The New Protectionism

One of the largest threats confronting the world today is the rise of protectionism.

Trade liberation has been the single most important factor in the unprecedented rate of economic growth experienced over much of the world over the last sixty years.

Australia is no exception.  While we pursued protectionist policies for much of our history, we began reducing trader barriers in the 1980s.  This change in policy has contributed greatly to our recent "miracle economy".

Nonetheless, protectionist tendencies run deep;  deeper than logic and the national interest.  This was illustrated last week by the reaction to a report that Telstra IT jobs were going to India.

IBM Australia has for six years had a contract with Telstra to provide a range of IT services.  It recently informed Telstra of a plan to contract-out about 500 software development jobs to India -- where its parent company has close ties and major investments.  Telstra readily agreed as it was a win--win arrangement.

IBM Australia benefits from the decision by the renewal of its contract.  Telstra shareholders, including taxpayers, benefit from lower costs and better services.  Likewise, telecommunication consumers benefit from lower costs and higher quality services.  Even Australian IT contractors at least do not lose, as the savings are such that IBM Australia plans use a portion to redeploy all 500 contractors to other tasks.

Telstra also faced a competitive imperative.  Its main competitor, Optus, contracted-out similar IT services years ago (in its case to China) and is reaping the benefits.

One would have expected a positive response from politicians.  After all, Australia is a large net beneficiary of offshore contracting of services.  McKinsey & Co estimates these gains at around US$400 million per year.  Offshore contracts play a critical role not only to the local IT industry but the pharmaceutical, education, engineering, hospitality, accounting and legal industries.  Our comparative advantage in trade in services has long been recognised by successive Australian governments and this has led them to push for further liberalisation.  More perversely, successive Australian Governments have identified India -- the country to which the jobs in question are going -- as a key potential market for Australian service exports.

There are other less tangible benefits flowing from the decision.  It will generate wealth and jobs for Indians in a far more effective manner than the $20 million in foreign aid Australia provides per year.  It will help develop a powerful constituency within India to free up its markets for services as well agricultural products.  It will also help develop links between Australian and Indian firms.  And one thing is clear:  the Indian IT industry will become a world force with or without Australian involvement.

Instead of support and leadership, our politicians criticised the decisions.  The Treasurer, Mr Costello, warned Telstra to ensure that jobs went to Australian first;  the Opposition Leader condemned the decision and blamed it on the lack of training and the Democrats demanded that government use their purchasing power to punish companies which out source jobs off-shore.

The fact is that trade in service will increase as a share of world trade and will become increasingly important to the success of Australian firms and the economy.

As such, it is the new frontier of trade debate and needs to be better addressed.

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Casual alternative wrongly demonised

The proposal by the federal ALP to give casuals access to full time holiday and other entitlements reflects a long held view that any work that is not full time and not permanent is somehow illegitimate.

This is a view that ignores simple mathematics, appears out of step with community expectations and seeks to impose one model of business operations onto business.

Workers are attracted to casual jobs.  They normally receive 6 to 11 percent higher pay than full timers and are paid on the spot.  Under most awards, full time entitlements equate to about 19 percent of workers' weekly pay.  Award casual loading is mostly between 25 and 30 percent putting, casuals' income way in front of full timers.  Casuals are paid their entitlements in cash each week.

If the ALP proposal were to add additional holiday and other leave to casuals -- when they already have their leave paid out -- it would on the surface seem to enable casuals to double dip.

This could initially excite casuals giving them up to 30 percent higher pay than full timers.  But business wouldn't carry the additional cost and would have to make casuals permanent, saving business up to 11 percent on weekly wages which will come from the pockets of casual employees.

Being paid leave entitlements in cash each week saves casuals from the risk of company collapse.  Full-timer "entitlements" are in effect loans made to companies.  When companies collapse, full timers become creditors whereas casuals credit risk is limited to one week.  The ALP proposal potentially limits casualisation and exposes more workers to financial loss in company collapses.

Why then the ALP proposal?  There is a strong view amongst industrial relations and human resource academics, some managers, unions and some industry associations that the only socially legitimate form of work is full time, permanent employment.

These groups argue that national skills development is reduced by the use of casuals, that loyalty to the firm is not possible, that work safety is reduced and that employers avoid their responsibilities when employees are casuals.

The public relations "war" against casualisation has been occurring for about five years in Australia and perhaps peaked as a force at a packed Australian Industrial Relations Society conference in Adelaide early last year.

