP's apparent involvement in distributing bogus how-to-vote cards at the subsequent by-election, there was no question about the independence of both the returning officer, a public servant, and the Victorian Supreme Court judge who sat as the Court of Disputed Returns.

That is a fundamental difference between the circumstances in Victoria in 1985 and in America today.  Victoria -- and Australia generally -- has a universally accepted hierarchy of procedures to be followed in the event of a contested election result, and mechanisms designed to ensure the neutrality of those responsible for carrying them out.

As contemporary Queenslanders know only too well, these do not always prevent electoral fraud, although they almost certainly reduce its incidence.  And when fraud does occur, it is invariably only the contesting political parties who are tainted.  The integrity of electoral officials and the system itself remains virtually unscathed.

But well before people went to the recent polls in the United States, commentators were expressing concern about the potential for skulduggery.  George W. Bush raised a big laugh at the end of his third pre-election debate when, after thanking his own supporters, he jokingly urged people backing Al Gore to "please vote only once".

Writing in The Wall St Journal, columnist John Fund noted that this was more than a joke.  Fund cautioned that with all the opinion surveys pointing to a close election, various kinds of vote fraud could be expected.  He quoted one distinguished political scientist's warning that "the temptation to steal votes in key swing states will be enormous", and another's assessment that the United States has "the modern world's sloppiest election systems".

While those who are unfavourably disposed towards America are having a fine time gloating over the presidential imbroglio, many of the present problems stem from aspects of the US political system that are otherwise admired by individuals with liberal or progressive inclinations.

Americans take the notion of the "people's will" very seriously, allowing more extensive popular input into decision making and civil appointments than in most other countries.  Many key public officials are either directly elected by voters or are openly acknowledged as political choices.

The judges of Florida's Supreme Court, for example, are chosen by the Governor from a list of names submitted by a judicial commission, and then have to be approved by the electorate.  Six of the seven judges who this week ruled that manual recounts in three crucial counties have to be included in Florida's final results are registered Democrats.  However much these judges may declare that they adjudicate "without fear or favour", unless their decision favours those who are in effect their political adversaries, it is difficult for them to avoid the taint of partisanship.

Americans also believe in "acting locally", giving state, county and municipal authorities considerable autonomy.  For Australians, one of the most remarkable current manifestations of this autonomy is the lack of uniform national, or even state, standards for ballot design, voting procedures and methods of determining valid votes.  Britain's Independent newspaper reported that for the United States as a whole, 28 different ballot formats were in operation for the presidential race.

This ardent devotion to local democracy has helped to make the United States a great nation, and one in which patriotism is not as unfashionable as it has become in many other Western countries.  Yet it also makes for a ramshackle electoral system without a consistent set of principles that could bring moral finality to the current presidential mess.

With the possible exception of the United States Supreme Court, there seems to be no ultimate arbiter whose decision would be treated as beyond challenge by any party.  But although America's Constitution would permit Supreme Court intervention under certain circumstances, it is not clear that the court would wish to become entangled in what is essentially a matter of Florida's election laws.

That America's next President will have gained office through a line-ball election is not such a problem.  His real difficulty will be dealing with a large and angry bloc of partisans who will be convinced that he stole the election from their man.

George W. Bush's personal qualities suggest that he would be the more effective healer for the nation as a whole in these circumstances.  Unfortunately, most of America's intellectuals, entertainers and media would much rather have Al Gore, and will do all they can to undermine the legitimacy of a President Bush.

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The Meaningless Emancipation of Aborigines

The failure of the Yalanji people of the Cape York region to return to their native land is symptomatic of a larger Aboriginal problem.  Aboriginal people were emancipated in the 1960s, fully two generations ago.  In the face of the enormous and contradictory pressures for separation or integration, many have found their emancipation to be meaningless because the choices were too stark.  They were free to be separate from the dominant culture and return to their land, but not to live as they once did.  They were free to integrate into the dominant culture, but feared a loss of identity.  Aborigines have chosen both paths, and Aboriginal policy reflects an uncomfortable accommodation of each path.

Presently, the dominant path in policy circles is the "progressive" policy of self-determination.  As far as land rights are an integral part of self-determination, it appears to be separatist.  Other than for the fortunate few, the future of Aboriginal homelands is likely to be ghettoes in the wilderness.  They are being established without an economic base, on a legal structure of non-traditional communal ownership, through non-traditional political processes, and following two centuries of the failure to overcome a "cargo-cult" mentality.

These are not my observations, but those of Richard Trudgen in his book, Why Warriors Lie Down and Die.  He recognises the needs of the Yolnu, with whom he worked, to maintain control over their lives by maintaining their language and traditional customs.  He writes, "when I left Arnhem Land in 1983, ninety-five percent of the work on Yolnu communities was carried out effectively by the people themselves.  On my return in 1992, I found only a few remained involved in meaningful work".  More devastating, "if you visit the Yolnu drunks in the long grass in Darwin or Nhulunbuy, you will find that a large proportion of them have had college or tertiary education".  The Yolnu emancipation brought destruction.

Two stories from his book help explain what happened.  The first is of an Aboriginal man who was trained as a builder.  He, along with Aboriginal apprentices built 3 houses per year in their settlement.  The government of the day decided there was a backlog in housing and sent in white builders to catch-up.  They completed 6 houses in three months.  The Yolnu community ridiculed the Yolnu builder for not keeping up with the white builders.  That Yolnu man has not worked since.

Self-determination may mean lower standards of living.  Will this be recognised by those clamouring for self-determination?  Will policy-makers recognise that the right to control ones' life will have consequences for the achievement of an equal standard of living?  Richard Trudgen may be a romantic, but he would opt for Aboriginal control over equal outcomes.  The irony in self-determination may be that it would be like the old missions.  It would require a band of dedicated and skilled people to act as interpreters, as a buffer between the Aborigines and the army of helpers presently moving in waves through the settlements.  Such protectionism is fundamental to Noel Pearsons' model of escaping welfare.  It would require a highly managed, possibly authoritarian model of community control.

The second story reveals the irony even more powerfully.  It concerns a group of Yolnu schoolchildren who visited Singapore on an excursion, and within two months were found sniffing petrol.  "What was meant to be an exciting and enriching educational experience had actually given the children a completely false understanding of how the world works and turned them against their own families".  The children were angry with their parents for not being able to give them what others could.  Trudgen reconnected the children with the adults by his understanding of the Yolnu language and custom.  However, his skills could not tackle the most fundamental issue.  "How do you keep 'em down on the farm?" Aboriginal children may not stay in communities where the opportunities they identify as being important, do not exist.

Why is it intelligent to persist in the policy of self-determination, where that policy means separatism?  Separatism will require a devotion and intensity and experience that only missionaries had.  This body of skills and devotion may no longer exist.  It may also require a level of authority that few elders' possess, and it seems, few new leaders possess.  At the very least, the inter-family and inter-clan fighting of "crony" pan-Aboriginal politics will continue under a separatist model of self-determinatiion.

Self-determination as integration may require resistance to the current progressive ideology, and some loss of identity, but perhaps, in the long run, a more enduring settlement between Aborigines and the rest of Australia.  The Yalantji of Cape York may well have chosen the latter course.

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Gene Technology in Agriculture

Submission to the Tasmanian Parliamentary Select Committee Inquiry
16 November 2000

GENE TECHNOLOGY

We wish to make a submission to the Inquiry.

Our aims and aspirations -- such as a prosperous economy with full employment, sound environmental management, care for the disadvantaged and a tolerant and peaceful society -- are shared by the vast majority of Australians.

We believe that society's goals are best achieved through an efficient, competitive private sector, small but effective government, individual freedom with personal responsibility, and an open and peaceful exchange among nations.

We are totally independent.  We do no accept any donations from political parties or grants from government.

We act as developer, test pilot and promoter of free market ideas.  We takes the view that the onus is on those who promote more regulation and government intervention to put a strong case that such measures are necessary and cost-effective.  Our role in the gene technology debate has been one of examining the public policy issues on a matter that has assumed considerable public profile against our core beliefs.

We have published three Backgrounders on the subject;

• Risk Assessment and Decision-Making for Genetically Modified Foods
• Regulating Biotechnology:  Some Questions and Some Answers;  and
• Biotechnology and Food:  Ten Thousand Years of Sowing Seeds, One Hundred Years of Harvesting Genes

In addition we have made submissions to government on different aspects of the matter:

• Proposed national regulatory system for genetically modified organisms:  How should it work?;  and
• Labelling Genetically Modified Foods, A Submission on Proposed Labelling Provisions for Genetically Modified Foods under Food Standard A18, December 1999.
• Submission to the Inquiry of the Senate Community Affairs References Committee into the Gene Technology Bill 2000

In addition, we have published press articles promoting our views and have hosted a number of overseas experts who have been seeking to better inform the debate.

Terms of reference 1 and 2

The economic costs and benefits for Tasmanian and individual industry sectors in relation to genetic modification in primary industries

Market opportunities and associated strategies for Tasmania as a producer of genetically-modified and non-genetically modified products

GOING GM FREE

Unlike some European farming, the Tasmanian industry is a part of the global food and fibre producing network.  It depends for its continuing viability upon the industriousness of its producers, their choice of products to grow and their adaptation of technology that will maintain or preferably enhance their competitiveness.

At the present time there is some evidence of modest premiums for crops that are GM-free, a matter being pressed on the Inquiry by those who are against the new technology.  It is, however, unlikely that a major agricultural producing community like the State of Tasmania could ever carve a niche in this area, to the exclusion of modern technology, that would sustain a prosperous farm industry for the entire State.  It is still less likely that such prosperity could be achieved in the more narrowly defined area of organic products, which comprise much less than one percent of world agricultural trade.  This is not to say that individual farmers or groups could not obtain better incomes by a "GM free" or "organic" strategy.  Nor is it to argue that there is not much to be learned from organic farmers in terms of soil preservation.  Indeed, Professor Klaus Ammann the noted botanist from the University of Switzerland has called for transgenic-organic alliances to be formed.

ALLOWING FARMERS THE CHOICE

GM products will only be adopted by farmers if they improve yields, reduce costs or allow price premiums.  Although there is thought to be some premia available for GM free foods at present that may not be the case in the future.  GM products incorporating features sought by consumers are likely to become available.  The most celebrated of these is golden rice incorporating Vitamin A which will considerably reduce blindness in developing countries.

Beyond such spectacular improvements to foods, we are likely to see a vast increase in the variety of products as a result of GM.  This will allow farmers to specialise in products that incorporate features sought by particular customer segments -- different acidities in fruits for example, or properties that cater to the needs of particular areas, for example frost tolerant or low water using crops.

Tasmania's economy is more dependent on agriculture than that of other States and it can ill-afford to relinquish the opportunities GM technology brings.  Even where the State has a clear competitive advantage, as it presently does in poppy growing, that can be readily overhauled by the adoption of GM technology in rival locations.

The evidence to date has shown significantly increased farmer profits from GM crops.  Yields for US corn and cotton are up 6-11 per cent while chemical spraying was reduced by between 14 and 72 per cent.  Some of these gains would, presumably, be offset by higher seed costs.

Some modelling of the benefits of allowing farmers the GM choice has been undertaken in New Zealand and presented to the Royal Commission there by Infometrics Consulting.  In that work, the effect of New Zealand rejecting GM while the rest of the world actively pursued it was a 4% reduction in GDP.  The main loss was in "other agriculture" (including horticulture) which showed 20% less output.

Some recent evidence of the distribution of benefits from GM crops grown in the US has been published. ⁽¹⁾  The authors examined the distribution of benefits among different sectors arising from the introduction of Bt cotton to the US in 1996.

	Mean surplus values ($US)	% of total world surplus
US Farmer surplus	$141m	59
US consumer surplus	$21.5m	9
Monsanto	$49.8m	21
Delta and Pine Land	$13m	5
Rest of World -- producer	-$21.5m
Rest of World -- consumer	$36.5m
Net Rest of World surplus	$15m	6
Total world surplus	$240m	100

It should be noted that the negative value are due to downwards pressure on world prices due to additional US output.  This underlines an important feature of the technology for Tasmanian farmers.  It is not possible in an interlinked world for nations to insulate themselves.  Cotton productivity gains in the US were already, as a result of competition, being passed on to consumers.  Those producers rejecting the technology therefore face diminished income levels.

Terms of reference 3 and 5

Environmental risks and effects of the use of genetically-modified organisms in Tasmanian primary industries

Assessment processes for genetically modified food

We believe the measures proposed for the Gene Regulator are adequate to ensure against mishap.  Indeed we are of the view that there is considerable overkill since the technology poses no threat to humans and is likely to improve environmental outcomes.

The environmental impact follows from the main feature of GM foods and other crops to date.  These normally have genetic modifications to allow better properties in combating pests and chemical sprays designed to prevent weeds.  They are also likely to allow for less waste in the crops (e.g. shorter stems) and to allow reduced consumption of water.

All of these features have a benign environmental effect either because they allow conservation of resources or because they allow crop production with fewer chemical inputs.  There have not been be any superweeds developed as a result of the technology and scientific evidence rates such developments as highly improbable.

With regard to protection of people's health and safety, the new products have undergone greater testing prior to release than any previous food technology.  Indeed, although all plant and animal food we now consume has been the creation of human induced cross breeding, no previous food has ever been subject to the oversight required of GM foods.  And objectively, the latter should in fact warrant a reduced oversight since the genetic modification, which is somewhat hit-and-miss in traditional cross breeding techniques, is precise with gene technology.  Specific genes can be introduced or changed without fear of also importing genes that may have adverse impacts.

We should also bear in mind that the technology has now been in common use, especially in North America for the past four years.  It is likely that most North Americans eat GM food every day.  Moreover, such is the nature of world food trade, and the ubiquitousness of soya (47% of which is GM)⁽²⁾ in foods, it is also certain that virtually all Australians have consumed GM product.  There is no case anywhere in the world of harm having been recorded from this consumption.

We do not believe that either the environmental conditions in Australia or the susceptibility of Australians to different foods is sufficiently unlike those elsewhere in the world to justify the additional level of testing that is being put in place.

The real issue is whether the extreme and unnecessary caution in permitting the adoption of this technology is creating harm through depriving consumers of cheaper and more nutritious food.  These issues, of course, loom larger in developing countries where more expensive food may mean people go hungry or become susceptible to inadequate nutrition with consequent adverse health effects.

As improved and healthier foods become available through the GM route, delays in bringing these to market will have a particularly adverse effect.  For example vitamin A enriched "golden" rice has the capacity to prevent tens of thousands of cases infant blindness in developing nations.

The overwhelming majority of scientists favour the technology.  Some 3000 have signed a petition that says the "techniques ... can contribute substantially in enhancing quality of life by improving agriculture, health care, and the environment".  And that, "The responsible genetic modification of plants is neither new nor dangerous."

To put all fears to rest, in the past few weeks, seven premier scientific academies, (including the Chinese and Indian science academies, the British Royal Society and the US National Academy of Sciences) have issued a joint report promoting the benefits of the technology and the need for it to feed a growing world population with increasing aspirations for food quality.

Terms of reference 4

Social and ethical issues surrounding the use of gene technologies with particular regard to Tasmania's primary industries

The procedures announced and presently in place are, in our view, designed solely for public re-assurance purposes.  As outlined above, the technology itself should warrant less oversight of the new products than that traditionally required -- which is to say no oversight.

It is likely that all new GM foods introduced in Australia will have first been introduced in countries like the USA with robust assessment requirements and bureaucratic procedures and skills that are unmatched anywhere in the world.  This doubles the surety of the safety of the products, a safety that already has a high degree of insurance in view of the reputations and financial penalties that firms marketing these products place at risk.

In addition the new Regulator is to be totally independent of Government.  The Regulator will have extensive powers of investigation and will be adequately funded.  In addition, the Ministerial Council, the Gene Technology Community Consultative Committee and the Gene Technology Advisory Committee will offer further assurances.

All this said, there are likely to be those who will wish to oppose the technology at all costs.  Some of these express opposition to the technology by destroying trial crops in deliberate attempts to prevent the knowledge being gathered.

We believe the Government has leaned over backwards to put in place suitable machinery to offer Australians a guarantee that the GM food they eat is safe and wholesome and that GM crops have a benign environmental effect.  Some people will not be satisfied by such levels of assurance because of an ideological opposition to the technology -- an opposition frequently grounded in deep-seated hostility to "big business", "capitalist exploitation" or other epithets for the free market system which has brought us our present levels of prosperity.

Others may prefer to avoid GM foods for similar reasons to vegetarians who avoid meat or those who seek only "organic" foods.  Many would regard such choices as eccentric but they are freely made and based on the individuals' value systems the rights to which nobody should deny.  However, the rights of people to such choices should not require others to bear unnecessary costs.

These matters have come to a head in the debate on labelling.  To make a clear statement that a product does not contain any GM material (and processed foods contain hundreds of ingredients) would entail a vast cost, while bringing no benefit in terms of health.  Doubtless some of those calling for increased labelling are doing so in the hope that the increased costs will abort the development of the technology.

If some consumers want to avoid GM foods, sufficient demand for the absence of these ingredients will cause suppliers to make the products available.  This already happens with "organic" foods.  Some, including many organic food producers, have called for labelling where any of the food might include GM substances.  This is ironic since organic food producers could not agree to a standard that guaranteed their produce to be 100% organic -- it is impossible to be certain of an absence of an admixture of modern technology.

The best solution is to leave niche suppliers to market non-GM products to the customer (if they can do so truthfully).  The rest of us can also buy the products we want without having a needless cost imposed.  Australian and New Zealand Health Ministers did not adopt this position during their August 2000 meeting and have opted for a system that requires labelling although not on such a comprehensive basis as called for by some opponents of the technology.

There remains the question of the practicality of an individual State passing blanket legislation to require an absence of GM in the crops they produce.  Freedom of interstate commerce is guaranteed under the Constitution (article 92).  As previously discussed, it is possible for areas to opt for a GM free position as a means of promoting themselves into niche markets, though this is unlikely to be practicable on a whole state basis.  If this were to be attempted on a wide scale, as the advantages of GM products became apparent, individual farmers would wish to take advantage of the increase in productivity and would appeal against any decision by a state jurisdiction to deny them that opportunity.

---

NOTES

1. Falk-Zepeda, J.B., Traxler, G, and Nelson, R.G. (2000) Surplus distribution from the introduction of a biotechnology innovation.  American Journal Agricultural Economics 82:  360-369.

2. EU Directorate of Agriculture, Economic Impacts of Genetically Modified Crops on the Agri-Food Sector, Brussels, 2000

Surprise!

Inaugural H.V. McKay Lecture:
The Future and Its Enemies:  The Growing Conflict over Creativity, Enterprise and Progress
14 November 2000

UNCERTAINTY IS AN ESSENTIAL INGREDIENT OF PROGRESS

FROM the late nineteenth century through the middle of the twentieth, futurists imagined electric lighting, but no electric guitars;  supersonic jets, but no hang gliders;  laser weapons, but no laser surgery or compact discs;  giant computer databases, but no Palm Pilots or video games;  nuclear power, but no nuclear medicine;  government surveillance cameras, but no baby monitors.