The three day talkfest featured all the key anti-casualisation campaigners, but what was surprising was the confusion that prevailed in the conference summations.  Whereas the underlying theme was that casualisation was an employer plot, several key case studies painted a starkly different picture.

For example a South Australian hospitals case study showed how the hospitals had to offer a wide variety of engagement types to attract and retain staff.  Their "standard" forms of employment included full time, part time, casual, contractor, agency and many more.

The diversity of engagement types was driven by hospital workers demanding alternate mixes of work -- or they weren't interested in working.  The message of worker demand was repeated at the conference in other case studies.

However the anti-casualisation campaigners brush with worker reality did not diminish the demonisation campaigns.

The ALP policy seems to be responding to the campaigns but it has potential political risk.

If the "employer plot" view is accurate, the ALP anti-casualisation proposal may be seen by employees as saving them from exploitation.  But if the South Australian case studies of worker demand is closer to the truth, the ALP risks angering large numbers of people.

This includes students who need casual work, older people who want to stay in the work force but on a highly casual basis, many working parents and people scared of business collapse.

These people have done their mathematics and know the dollar value of casualisation.

The Howard government quietly embarked late last year on a policy of neutralising industrial relations as a political issue in the next election.

If the ALP proposal is counter to community aspirations, an anti-casualsation stance -- even if masked by "worker rights" language -- risks backfiring on the ALP among many people who want casual work.

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The New Protectionism

One of the largest threats confronting the world today is the rise of protectionism.

This threat is real and its new face highlighted last week by reaction to Telstra's (or rather its contractor, IBM Australia), decisions to contract-out IT jobs to India.

While reports of rising protectionism in Australia have focused on such things as steel import quotas and agricultural subsidies, the focus in the US has actually been more on the loss of IT and other service jobs to off-shore operations -- known as "offshoring".

Indeed fear of off-shoring has led to five US states proposing legislation to prohibit or severely restrict the state governments from contracting with firms that contract-out services to low-wage developing countries.  The US union movement has also been actively lobbying Congress against off-shoring.

There is no doubt that off-shoring is a significant and growing phenomenon in the US.  Forrester, a leading IT consultancy firm, predicts that nearly 500,000 IT jobs will be moved offshore from the US over the next twelve years.  While this represents a small number of total US jobs, it represents 8 per cent of current IT jobs.

That similar concerns exist in Australia is much harder to understand.  While the US is a net exporter of off-shoring jobs, Australia is a large net beneficiary of off-shoring.  McKinsey & Co estimates that Australia benefits from off-shoring to the tune of US$400 million per year.  Moreover, our comparative advantage in trade in services has long been recognised by successive Australian Governments and this has led them to push for the liberation to trade in services.  More perversely, successive Australian Governments have identified India -- the country to which the Telstra IT jobs are going -- as a prime potential market for Australian service exports.

While the debate about trade in services is in many ways identical to that of trade in goods, it has some different aspects which make it both more difficult and important to advance.

Protectionism is based fundamentally on the notion that trade is a zero-sum game.  Of course, in reality, trade is win--win, at least when viewed from an economy-wide perspective.  This is illustrated nicely by Telstra's off-shoring decisions.  The facts are that Telstra's contractor of many years, IBM Australia, has decided to shift 500 software development jobs to India.  It did so to save costs, to access higher skills and to provide a greater range of services to it client.  IBM Australia benefits from the transaction by the renewal of its contract.  Telstra shareholders, including taxpayers, benefit from the ability of the Telstra to match it major competitor, Optus, which has off-shored similar services, and to generate profit.  Telecommunication consumers benefit from lower costs and higher quality services.  Australian IT contractors benefit from use of some of the saving to create new domestic jobs.

There are benefits from this decision.  First, it generates wealth and jobs for Indians, in a far more effective manner than the $20 million in foreign aid that Australia provides to that country annually.  Second it will help develop a powerful constituency within India to free up its markets for services as wells as goods.  Finally, it helps develop links between Australian firms and Indian firms.  And one thing is clear:  the Indian IT industry will become a world force, with or without Australian involvement.