These stunted visions -- produced by social critics and science-fiction writers -- are neither random nor isolated.  Optimists and pessimists alike conceived of the future -- our present -- as a uniform society, a flattened, unnuanced world designed by a few smart men.  They didn't imagine the quirky products of creativity applied to small-scale, personal problems and passions.  They didn't factor in the power of vanity, self-expression, chance, novelty or fun.  Theirs was a future without surprise.

The infatuation with predictability has been deeply imprinted on modern times.  From the communist regimes to corporate giants, we came up in an age of central design, planning and control.  The leading futurists, the science-fiction writers, long depicted progress as the product of elites.  In his book Paris in the Twentieth Century -- written in 1863, but not published until 1996 -- science-fiction master Jules Verne wrote of "an age when everything was centralised, thought as well as mechanical power".

The unplanned outcomes that emerge from obsessive tinkering, competitive one-upmanship, incremental improvement and unarticulated longings have no place in a rigidly planned world.  As it turns out, however, they define the world in which we live -- and they will define our future.  For as we're now discovering, the future, in fact, is made of surprise.

Even the science-fiction writers nowadays recognise the inevitability of surprise.  They "see themselves more as conceptual gardeners, planting for fruitful growth, rather than engineers designing eternal, gray social machines," writes Gregory Benford, the author of such popular science fiction as Timescape and Cosm.  "Their views of that future are often playful, seeking to achieve an almost impressionistic effect, imagining small scattered details ... that imply more than they can say".

Small, scattered details aren't just writing techniques.  They're also fuel for social and economic propulsion.  Important things happen out of sight, often tapping occluded desires.  Cultural critics, on the Right and Left, still argue over where "the sixties" came from, as if someone designed them.  Cigar-and-martini bars, The Blair Witch Project and green-and-purple nail polish from Urban Decay, an upstart cosmetics company in California, all took the world by surprise -- unpredicted and unpredictable.  So, less fleetingly, did the Web.

Technology pundits searched in Silicon Valley for a challenge to Washington State's Microsoft Corporation, but never expected the alternative:  the free Linux computer operating system, created by hobbyists dispersed around the world who, for fun and hacker prestige, work incessantly to improve it.  Linux keeps getting better because thousands of Linux hackers think it's cool to look for bugs.  It's an "open source" system, whose code is available to anyone who wants to see it.  Linux welcomes ideas and improvements from people anywhere.

"Incessant search by many minds," wrote the late political scientist Aaron Wildavsky, "produces more [and more valuable] knowledge than the attempt to program the paths to discovery by a single one".  Professor Wildavsky, who taught at the University of California, Berkeley, could have been writing about Linux.  But the open systems Professor Wildavsky had in mind were social:  science, democracy, markets.  These competitive systems encourage scattered knowledge to emerge.  They allow for serendipity and thus for surprise.

Surprise drives progress because innovation depends on the sort of knowledge no one can gather in a central place.  The Austrian-born economist Friedrich A. Hayek, who won the Nobel Prize in 1974, applied this insight to market prices.  In his 1945 article, "The Use of Knowledge in Society," he argued that markets operate as a "system of telecommunications".  Prices relay scattered information about what people want, what producers have to offer, and how relative scarcities are changing.

But prices aren't the only way markets transmit information.  Markets also allow people with new ideas to test their hypotheses.  While other discount retailers concentrated on urban markets, Sam Walton, the founder of Wal-Mart, built stores in small towns, clustering them around central warehouses.  He guessed correctly that he had a good model for improving retailing.  But only by trying it out, in competition with other retailers, could he be sure.

This divining function of the market has been overlooked by futurist visions, some of which imagined new products arising from obvious, articulated consumer demands, not entrepreneurial inventions.  Edward Bellamy's 1888 novel Looking Backward, a monster bestseller in its day, hails a year 2000 in which nothing new is created unless someone explicitly asks the authorities to provide it.  "Suppose an article not before produced is demanded," explains a character to Mr Bellamy's nineteenth-century time traveller.  "If the administration doubts the reality of the demand, a popular petition guaranteeing a certain basis of consumption compels it to produce the desired article".

Not surprisingly, no one fills out a request for rock music, jacuzzis or Vidal Sassoon-style blunt haircuts.  Bellamy's 2000 is a year in which furniture and clothing have barely changed in a century.

Just as producers often give consumers things they want, but didn't think to ask for, consumers sometimes come up with surprising uses for new inventions.  When a new product appears, it can uncover dissatisfactions and desires no-one knew were there.  Minnesota Mining and Manufacturing Company (3M) first developed cellophane tape so a bakery could seal moisture-proof packages.  The bakery, like Bellamy's order-placing consumers, was indeed able to articulate its demand for something that didn't yet exist.  But a lot of other potential customers wanted things they hadn't expressed.  No sooner was Scotch tape on the market than people started finding new uses for it:  wrapping packages, repairing ripped curtains, making labels, even lining the ribs of dirigibles.

Similarly, Starbucks originally envisioned its shops as take-out stores in busy business districts.  It found instead that customers wanted neighbourhood hangouts -- stores in residential areas did much better than expected -- and adjusted its strategy accordingly.  No customer, and certainly no planner, "ordered" neighbourhood Starbucks.  The company itself was taken by surprise.

To discover what people really want, markets have to be left open to new ideas.  Picking winners in advance, as political planners often attempt, can shut down surprise and discovery.  Laws tend to get in the way of this innovative process and only rarely get changed.

When Starbucks first moved into San Francisco, it found that its neighbourhood hangouts were illegal:  new restaurants had been outlawed in residential areas.  Under these zoning restrictions, Starbucks could sell coffee, but it couldn't put in chairs.  By that time, Starbucks was a well-established brand, with enough clout to get the law changed.  The city created a new category, "beverage houses".  The change accommodated Starbucks, but it won't help the next upstart with a new idea.

Central control also must keep categories rigid.  The characters Mr Bellamy depicted in 1888 could listen to any music they liked at any time of the day or night -- performed live and delivered via the telephone system.  They could choose, for instance, between a waltz and organ music -- extraordinary choices for a nineteenth-century person who was lucky to sing around a parlour piano.  But the songs came from orchestras that played the same old genres, and the playlist would fill a single bin in a contemporary music store.

In the actual world, by contrast, dynamic new markets for radio and recordings gave rise to new genres, new instruments, new institutions.  In Japan, Sony Corporation took the kind of "serious" cutting-edge technologies that planners would have reserved for military and scientific purposes, and applied them to making music personal, first through transistor radios and later through an equally small cassette player called the Walkman.

Even the science underlying Sony's inventions was fundamentally unpredictable, a product of "incessant search by many minds".  As physicist Freeman Dyson, of the Institute for Advanced Studies in Princeton, N.J., has noted, "A 19th-century development program aimed at the mechanical reproduction of music might have produced a superbly engineered music box or Pianola [player piano], but it would never have imagined a transistor radio".  Neither, he notes, would such a programme have subsidised the electromagnetic research of James Clerk Maxwell, the nineteenth-century Scottish physicist whose work led to the development of the transistor radio.

The quiet, unpredictable way that desires and creativity match up in the marketplace disturbs and baffles many people.  It especially confounds people who excel in articulation, since those who are good at self-expression have an advantage in a world where everything is explained in words.  They would rather stick to plans made in public, with everything spelled out in advance and all new ideas firmly under control.  That planning, which intellectuals sometimes equate with "democracy", rewards the ability to explain and argue.  It discourages the restless pursuit and real-world testing of new ideas.

This wariness of uncontrolled creativity recalls the Bellamy model:  carefully articulated wants, approved in advance by a central administration.  In an ironic twist, our mainstream literary culture clings to the ideal of an engineered future, while the actual engineers and money-grubbers embrace creativity and surprise.  It's a strange world indeed.

The Dismissal -- 25th Anniversary

Today is the twenty-fifth anniversary of the dismissal of Gough Whitlam's Labor government by the then Governor-General, Sir John Kerr.  This momentous event cast a long and destructive shadow over Australian political life, ushering in seven years of aimless Coalition rule under Malcolm Fraser, and many more years of Labor bitterness about its abrupt loss of power at the hands of Kerr and Fraser.

It was triggered by the determination of the conservative controlled Senate to defer the money supply bill until Whitlam agreed to an election for the House of Representatives.  By November 1975, economic mismanagement and a series of scandals had so overwhelmed the Whitlam government that it was almost certain to lose such an election.  So it held out in the hope that the Senate would back down, causing government business to come to a virtual standstill in the process.

Although legal, the Senate's decision to block supply went against a long-standing parliamentary convention, and conservatives claimed to respect such conventions.  Worse, the conservative parties only controlled the Senate because the sudden death of Queensland Labor Senator Bert Milliner had allowed Premier Joh Bjelke-Peterson to appoint a lackey to take his place.  That too was legal, but it was still a sleazy act.

Labor's rage over the dismissal now seems to have petered out amongst all but the most ardent believers.  But for many years Fraser was blithely characterised as a "fascist" by stalwarts on the left, and in graffiti and political posters denouncing him they would usually substitute a swastika for the "s" in his name.  This was particularly contemptible, given that Fraser appeared to be genuinely hostile to racism.

So in 1975 no-one would have predicted that the ultimate denouement of that shocking November day would come with Malcolm Fraser being anointed as a latter day Whitlamite, fondly regarded as a national treasure and man of principle by the very people who formerly despised him as a ruthless and arrogant opportunist.

A bill of rights;  an apology and compensation for the "stolen generations";  deference to partisan United Nations sub-committees that denounce Australia -- Fraser's advocacy of these and many similar positions has allowed him to become a denizen of that exalted place, the progressives' moral high ground.

Only two months ago the great Gough himself told the world that Fraser had become a "vastly improved man".  "I can't think of anything he's said in the last 10 years with which I did not agree", said Whitlam of his former adversary.  And in a recent interview Fraser claimed that Kim Beazley has told him, "Malcolm, I'm finding it very difficult to find an issue on which I'm more to the left than you".

In retrospect however, Fraser's apparent transformation is not so surprising.

Even though the Coalition parties achieved a landslide victory in the Federal election held a few weeks after the dismissal -- and a victory that was only marginally smaller in the 1977 election -- progressive opinion never really accepted that the Fraser government had a rightful claim to govern.  In their eyes Fraser had initially come to power through a "coup", with some of the more unbalanced and conspiratorially minded members of the left even believing that the CIA had played a significant part in his triumph.

Fraser would never have doubted that every aspect of his accession to government was constitutional.  But at some level he was obviously affected by the relentless assault on his authority coming from newly politicised sections of academia, the arts, the media and the churches.  He must have accepted that there were at least some grounds for Labor's anger about the way he came to power, and felt a sense of guilt that had to be assuaged.

Had he really been motivated by a high-minded desire to rescue Australia from the economic and social damage that Whitlam had wrought, Fraser would have sought his redemption by acting in accord with the principles he espoused in the lead up to the dismissal and in the election campaign that followed.

He would have reduced the size and cost of government, as well as restraining the Whitlam inspired enthusiasm for government instigated and taxpayer funded social engineering.  There was little to hinder him -- he had a massive popular mandate for his first two terms, and for much of his rule the Coalition held the majority in both houses of Parliament.

But Fraser tried to gain his moral deliverance through a very different route, by adopting many of the positions of his adversaries.  In doing so, he showed that their initial assessment had been right.  He was not really a man of principle at all, but a vain opportunist interested in power only for its own sake.

As former Labor Finance Minister Peter Walsh has pointed out, at the end of Fraser's seven years in power government outlays were much higher in real terms than they had been under Whitlam.  And the Fraser government adopted a raft of counter-productive Whitlamite follies -- a divisive multiculturalism;  a worthless human rights commission;  Aboriginal policies based on sentimental fantasies about traditional communities rather than recognising Aborigines as responsible individuals who had to come to terms with modern life.

No doubt these would eventually have been introduced anyway, under later Labor administrations -- although at least Hawke and Keating carried out a number of necessary economic reforms that Fraser had shirked.  But the fact that Whitlamite social and cultural policies had been introduced by a conservative government enhanced their legitimacy, and made it more difficult for later conservative politicians to dismantle them or even question their value.  Australia paid a high price for Malcolm Fraser's grab for power twenty-five years ago.

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NGO Way To Go

Backgrounder

The growth of NGOs in the last three decades has been a significant feature of political life.  Few matters of public policy pass without an NGO spokesperson advocating a position.  They have, in some regards, become the official opposition.

Historically, associations of private individuals have gathered for public purposes, usually to provide a service not available from the state, well before the establishment of democratic government.  They have preceded, and now complement, the growth of services available from the welfare state.  Many are church-based and concentrate on the needs of individuals for assistance, typically in welfare, health and education.

In more recent times, a new class of NGOs has arisen which focuses directly on changing public policy.  Though membership-based, they are unlike the representative interest groups of employer and employees, which provide both service to membership and public advocacy on behalf of their members.  The new NGOs consist, typically, of middle-class activists who want government to reallocate resources or change laws according to activists' view of the good society.

In some respects, the phenomenal growth of civil activism as represented by NGOs reflects restlessness with the inadequacies of government to remake the world in a way acceptable to the activists.  In this regard, NGO activism is a challenge to representative democracy;  it regards itself as a new form of democracy.

If NGO activism is to take its place within democratic society, it presumably has to be accountable for its actions.  How this is to be achieved, and the nature of the relationship between government and civil society as represented by NGOs, is the subject of this Backgrounder.

INTRODUCTION

Non-government organisations (NGOs) provide citizens with vehicles for the exercise of "private initiative in pursuit of public purposes".  Their growth in recent times has been such as to constitute a "global associational revolution", reflecting "new enthusiasms on the part of citizens to engage more directly in public problem-solving". ⁽¹⁾  So, are NGOs good for democracy or bad?  This may seem a harsh question, but the prominence of NGOs in public policy suggests that they are a serious challenge to representative democracy.  If they are, what is the proper relationship between NGOs and democratic government?  The answer depends very much on the outcome of two debates.  First, whether a strong civil society -- a measure of which is the number and range of civil associations such as NGOs -- is "necessary for effective democratic government". ⁽²⁾  Second, whether democracy is in need of renewal.  An observation common in most western democracies over the past 25 years is that there has been a decline in public trust in government. ⁽³⁾  In these two debates, the NGO sector asserts, in rather contradictory terms, that it is both a fundamental component of democracy and also its saviour. ⁽⁴⁾

It is possible, however, that a strong civil society is not essential for an effective democracy, indeed that an active citizenry may, in some circumstances, produce a less effective democracy.  It is possible that the strength of liberal democracies lies in institutions and habits formed over a century or more, and which pre-date the associational revolution now in progress.  Whichever view is right, it is probable that if NGOs continue to press their claim to a form of democratic legitimacy, they are more liable to become politically accountable for their actions, and more liable to be subject to some form of regulation by the state.

From the point of view of traditional liberal democratic thinking, the preferred outcome is to have each NGO claim no more than to represent a view and to acknowledge and assist the legitimacy of the formal representative institutions.  The collective of NGOs does not literally represent civil society.  Each time that NGOs or any other interests seek to belittle the authority of representative democracy they invite the question:  Whose authority should be substituted for that of government?  If it is to be the self-appointed representatives of civil society, that is, NGOs, the result will be less democratic.  Far better to maintain the authority of the present representative structures and encourage the free flow of ideas.  In that way, the political accountability of NGOs can remain at the level of the scrutiny of ideas.  Such scrutiny has as its object the open market-place of ideas that is the lifeblood of democracy.  If NGOs seek a more formal and representational legitimacy, then the inevitable consequence is a more formal scrutiny of their organisational form.  Their legitimacy will be seen to be in parallel with the representational form of the parliament and they will come to be scrutinised as other than private associations.  They will come to be scrutinised as public property and will have to abide by public rules.  This is a wholly undesirable path from a liberal perspective.

The surest way to maintain an open contest for influence on collective decision-making is for government never to confer the mantle of public authority on non-government organisations.  Governments are guilty of this when they anoint favoured groups as spokespersons, when they provide ready access to committees, including the Cabinet, when they provide resources and, in extremes, when they anoint them judges of policy outcomes.  This is not to argue that the open government that comes with "community consultation" is bad, but that it can "privilege" some citizens at the expense of others.  The political influence of NGOs and the consequence for their political accountability lies, principally, in the access to authority that they are given by government.  Political parties no longer provide rich and concrete links between the community and government.  This state of affairs makes it more likely that governments will renew those links by furnishing access and resources to NGOs.  In so doing, governments lend NGOs an authority beyond their actual legitimate claim.  Challenging the authority of government is a treasured part of democracy, but when it reaches a point where the authority of the entire mechanism of representative democracy is challenged, it is fair to question the motives, the source, and the consequences of the challenge.

NGOs enhance the tendency to wrest authority from its representative moorings when they make claims to represent civil society -- for example, by establishing parliament-like structures to mimic the formal mechanism.  The challenge which such activity presents to representative democracy is considerable, no more acutely than at the international level.  Within states, governments are clearly in charge of the machinery of government, and the electorate can constrain a government that hands out its favours too readily.  At international forums, however, governments are one step removed.  Discussions take place between representatives of governments (bureaucrats) in the absence of review by electorates.  NGOs in conjunction with international bureaucrats are likely to seek out each other and create a politics that is wholly removed from electors.

WHAT TYPE OF ACCOUNTABILITY FOR
WHAT TYPE OF ORGANISATION?

In some schemas, non-government organisations are part of the "third" sector;  the first is government and the second is business.  The third sector suffers a plethora of definitions.  Each definition, though, provides some clue as to the origins or orientation of the organisation.  For example, "non-profits" tend to be service organisations run along business lines with motives other than profit.  "Non-governments" may be service or advocacy organisations which, from time to time, may see themselves as an opposition to government.  "Civil associations" tend to incorporate the concept of civil society pre-dating the modern state, and "social movement organisations", the most modern incarnation of the species, see themselves as purely advocacy organisations, sometimes without a specific membership but seeking to change some condition in society.  The most commonly used term to describe organisations in the third sector is NGOs, and for the purpose of this discussion that will be the preferred term.

The right of civil association is a fundamental element of a liberal democracy.  It should be cherished and protected.  However, where NGOs of whatever origins, aims, or orientation make claims on public policy, such claims should be the subject of scrutiny.  Their objectives, motives and organisational form are of no concern per se, except where these affect public policy.  At that point, the private association enters the public arena;  at that point, the desire to influence public power for particular ends brings with it the scrutiny that all others who similarly seek to influence public policy would have to bear.  The form of such scrutiny is of great interest and importance.  No useful purpose can be served if the result of the scrutiny of NGOs were a policy of heavy-handed regulation of private associations.

Private associations are regulated in those societies where only the state is assumed to act for the common good.  In such cases, private associations that seek to act in a public capacity have to apply for the right to do so.  This occurs in some democratic states, for example France, where the state is regarded as the highest expression of the "solidarity" of the society and a civil law system presumes against private associations acting in a public capacity. ⁽⁵⁾  In non-democratic countries, private associations may be banned or simply not exist because of the assumption of state munificence.  For example, "civil society" is typically weak in communist regimes.  In democratic countries with common law systems, there is a presumption, regardless of the strength of the state sector, that private organisations can claim the privilege of operating in the public interest as a matter of right. ⁽⁶⁾  This is clearly the case in Australia.