Trade in services, however, has characteristics which make trade liberation more difficult (though there are major exceptions).  First, many service sectors have until now not been subject to foreign competition -- at least not directly.  Thus the idea is new and the new is often threatening.  Second, the service sector accounts for most existing and virtually all new jobs in Australian.  Thus the number of people affected by trade in services will potentially be much larger than for trade in goods.  Third, service providers are generally more affluent and articulate than farmers and manufacturers.  Fourth, the union movement has identified trade in services, particularly IT services, as fertile ground for its own renewal.  Little wonder that the union movement was the chief propagator of the recent Telstra off-shoring scare.

Finally, politicians are, with few exceptions, latently protectionist, seeking to use the power of the state to provide special favours and protection from the "outside".  This is particularly the case when it affects them and their own constituency, which in turn largely comprises service providers.  Hence we were subject to the absurd spectacle of all major parties chastising Telstra for doing what all governments have long advocated -- competing on a world stage and creating value for shareholders and the economy.

All is not gloomy, many parts of the service sector, most importantly the IT industry, have a global, competitive culture.  More importantly still, technology is likely to thwart any efforts to stop trade in IT services.  The culture of the contractor in the service sector will also limit the influence of unions.

Nonetheless, services are likely to be the next battle ground for free trade.

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The New Missionaries: NGOs in Third World Development

NGOs are the new missionaries to the Third World.  The original missionaries carried messages of Christianity and capitalism.  Many of the new missionaries whether Christian or not, are decidedly anti-capitalist.  Many are given unwarranted legitimacy in international forums.

Oxfam/ Community Aid Abroad has been active for many years, seeking a reduction in the debt owed by the most heavily indebted poor countries to multilateral institutions such as the World Bank and IMF.  A nice thought, except that the successive forgiveness of debt provides an incentive to continue Third World practices that created the debt in the first place.

Guilt, wrongly attributed, and altruism, can raise money for transfers of wealth between the First World and the Third, it has succeeded in capturing the minds of international bureaucrats in the UN, and at times unfortunately in the World Bank, though less so at the IMF.  Guilt, however, is no substitute for the message of economic development based on sound political and economic institutions.

Take one very prominent example, the Jubilee 2000 campaign to forgive the debt of poor countries.  Oxfam and the churches, with the Pope and the Dalai Lama and stars like Bono of rock group U2 pressed Western governments to forgive the debt of the poorest countries.  The argument was to let them start afresh without the burden placed on them by the West.

A former World Bank economist, William Easterly, has tested the incentives in debt forgiveness.  He found that the big problem is that debt forgiveness is not new.  The World Bank/ IMF Highly Indebted Poor Countries Initiative, now running at $27 billion, stands on the shoulders of decades of previous rounds of debt forgiveness.

The promise of Jubilee 2000 was no different to all of those that have gone before.  "The debt campaigners treated debt as a natural disaster that just happened to strike poor countries".  The truth is not so charitable.  Countries that borrowed heavily did so because they were willing to mortgage their future.  They were irresponsible, they sold productive assets into unproductive hands, they built unproductive infrastructure, they favoured one ethnic group above another, or one region above another, they ran inflated economies, they were corrupt, they waged war, they allowed black markets to develop because they controlled exchange rates and interest rates.

How many "progressive" NGOs would sign up for Easterly's remedies?  "Does the government of each nation face incentives to create private sector growth, or does it face incentives to steal from private business?  In a polarised and undemocratic society, where class-based or ethnically based interest groups are in a vicious competition for loot, the answer is probably the latter ... In a democratic society with institutions that protect the right of minority interest groups, institutions that protect the right of private property and individual economic freedoms, governments face the right incentives to create private sector growth".

Environmental NGOs have bought into the trade, aid and development game as well.  The Australian Conservation Foundation is active in Papua New Guinea, supporting local NGOs pressing its line on "ecologically sustainable development" and "management of natural resources".  Green NGOs will cite the Ok Tedi mine as an example of poor exploitation practices.  Ok Tedi experienced wash from a tailings dam escaping into the local river and affecting the amenity of the residents downstream on the Fly river.  The action brought by Slater & Gordon in Australia was the straw that broke the camel's back in terms of BHP's involvement with OTML in the mine.  They walked away from the mine, agreeing to pay compensation to certain groups.  They were already paying compensation to others, already paying for infrastructure and development costs in the immediate region, they were already subject to an Act of the PNG legislature requiring specific performance in all matters associated with the mine, including environmental management.

The mine continues, in the hands of the PNG government, but with a significant and skilled partner, BHP absent.  The chance for PNG citizens to break out of the primitive existence is diminished.  The Greens wants to keep the PNG villagers in the Stone Age.