Collectively, NGOs have become prominent in public policy.  Democratic governments in Australia and elsewhere have come to rely on the advice of the sector, at times to collaborate with the sector in finding solutions to a nation's problems.  At times, governments have feared the political strength of the sector, sometimes doing their bidding.  In some non-democratic states, the sector is seen as the embodiment of the democratic opposition;  it has begun to take on the mantle of legitimacy.  This tendency to assume the mantle of representation is also obvious in supra-national forums, such as the United Nations.  Where elements of civil society seek to have their views heard, to voice their concerns and opinions, they, as with any interest group representing any sector of society and seeking to influence public policy, must subject their claims to public scrutiny.

The object of the discussion of the political accountability of NGOs, therefore, is not to disturb the presumption of the privilege of operating in the public interest, but to question the particular claims made from time to time about the public interest.  Indeed, to distinguish particular interests and claims from the public interest is an essential part of the dialogue of democracy.  For example, a very large part of NGO energy has been devoted to social movements on behalf of previously ignored and/or minority interests -- interests built around identity or presence, such as women, indigenes, ethnicities, sexual orientation and so on.  Such claims have been made against democracy on the basis that democracy may be no more than a crude tyranny by the majority.  At times it may well be.  Democracy may also be a crude tyranny by the minorities, where the public interest is reduced to being no more than the sum of the particular interests that have been given voice.  The sum of these interests, however, may be irrational.  What the public chooses may not be in the public interest. ⁽⁷⁾

Not only is the concept of the public interest contested, so is democracy itself.  In some views, ⁽⁸⁾ the essence of democracy is solely the manner in which authority is structured.  The idea of collective judgements about the concept of well-being or justice, much less a democratic way of life, is held to be somewhat fanciful.  In others, the essence of democracy lies in the nature of the participation of the citizens;  that is, that democracy lies in an active citizenry coming together for collective causes and to contest different ideas and interests. ⁽⁹⁾  More recently, the challenge to democracy has come in the form of identifying not only the interests of those who are excluded from participation, but in suggesting their physical presence is as important as the ideas which are contested on their behalf.  Such a phenomenon is labeled the "politics of presence". ⁽¹⁰⁾

These strands suggest that there is a challenge to democracy from the third sector.  The challenge is from NGOs not satisfied that their concept of the common good is dominant or even recognised, or that they are not involved in decisions about either common interests or their own, or that, regardless of interests and ideas, every type of person should have a formal presence in the machinery of democracy.  A simple parliamentary democracy seems ill-equipped to cope with such pressures.  Hence, as a response to the so-called loss of trust in governments, we have seen the call on the part of the proponents of the "Third Way" to "democratise democracy". ⁽¹¹⁾  "Civil society, rather than the state, supplies the grounding of citizenship, and is hence crucial to sustaining an open public sphere". ⁽¹²⁾  This sort of thinking is a major challenge to the concept of representative and responsible government.  It begins to deny legitimacy to the formal elements of democracy, that is, the way in which authority is carefully divided and offset to deny a too great concentration of power.  It begins to claim political legitimacy for the citizen more directly, in an apparently less elite manner.

But who represents civil society?  Is it a government formed in the parliament following a formal, regular and scrutinised election, canvassing the full range of public issues and the credentials of the participants, all in the full scrutiny of the free press?  Alternatively, is it the haphazard accumulation of activists in a myriad of privately-formed groups known as NGOs?  If the claims made on behalf of civil society to a political legitimacy equal to that of the formal democratic process are to be believed, it follows that the representatives of civil society must be as scrutinised as the elected representatives.  This leads to a highly complex and regulatory scrutiny.

A more productive and positive route is for governments, where duly elected, never to cede public authority or policy legitimacy to any group.  NGOs may lobby, comment, criticise, and assist in the formulation of policy.  They may even deliver policy on behalf of government.  But they can never assume, collectively or individually, the mantle of government, even in the policy area that they claim to represent.  The only scrutiny of NGOs that need take place is the ordinary scrutiny of any group or person who seeks to make claims on the public.  While all have the right to a voice, each has to prove their particular standing in order to furnish advice or develop policy for government.  Such standing should be based on the proof of any claims to represent interests, or a particular knowledge or expertise.  In either case a claim must be based on the integrity and truth of the proposal.  The policy objective is an open market in political influence.  By contrast, formalising the status of civil society and its representatives, which is different to accepting a professional approach to public advocacy "in order to be credible members of the policy community, ⁽¹³⁾ comes dangerously close to denying the validity of responsible government.

HOW SERIOUS IS THE CHALLENGE TO DEMOCRACY?

The NGO sector has grown enormously in recent years:  there are over 44,000 international NGOs, ⁽¹⁴⁾ almost double the number just 25 years ago, up from just over 1,000 in 1956.  Such figures, however, may exaggerate the impact of NGOs on public affairs.  For example, the NGO Millennium Forum, a meeting of all major NGOs "representing" international civil society in the lead-up to the United Nations General Assembly Millennium noted that "the United Nations and its Member States had failed to fulfill their primary responsibility of maintaining peace and preserving human life".  The Declaration accordingly urged the "Organisation to undertake a number of measures to reduce the level of armed violence throughout the world, including the establishment of a corps of at least 50 professionally trained mediators for more effective conflict prevention". ⁽¹⁵⁾  This is the major contribution of civil society to the Summit!  Such a statement, made to the governments of all member nations and the enormous power exercised by them, is a reminder not only of the idealistic nature of the NGO community, but of its limitations in actually representing anyone other than its own members.  Free of the responsibility for the care and order of the nations entrusted to the member governments, the NGOs have shown themselves to be dangerously flippant.  In this regard, the most important first lesson to learn in the discussion of the political accountability of NGOs is the modesty of their contribution to the resolution of political issues.

Within nations, matters may be considerably different.  In Australia, non-profit organisations (ABS definition) ⁽¹⁶⁾ provided employment for almost 600,000 people and spent over $26b in 1996.  Interest groups (ABS definition) are the most commonly recognised "advocacy" NGOs in that they mainly serve the interests of their members.  They employed 47,000 people and they spent a little over $3b in 1995-96.  Included are political parties and trade unions;  professional associations, such as medical colleges, bar associations, institutes of architects or chartered accountants;  and business, trade or industry associations.  Many other interest organisations, such as the Combined Pensioners' Association or the Federation of Parents and Citizens Associations, are formed to advance the interests of their members who might be individuals or other non-profit organisations.  Many other non-profit organisations are formed to advance the interests of other people or causes.  These include Amnesty International, the Australian Council of Social Service, the World Wide Fund for Nature and the Australian Conservation Foundation.

Interest groups, however, are not the sole subject of civil society or the sole group with an interest in public advocacy.  Non-profit organisations in the educational field, typically the church-run private schools and research hospitals, and in the community services field, such as the Smith Family, Mission Australia, the St Vincent de Paul Society, World Vision and the Red Cross, are also clearly in the business of public advocacy.

Public-serving non-profits can be contrasted with member-serving organisations, established primarily to serve the interests of their members, commonly social or registered clubs.  They include non-profit organisations such as Returned Services League Sub-branches and sporting clubs such as bowls, golf and football clubs.  In culture and the arts, non-profit organisations are a mixture of member- and public-serving.  The economic impact of non-profit arts organisations comes mainly from the large performing arts companies such as the Australian Ballet or the Sydney Theatre Company.  In addition, there are over 150 small non-profit organisations running community radio and television stations and a few non-profit libraries and museums.  The interest of these latter categories in public advocacy is of a far more limited nature.

The size of this sector, the breadth of its interests and the depth and history of its organisation and its impact on Australian life is considerable.  The question is:  what is the sector's relationship to the broader political structure and does it have a political legitimacy beyond that of interest groups?

A RENEWED INTEREST IN CIVIL SOCIETY

Unless the reasons for the growth of NGOs and the renewed interest in civil society are well understood, a policy of political accountability for NGOs will be misconceived.  There appear to be two main rationales for the "associational revolution" of the last two or three decades.  Each has implications for understanding the relationship between civil society and democracy, the relationship between civil society and government and the question of the political accountability of NGOs.

That civil society is a foundation of democracy:  The collapse of the former Soviet Union and the emergence of democracy in central Europe have highlighted the ways in which civil associations were sources of resistance to oppressive governments.  It also raises the possibility that the weakness of civil associations in the new democracies is an impediment to the growth of democracy.  This observation has intensified the perception of a decline in "social capital" in the western democracies, ⁽¹⁷⁾ and has produced the anxiety that the traditional sources of citizen solidarity, socialisation and activity are becoming dangerously weak.  The issue of the centrality of civil society to the health of democracy thus becomes central to a discussion of the relationship between NGOs and government.

That civil society could save democracy:  It is often suggested that there has been a decline in the last 25 years in the trust shown by the electorate in their democratically elected governments.  This may create a vacuum that private activism can fill or it may reflect the power of private activism to unseat legitimate forms of democracy.  For example, NGOs have emerged to voice concerns at world forums addressing transnational issues such as the environment, population, human rights, the status of women, disarmament and so on.  Civil society provides a basis for criticising the failures of both the state and the market.  Those of the political left turned to civil society as a means of a new legitimacy once they began to observe the limitations of the welfare state, or were disappointed that no government would continue their endless desire for social experiment.  The political right, "troubled by the amorality of the market and by its corrosive effects on social institutions, turned to voluntary associations as a source of stability and virtue". ⁽¹⁸⁾

CIVIL SOCIETY AND DEMOCRACY

At the heart of the debate over the importance of civil society to democracy is the so-called "social capital" thesis of political scientist Robert Putnam. ⁽¹⁹⁾  It is important because of the belief that "the quality of governance [is] determined by longstanding traditions of civic engagement (or its absence)".  It suggests that social capital -- "networks, norms and social trust that facilitate coordination and cooperation for mutual benefit" ⁽²⁰⁾ -- are the product of a healthy civil society and a healthy civil society creates a healthy democracy.  Putnam further suggests that there has been a decline in social capital and civic engagement in the USA.  The link is then made to a loss of civic trust, meaning a loss of faith in government.

How much weight can be placed on the social capital basis to democracy thesis?  It seems very little, and for the following reasons.  First, it assumes a link between social capital and political trust that probably does not exist, and second there is abundant evidence of a decline in trust in government, with no decline in social capital. ⁽²¹⁾  Indeed, there are those who argue that the decline in social capital has not even occurred in the USA.  Rather, some associations "have simply failed to meet the needs of a better-educated, more discriminating public and have paid the price". ⁽²²⁾  Other forms of activity are beginning to take the place of the old.  This appears true when considering the popularity of NGOs over political parties as vehicles for political activity.  Levels of trust in a society may have little to do with civic engagement or the density of the network of civil associations.  Take Martin Krygier's ⁽²³⁾ observation of Poland and the sources of civil society.  He suggested that civility -- civilising conflict and difference -- is a kind of trust among non-intimates.  Rather, the law and institutions safeguard the trust.  "Civil society is buttressed by impersonal institutions of many kinds, particularly impersonal legal institutions". ⁽²⁴⁾  Civil associations like Solidarnosc, the Polish trade union movement, may have won democracy for Poland by defeating the communist state.  The preservation of democracy in Poland will depend, however, not on the skills learned in a partisan association but in the institution of opposition through the parliament and the rule of law.

At the very least, the link between trust between individuals and trust in government seems unclear.  The Putnam thesis, that local association encourages trust in democratic government, seems not sustainable.  Indeed, "both social trust and political trust seem to be only weakly related to membership in social organisations". ⁽²⁵⁾  While there is no doubt that trust of some sort is crucial to many social relations, there is little evidence that greater or lesser proportions of a population expressing themselves as trustful of others has any bearing on the health of democracy.  "Trust is not the universal lubricant that oils the wheels of cooperation wherever it is applied.  Rather, cooperation is achieved through a variety of mechanisms, not the least important of which is effective government regulation". ⁽²⁶⁾  Participation in civil society may be a school for democracy in as much as participants learn how to work together in groups.  Putnam ⁽²⁷⁾ observes how mutual trust and rules are developed in a competitive and even poisonous atmosphere in political parties.  However, many such schools may teach bad habits as well as good.  A favourite story of democracy at work in a civil association was the members of a sporting club scrambling over the body of the club treasurer to get to the books, moments after he took a heart attack! ⁽²⁸⁾  The experience of participation does not "civilise" everyone.

The argument that civil society is the bedrock of democracy is flawed.  The weight and legitimacy that should be accorded the organised parts of civil society -- NGOs -- must therefore be strictly limited.  Civil society is as likely to oppose a democratic government as an authoritarian one.  It is as likely to split "into warring factions ... or degenerat[e] into a congeries of rent-seeking 'special interests' ". ⁽²⁹⁾  Those in the civil society "utopia" camp ⁽³⁰⁾ who see civil society as a counterweight to the state must concede that it can be a counterweight to a good state as well as a bad one.  Civil society and its activists may simply monopolise public resources, they may spend all their time battling one another for control, they may polarise society.  The key missing variable in the civil society argument, and indeed the claim of NGOs to political legitimacy, is politics itself.  Who is to play the important role of political compromise and restraint, accommodation and reconciliation in an orderly and peaceful way?  Ultimately this is the role of the political parties or the parliamentary representatives and, of course, the most powerful of interests who hold sway in the electorate.

Most important are the institutions that govern the means by which settlements are reached, the important and hard-won rules of play, the determination of what are acceptable and what are not acceptable outcomes.  "A democratic civil society seems to require a democratic state, and a strong civil society seems to require a strong and responsive state.  The strength and responsiveness of a democracy may depend upon the character of its civil society ... reinforcing both the democratic functioning and strength of the state.  But such effects depend on the prior achievement of both democracy and a strong state". ⁽³¹⁾  The strength and role of NGOs may give the appearance of an active democracy, indeed, it may be an active democracy, but it is primarily a sign of an active citizenship.  The quality of the democracy will be measured by the ability to incorporate and resolve issues not just voice them.  A parallel argument can be made as to whether the presence of a large NGO (particularly non-profit or charity) sector in a society is a sign of a "caring" tradition in a society.  "There is no obvious relationship between the degree of caring in a society and NGOs". ⁽³²⁾  If the state has the primary role, the absence of NGOs is not a measure of a lack of caring.  It is important to not be too readily recruited to the ranks of those who would concede power to the activists.

DEMOCRATISING DEMOCRACY

If civil society is not foundational to democracy, could it be its saviour?  Bearing this in mind, what is the nature of the loss of confidence in democratic government and what are its sources?  There is evidence of a decline in the public trust and political support of democratic governments in three areas:  "disillusionment with politicians, with political parties, and with political institutions". ⁽³³⁾  However, the apparent erosion in popular confidence in government and the institutions of representative democracy may not be cause for concern.  A more educated and prosperous citizenry is bound to be a more discerning citizenry, and more likely to say so.  It may also reflect the desire for more direct forms of participation in public life.  In other words, NGO participation will make life harder for governments because of the constant articulation of dissatisfaction.  That is a consequence of enhanced participation;  the issue of whether it weakens those elements of democracy that allow for consensus is a different matter.  Indeed in the face of a particularly boisterous and highly organised civil society, can the state possibly resist?  Then the question arises as to whether the accumulation of the interests of NGOs is the same as the interest of civil society or indeed the electorate.  At that point, there is a clash between the associational democracy and the representative democracy.  At that point, those who see the role of government as delivering what people need, rather than what they say they want, comes to pass.  Government is more than a populist instrument;  it requires somewhat more finesse than access and voice, it requires accommodation and common sense.

Nevertheless, if the decline thesis is of concern, what are its causes?  There are two major sets of explanation for the decline-of-confidence thesis.  The first concentrates on information and expectation.  It is clear that voters have, over time, become better informed about their governments' performance, good or bad.  Voters expect more of government and their expectations are more divergent, consequently it becomes more difficult for government to "identify any feasible set of policies that would satisfy its constituents". ⁽³⁴⁾

The second relies on changes in the economy and in social attitudes.  The third industrial revolution -- the information society -- has caused a "creative destruction ... disrupt[ing] existing social patterns.  This in turn creates anxiety and dissatisfaction in large parts of the public".  Changes in social and cultural attitudes have caused a "change in the balance between the individual and the community", which has led to a long-term trend toward the individual, a trend which "undercuts the authority of institutions". ⁽³⁵⁾  At the same time, government is now seen as an arbiter of social relations, gender, race, family, and so on.  Expectations of government, once confined to safety and the administration of justice have risen to include "prosperity and various norms of social stability". ⁽³⁶⁾

The danger in these trends is that it is simply not popular to believe in government.  Certainly, the press covers politics in a highly intrusive and negative way, which reinforces the popular belief.  This is the context in which NGOs, in increasing numbers, and in a more professional and organised manner, approach government.  However, whether they are the solution to the desire for a more participative democracy, or the reflection of the problems which cause governments to fail in the eyes of the public, is highly contested.

At the heart of the desire to democratise democracy as a means of restoring faith in the institutions of government is the desire by citizens to take a greater role in determining their future.  That is an entirely laudable desire.  The question is:  what sort of access and on what basis should some be given access to the public power of the state in order to assist that desire?  If the view prevails that civil society lies at the heart of democracy, and that there is a need to democratise democracy, then the policy implication is to take the high regulation option to the political accountability of NGOs.  If the view prevails that the claims made on behalf of civil society and NGOs are false or at least greatly overstated, and that one of the causes of the loss of confidence in government is because of NGOs, then a route to low regulation is advisable.  What would each option look like?

ACCOUNTABILITY OPTIONS

The high regulation option is set out in great detail for international NGOs by Michael Edwards, ⁽³⁷⁾ Director of the Ford Foundation's Governance and Civil Society Unit, and formerly of the World Bank and The Save The Children Fund.  Edwards proposes a "new deal" between government and non-government organisations in global governance.  The deal is a parallel parliament of "civil society chambers" standing alongside the UN Assembly, the WTO and the boards of the World Bank and the IMF.  He asserts, "while NGOs cannot and should not be expected to take the place of governments, they will have a voice in world affairs". ⁽³⁸⁾  The chambers are to be their voice.

Edwards observes that NGOs are increasingly under attack as being "self-selected, unaccountable and poorly rooted in society". ⁽³⁹⁾  Governments and corporations question their legitimacy in debates on global development.  Within the sector, Third World NGOs are at times highly critical of their Western big brothers.  He notes that the criticism is a considerable challenge to NGOs because, "humility doesn't come easy to organisations that have been used to occupying the moral high ground". ⁽⁴⁰⁾

Further fault lies in their tendency to be ruled by fashion and sensation and, in campaigns, to "trade off rigour for speed and profile". ⁽⁴¹⁾  He is also aware that "although civil society is often seen as the key to future progressive politics, the civic arena contains many different interests and agendas, some of which are decidedly non-progressive". ⁽⁴²⁾  The US National Rifle Association has consultative status with the UN!

These honest admissions are an important start to a new deal.  Edwards argues that the increased prominence of NGOs in world affairs has occurred because the "Washington Consensus" -- the belief that free markets and liberal democracy provide a universal recipe for growth and poverty-reduction -- has declined.  He also notes that governments and international institutions involve NGOs because it is cost-effective public relations and that "few people now trust governments alone to represent the views of every interest in society". ⁽⁴³⁾  While the rise of NGO strength and the decline in public confidence in the democratic process is real, the assumption that trust now resides in NGOs is highly questionable and decidedly self-serving.  It is just as valid to argue that the decline in public trust in democratic and international institutions alike is a result of criticism from NGOs.  Institutions do not open their doors to NGOs, ergo the institutions lack accountability.