A contrast in the Pacific, where the progressive NGOs are conspicuously absent, or at least ineffectual, is New Caledonia.  Rather than opt for the liberation path of the post-colonial so disastrous for their neighbours, such as the Solomons, New Caledonia is "still lucky to have France".  New Caledonia has a First World standard of living, high literacy rates and long life expectancy.  The careful and long-term devolution of power from the colonial power to the locals, contrasts with the Anglo experience in the Pacific, where the liberationists have reaped the dividend of poverty and mayhem.

Latham's Choice: Put the Child or School First?

Labor now has a communicator;  the next trick is to work out what he needs to communicate.  The new leader of the Opposition, Mark Latham, will have to wear statements made as Treasury spokesman, but to some extent, a line can be ruled under nearly all previous statements.  The electorate are for the first time listening to him as Opposition leader, so he has an opportunity to make, not remake himself.

In the next nine months, Latham has to negotiate National Conference, sell the policies developed by his team, and begin to think in terms of specific seats.  He has to do this with one very important worry in the back of his mind.  Labor may never again win a parliamentary majority.  It is the same problem the Liberals face, as the Nationals begin to fade from the scene.  The vote share by the three major parties averaged 97 per cent for the 1949 and 1951 elections, 80 per cent for the 1998 and 2001 elections, and 77 per cent for 2001.  Labor's share of that diminishing vote was only 37.8 percent -- lower than in any of the big defeats of 1975, 1977, and 1996 and the lowest primary vote for the party since 1906.  No matter what the polls say, it is a long way back.

The stability of the party system may well unwind as the majors find it just too much to spread their tiny membership, and their policies across a very broad spectrum of policy demands.  Simple electoral arithmetic may soon be outdated.  Minority government has been the experience of nearly every state government in the last decade, and there are more Independents in the House of Representatives than has ever been the case.  There have only been nine Independents out 727 members elected to the House of Representatives since 1941, most of those successes occurred since 1990.

That is the future, but back to the present.  The easy part is the faces.  Latham starts with a minor reshuffle.  The main winners are Simon Crean as Shadow Treasurer, Julia Gillard's additional duties as Manager of Opposition Business in the House of Representatives, Nicola Roxon as Shadow Attorney-General, Robert McClelland in Home Security, Daryl Melham as Shadow Minister for Housing, and Stephen Smith as shadow Immigration spokesman.  The rest remain in place, including the "silly" ministries, "Sustainability", "Population", and "Reconciliation".

The hard part is policy.  In his first speech to Parliament as leader, Latham mentioned early childhood development.  He implored parents to read books to their children.  "It is the foundation stone of lifelong learning because the truth is that learning does not start the first day school;  it starts the first day of life".  Now here is a policy area to watch.  Like school funding and child-care before it, Labor will open up a new front for Commonwealth spending.  They will seek to develop "quality" early childhood development, meaning professionalising those who care for very young children.

Nearly forty years ago, Bridget Plowden reported to Tony Crosland, Harold Wilson's Secretary of State for Education, on the future of English children and their primary schools.  Plowden attributed most importance in accounting for variations in children's achievement to the home, then the neighbourhood, and least of all to school.  That never stopped a labor government in Britain or Australia spending a lot more on public education.  Public expenditure is supposed to substitute for what some parents lack:  the desire to achieve.  The issue for Labor is what stimulates that desire.  Ask most immigrant families, it is almost certainly not public resources.  Plowden's insight into the factors that lead to children succeeding was simple.  The mother's aspirations for the child, and the number of books in the home.  Has anything changed?

Mark Latham's story of the importance of reading to children is sobering.  But what does a government do about it?  Does a government follow the advice of the early childhood development specialist, and Australian of the Year Fiona Stanley, and pour resources into children at the youngest age, or does it implore the parents to take an interest in the child?  Does it fund the parents?

This same question is being played out in school funding, university funding, even medical insurance, with obvious implications for income tax cuts.  Does a government substitute for personal exertion, or does a government reward personal exertion?  Labor was always in the first camp.  In Whitlam's time, Labor wanted the state to massively substitute for individual effort.  But in the last three decades, there has been a remarkable change of heart on the part of the electorate.  Many parents make a considerable financial sacrifice in order to fund their children, and their health.  Labor appeared to step into this camp when it introduced HECS for university students.