Excusing the circuitous rationale for NGO growth, Edwards's new deal is based on two assumptions.  First, the world is not headed for global government, but rather a patchwork of agreements between governments, corporations, and citizens' groups at different levels.  Second, there should be a way to harness the NGO voice in more responsible and constructive ways.  These are an admission that NGOs are suffering a crisis of legitimacy in international governance.  Edwards is aware of the tenuous rationale for the involvement of NGOs in global governance, so he sets out to find something a little stronger.

He suggests three grounds for legitimacy:

• A voice, not a vote.
• Minimum standards for NGO integrity and performance.
• A level playing field for NGO involvement.

Edwards recognises that NGOs cannot claim to represent the whole of civil society, but they can give voice to a wide range of opinion.  He observes that "there is no such thing as a common set of civic interests that cross national borders, still less a global civil society with uniform goals and values".  In the second, he proposes a trade-off:  NGO participation in return for transparency and accountability of NGOs.  In the third, NGOs from developing countries are to be given a helping hand so that their voices may be heard.

The essence of the Edwards' position is for NGOs to gain democratic legitimacy through a "structured voice" and that this requires a set of selection criteria and a mechanism for their enforcement.  The selection criteria inevitably will become a substitute plebiscite;  it will be used to decide who represents a particular view or a particular group.  He insists, for example, that there will have to be a demonstration of internal democracy.  While this is a reasonable idea in any association, in Edwards' schema of a ghost parliament of NGOs to parallel the parliament of nations, internal democracy will not be a stand-alone criterion.  It will ultimately mean to imply that the combination of democratic NGOs will truly represent civil society.  This is a recipe for pitting representative democracy against associational democracy.  Only associational democracy will have no pretence to be other than an accumulation of different interests.  The essence of cross-dealing under the confines of the real responsibilities of office will be absent, as will the actual sanction of direct elections.  The ghost parliament is ultimately either a move to supplant electorates with activists, which is entirely undemocratic or it is a forlorn attempt to breathe legitimacy into a sector that Edwards' admits lacks any.

A recent example of the "structured voice" approach to democracy was the International Youth Parliament 2000 held in October, in Sydney.  The parliament was "an international youth declaration of the need to act together under the banner of equality and democracy". ⁽⁴⁴⁾  The "parliament" was sponsored by Community Aid Abroad, which invited young community activists from 162 countries.  These activists discussed the problems of the world and sought to generate solutions.  Nothing wrong in that, except the pretence that it was any more than a meeting of 300-or-so individuals.  Community Aid Abroad indicated that the delegates "would speak as advocates for significant issues, rather than as ambassadors for their own countries or peoples". ⁽⁴⁵⁾  Nevertheless, the meeting sought to appropriate the mechanisms of representative democracy while heralding a new form of democracy, an associational one.  It was not a parliament in the sense of a representative or responsible mechanism.  It should not have pretended to be one.

NGO STRATEGIES FOR POLITICAL LEGITIMACY

The Edwards' new deal is on safer ground when he refers to the other criteria for NGOs, for example, the degree of expertise that an NGO brings to the table.  This suggestion suits a low regulation route and regards NGOs as interest groups.  It maintains the primacy of that concept of democracy that relies on the proper distribution of authority.  The legitimacy of any lobby or interest group thus depends not on some universal appeal to represent civil society or a superior moral world-view but on particular credentials and characteristics.  These are exhibited in different ways by different NGOs, and expertise is one such basis of legitimacy.

In fact, the one thing that NGOs produce in the advocacy arena is public information.  The only measure of their performance and of their legitimacy is whether the information is true and accurate.  The amount of expertise and/or experience of the matters under debate will be directly related to the truth and accuracy of their information.  In addition to the veracity of their views is the crucial issue of their standing.  The concept of standing means that only those with a direct interest in an action will be heard.  The idea that any NGO should insist on standing, that is, the right to be heard in a government forum, is nonsense.  A vast array of opportunities is available for views to be expressed in the general machinery and committees of parliament.  For example, the open process of enquiry is common and welcome.  The insistence of standing in dealings between governments or between governments and a given constituency is not acceptable.  It is a presumption on a democratic government to do as it judges fair within the constraints of the law and the review at the ballot.

Such a presumption is made by some NGOs in dealings with the private sector as well.  In such cases, the NGO seeks to act as the government.  For example, a memorandum prepared by NGOs for the conduct of company operations within the mineral industries, not only establishes codes of conduct for companies, but makes NGOs the judge of the principles and of compliance.  At numerous points in the exercise, the NGOs assert that they are stakeholders in the mineral industry.  They assert that, as a stakeholder, they should have standing to contest any action of a company.  The stakeholder NGOs will be "local, regional and international not-for-profit, non-governmental organisations working for human rights, education, welfare, economic or cultural development, environmental protection, and various other humane objectives". ⁽⁴⁶⁾  The only standing that NGOs have is that of any other interested bystander.  They may insist on being heard but there is not a right to be heard.  No amount of formality in process or professionalism in lobbying can change that.  They may be of great assistance in the development of policy, but only if they add value, and only governments in our first example, or a company and its shareholders in our second, can be the judges of that.

A more productive strategy for NGOs than the pretence at being an alternative democracy is to continue to serve their members or pursue their interests as they see fit.  It is most important that NGOs base their advocacy on experience in the field.  There is a real potential, especially with advocacy NGOs, for a conflict of interest in their advocacy mission, in upholding a public image and maximising fundraising. ⁽⁴⁷⁾  These conflicts become apparent when, for example, Amnesty International begins to investigate alleged human rights breaches in their own base, especially in democratic countries or, say, where an aid agency begins to service the poor of a wealthy nation as for example when Oxfam began working at home in the UK in the mid 1990s. ⁽⁴⁸⁾  The idea has been taken up in a recent report ⁽⁴⁹⁾ to the Commonwealth government, which suggests that Community Aid Abroad (Oxfam) should assist Aborigines in Australia.  In these cases, the claim for the universality of the appeal to human rights begins to lose its appeal as the blunt instrument is applied to the much more subtle study of poverty in a wealthy society.  It becomes obvious to national backers that the organisation is not the keeper of the ultimate truth at all, but just a collection of people with a particular political bias and a desire to maintain funding for the promotion of their views.

The transformations of NGOs from the early phase of universal appeal and apparent universal truth to self-promoting political outfit has been observed by Patrick Moore, co-founder of Greenpeace.  "It's easy to see that the mainstream of the environmental movement has fallen prey to misguided priorities, misinformation, dogmatism, and self-interest.  Soon after I left Greenpeace in 1986, I found out that they had initiated a pension plan.  I knew I had got out just in time.  In the early days many of us realised that our job was to work ourselves out of the job, not to give ourselves jobs for life". ⁽⁵⁰⁾

One of the most respected NGOs in its field, for example, is the Brotherhood of St. Lawrence.  The Brotherhood has become a virtual social policy think-tank, producing knowledge and expertise.  "Empirical evidence ... has given the Brotherhood ... its special credibility". ⁽⁵¹⁾  That is not to say that the Brotherhood does not seek to keep itself in business by the use of a relative measure of poverty.  Their measure is one that is regularly updated to keep the appearance of ever-present poverty.  At least it adds some value to the debate on equality and maintains its close contact with its constituency.  In other words, it is serious about its integrity, not about winning power.

A more subtle form of maintaining a public profile is for an interest group to market itself as an advocacy NGO.  The Australian Medical Association is a trade union, and yet it seeks to pass itself off as a health advocacy organisation.  The various colleges of the profession, GP's, surgeons and so on are the professional arms of the medical profession.  They deal in the maintenance of professional standards and the dialogue of medical science.  However, because the profession comes under serious public scrutiny due to its receipt of public funds through the Medicare subsidy to medical services, it seeks to reposition itself as public friend through its various statements about its political solutions to the nation's health problems.  It is a prominent advocate for the taxation regime on low-alcohol beer and tobacco and so on, and for further spending on indigenous health.  It is arguable that, although there are health outcomes of lifestyle choices that many Australians make, it is not at all obvious that the medical profession has any role other than as professionals dealing with their patients.  Their penchant for, indeed promotion of, the whole concept of "public health" issues takes them well beyond their professional brief and into the area of public actor.  At that point, it is difficult to separate the professional from the self-interested.

The same is beginning to be true of the legal profession.  No longer content to administer the law, they seek to become a public profession trying to save the world in their own special way.  Their own special way, of course, is to turn many issues into ones where the measure of right and wrong is that which would apply in a court of law.  The entire "rights" revolution ensures that the profession becomes ever more in demand.  The rights revolution means that everyone has a right to be heard on every matter, and that every claim is, if not valid, at least to be heard and tested in a legal forum.  Further, the claim is to be tested under an ever-broadening concept of the liability of any organisation for the life of any other person, however remotely connected. ⁽⁵²⁾  Again, the claim for public advocacy is difficult to separate from self-interest.

NGOs' credibility rests in the value they add to public debate.  Where they use misleading statistics, which have become their stock in trade -- "1 in 4 Australians will at some stage in their lifetime ..." -- they damage their claim to contribute to debate.  To promote World Mental Health Day, the Mental Health Foundation of Australia ⁽⁵³⁾ used a tried and untrue formula, to promote their cause.  "One in four women and one in six men will experience depression at some time in their life".  In this instance, a relatively common problem, "a mild depressive episode" ⁽⁵⁴⁾ is lumped in with depressive and other disorders of a far more serious nature, some of which are deadly, but very rare.  To boost the numbers, the real problems are combined with the everyday and relabelled mental health.  Experiencing a mild depressive episode at some point in a person's life does not seem at all unlikely, but to lump this benign condition with the serious is a deliberate exaggeration.  In the feminist advocacy area, the equivalent is rape and murder being lumped in with bad language in front of women.  All are labelled sexual harassment!  The NGO desire to be heard in an otherwise crowded market-place by the use of exaggeration and sensation will in the end bring them into disrepute.  It has done so with the apocalyptic scenarios of the environment movement, the protectionist claims of the manufacturing employers and employees, the gross claims of the stolen generations to the status of victims of genocide and on and on.

The "Best Companies Guide" ⁽⁵⁵⁾ published by the Sydney Morning Herald and The Age newspapers was promoted as the first comprehensive study of corporate reputation in Australia.  The reputation of Australian companies was measured by the "informed views" of a range of NGOs.  On the environmental performance section of the index, Australia's top 100 companies were judged by Greenpeace, the Australian Conservation Foundation and The Wilderness Society.  The three ranked Visy industries number one.  Why?  Because it is a recycler.  They ranked IBM Australia number two.  Why?  Because they only produce (non-polluting) computers.  They ranked Queensland Rail three.  Why?  Because it is a public transport company.  By and large, companies -- Wesfarmers, BHP, North -- that actually made things, including the hardware that Visy, IBM and QR use, were marked down.  Producers of resources are bad, consumers are good.  The Reputation Guide had more to do with setting up the NGOs as opinion-makers on the basis of their reputation as environmental activists.  It had precious little to do with actual performance of tasks that the companies need to undertake in order to fulfil their obligations to their customers, shareholders, their workforce and to society through their legal obligations, imposed by the representative of the people, the parliament.  The business of placing reputations of companies or governments in the hands of opinion-makers who are not representative, nor expert, nor indeed have any standing as a stakeholder -- consumer, regulator, shareholder, employee -- is a recipe for destroying valuable systems of formal scrutiny and ignoring the credibility that comes from verifiable facts.  The post-modern penchant to regard stories in the hands of the less privileged as facts and facts in the hands of the most privileged as stories, is a recipe for a less democratic society, not a liberated one.

CONCLUSION

The associational revolution of the past several decades may reflect a desire on the part of a class of people who, freed from the constraints of having to struggle for an existence, have set out to make a better world.  The real danger of such enthusiasm is that if it becomes unconstrained by those who do not share such enthusiasms, or indeed whose own enthusiasms are for solutions that are diametrically opposed, a surfeit of political activism will arise.  Such a surfeit places a considerable strain on those institutions that are meant to resolve the claims on society, not promote them.  The NGO movement may think that it is the greatest expression of democracy.  It is not.  The greatest expression of democracy lies in those institutions which give expression and due weight to the opinion of all the people, organised, and unorganised.  The central institution is the parliament, itself constrained by the electorate, by the constitution and the courts.

The challenge for governments is not to allow the mantle of political legitimacy to slip from the premier democratic institutions into the more apparently popular one of civil society.  That way lies a less accountable democracy.

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ENDNOTES

1.  Salamon, L. and H. Anheier, 1996, The Non-Profit Sector:  A New Global Force, Working Paper 21, Baltimore:  Johns Hopkins University Institute for Policy Studies.

2.  Giddens, A., 2000, The Third Way and its Critics, Oxford:  Polity Press, page 29.

3.  Pharr, S., R. Putnam and R. Dalton, 2000, "A Quarter Century of Declining Confidence", Journal of Democracy, 11(2):  pages 5-25.

4.  "While NGOs cannot and should not take the place of governments, they will have a voice," Edwards, M., 2000, NGO Rights and Responsibilities:  A New Deal for Global Governance, London:  The Foreign Policy Centre, page 4.

5.  Salamon, L. and H. Anheier, 1994, Caring Sector or Caring Society?  Discovering the Non-Profit Sector Cross-Nationally, Working Paper 17, Baltimore:  Johns Hopkins University Institute for Policy Studies.

6.  Ibid., page 11.

7.  Olson, M., 1971, The Logic of Collective Action, Massachusetts:  Harvard University Press.

8.  Parekh, B., 1995, "Oakeshott's Theory of Association", Ethics, 106:  page 180.

9.  Pateman, C., 1970, Participation and Democratic Theory, Cambridge:  Cambridge University Press.

10.  Phillips, A., 1995, The Politics of Presence, Oxford:  Clarendon Press.

11.  Giddens, A. 2000, The Third Way and its Critics, Oxford:  Polity Press, page 61.

12.  Ibid., page 65.

13.  Sawer, M. and J. Jupp, 1996, "The Two-Way Street:  Government Shaping of Community-Based Advocacy", Australian Journal of Public Administration, 55(4):  page 85.

14.  Union of International Associations, 1996/97, Yearbook of International Associations, Table 2 International Organisations by Year and by Type 1909-96, http://www.uia.org/uiastats/stybv296.htm

15.  NGO Millennium Forum -- 2 -- Press Release GA/9712 PM Meeting, 26 May 2000.

16.  Lyons, M., 1999, "Australia's nonprofit sector", Year Book Australia, (Australian Bureau of Statistics Catalogue No. 1301.01)

17.  Putnam, R., 1995, "Bowling Alone:  America's Declining Social Capital", Journal of Democracy, 6(1):  page 67.

18.  Galston, W., 2000, "Civil Society and the 'Art of Association' ", Journal of Democracy, 11(1):  page 64.

19.  Putnam, R., op.cit., 6(1):  pages 65-78.

20.  Ibid., pages 66, 67.

21.  Hall, P., 1999, "Social Capital in Britain", British Journal of Political Science, 29:  pages 417-61.

22.  Rich, P., 1999, "American Voluntarism, Social Capitalism, and Political Culture", The Annals of the American Academy of Political and Social Science, 565:  page15.

23.  Krygier, M., 1996, "The Sources of Civil Society", Quadrant, October and November:  pages 12-22 and 26-33.

24.  Ibid., page 29.

25.  Foley, M. and B. Edwards, 1999, "Is it Time to Disinvest in Social Capital?"  Journal of Public Policy, 19(2):  page150.

26.  Ibid., page162.

27.  Putnam R, 1993, Making Democracy Work:  Civic Traditions in Modern Italy, Princeton:  Princeton University Press, pages 166ff.

28.  As told to the author in 1998 by Associate Professor Myles McGregor-Lowndes of the Queensland University of Technology.

29.  Foley, M. and B. Edwards, 1996, "The Paradox of Civil Society", The Journal of Democracy, 7(3):  page 39.

30.  Examples are Cox, E., 1995, A Truly Civil Society, Boyer Lectures, ABC Books;  Saul, J., 1997, The Unconscious Civilisation, Melbourne:  Penguin.  Saul, who has a particularly bizarre view, was accorded hero status by the ABC, which publicly televised his lectures.  His critique is that groups to the exclusion of the individual have claimed political legitimacy, and that the primary loyalty of the individual is to groups, not to society.  "We live in a corporatist society with soft pretensions to democracy", page 34..

31.  Foley and Edwards, 1996, "The Paradox of Civil Society", page 48.

32.  Salamon, L. and H. Anheier, 1994, Caring Sector or Caring Society?, page 12.

33.  Pharr, S., Putnam, R. and R. Dalton, 2000, "A Quarter Century of Declining Confidence", Journal of Democracy, 11(2):  page 13.

34.  Ibid., page 20.

35.  Nye, J. and P. Zelikow, 1997, "Reflections, Conjectures and Puzzles", in Nye, J., P. Zelikow and D. King, (eds), Why People Don't Trust Government, Mass.:  Harvard University Press, page 271.

36.  Ibid., page 272.

37.  Edwards, M. 2000.  NGO Rights and Responsibilities:  A New Deal for Global Governance, The Foreign Policy Centre, in association with The National Council for Voluntary Organisations, UK.

38.  Ibid., page 4.

39.  Ibid., page 2.

40.  Ibid., page 26.

41.  Ibid., page 20.

42.  Ibid., page 8.

43.  Ibid., page 11.

44.  http://www.caa.org.au/parliament/what_is_it.html, 22 October 2000.

45.  Ibid.

46.  Australian Asia-Pacific Mining Network, 1998, Principles for the Conduct of Company Operations Within the Mineral Industry, Sydney:  Mineral Policy Institute.  (Mimeo), page 6.

47.  Norrell, A., 1999, "Bridging Gaps or 'A Bridge Too Far?' ", Centre for Volunteer Organisation:  London School of Economics.

48.  Lewis, D., 1998, "Bridging the Gap:  The Parallel Universe of the Non-Profit and Non-Governmental Organisation Research Traditions ...", Centre For Voluntary Organisation:  London School of Economics.

49.  Report by Col. Dillon, former ATSIC Commissioner to the Minister for Aboriginal Affairs, November 2000.

50.  Moore, P., 2000, "Environmentalism for the 21st Century", Reprinted in Review, 52(3):  page 8.

51.  Keen, S., 1996, "Nonprofit Organisations and Public Policy:  Exploring the Research Role of the Brotherhood of St. Lawrence", Program for Nonprofit Corporations:  Queensland University of Technology, Working Paper 67, page 4.

52.  Gleeson, A.M., 1995 "Individualised Justice:  the Holy Grail", The Australian Law Journal, 69:  pages 421–33.

53.  A combination of NGO and government health advocates.  Fact Sheet, Mental Health Foundation Australia (Victoria), mentalh@mira.net

54.  A mild depressive episode is diagnosed, "if the person reported two weeks of abnormally depressed mood, with loss of interest and decreased energy, and one of the following list of symptoms:  Loss of confidence, excessive guilt, recurrent thoughts of death, poor concentration, agitation or retardation, sleep disturbance, change in appetite".

55.  Sydney Morning Herald, "Best Companies:  The Good Reputation Index", 30 October 2000.