Until last week, my reading of Mark Latham was that he was in the Plowden camp.  My bet is that by the time he comes out of the other end of the National Conference he will be in the Stanley camp.  The more interesting thing is how the government will react.  In its heart, it must be in the Plowden camp, but it too will have to lay off bets with the easy solution of paying professionals to do what only a parent can.

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Local coastline well and truly in tidal wave sights

As I write this column the number of people estimated to have died from the Boxing Day Tsunami that devastated Indian Ocean communities is 150,000.

The earth quake that generated the tsunami occurred on the anniversary of that which killed approximately 41,000 Iranians when the city of Bam was flattened in 2003.

Earthquakes have the potential to cause great destruction.

When the island volcano of Krakatoa erupted in August, 1883, giant waves hurled ashore coral blocks weighing as much as 600 tonnes.

A year ago nobody was discussing the possibility of another Krakatoa.

During 2004 the world's media were preoccupied with "human-induced climate change" the "war on terror" and "the war on Iraq" as potential sources of devastation.

The Global Coral Reef Monitoring Network identified the 1997-98 coral bleaching event as severely impacting on reefs in South Asia including Sri Lanka and the Maldives with concern that climate change and/ or another El Nino event could slow recovery.

The human death toll from the Boxing Day tsunami tragedy would have been much greater had the giant waves not first struck the coral reefs that protect beaches on these Indian Ocean Island, in this way dissipating a lot of energy.

Yet earthquakes and tsunamis are not listed by the large global environmental organisations as environmental threats.

These organisations focus exclusively on human impacts on the environment.

There are four potential sources of tsunami:  earthquakes, undersea volcanoes, submarine landslides and asteroids.

NASA estimates that asteroids with a diameter of 90 metres or more can be expected to hit one of Earth's oceans once every 2,000 years.

Eastern Australia is more likely to be hit from a tsunami resulting from an earthquake along the Alpine fault which runs through New Zealand.  There would be a maximum of three hours before such a tsunami hit Australia's east coast.

Unlike coral reefs that have the effect of reducing the land impact of tsunamis, bays and inlets -- for example, Sydney Harbour -- create opportunity for wave reflection and refraction potentially magnifying and focusing impacts.

Professor Ted Bryant, of the University of Wollongong and author or Tsunami:  The Underrated Hazard, suggests the Australian Government should plan for tsunamis including through a public awareness campaign.

In contrast, Dr Anne Felton, an Australian and a tsunami expert based at the University of Hawaii, suggests that because of the difficulty of calculating the likelihood of a tsunami hitting the east coast of Australia it is not worth establishing an early warning system.

While the experts don't agree on whether we should plan for a tsunami, they do agree that the Australian coastline is always at risk.

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From Bureaucracy to Business Enterprise

Agenda

Publishers will tell you that a book of conference papers is hard to sell, and editors will tell you that a book of conference papers is hard to review.  The latter, even more so when three of the papers are comments on other papers.  Publishers and editors are generally right, they have to be because they are paid to know their market.  This is a useful starter for the review of an edited book about the regulation of Government Business Enterprises and Government Operated Corporations.  The contributors jump between the two terms, so for the purposes of the review the generic GOC will suffice.  The issue for all of the contributors is to decide how public or private are GOCs, and having decided, to be satisfied that each is sufficiently accountable to the appropriate power, the government and/ or the market.

The contributors appreciate the dangers of bureaucratic inefficiency and party-political manipulation in the governance of GOCs on the one hand, and the emulation of private sector management on the other.  It is not difficult to be left with the impression however, that the complexities of designing accountability systems for GOC performance are such that, in the absence of overwhelming economic argument, like the presence of a natural monopoly, it is better to privatise than to corporatise.  If a GOC cannot serve two masters, the private interest and the public interest, then best to sell and let government concentrate on regulating the market, not the GOC.  I suspect that most of the authors in the volume would not be in the privatisation camp.  In fact, at the outset while the editor claims to have no preference for state control over government control of economic enterprises, those in favour of market processes are described as "ideologues of the Right" whereas the statists are assumed to be normal.

There are three classes of contribution;  we will name them, reactionary, sceptical, and accepting.  Only the latter seem to be aware that Australian GOCs have turned from being a net drain on government budgets to a net contributor in the space of two decades, that many of those privatised are making a significant contribution to the economy, and subsidies for public purposes once associated with GOC pricing are more explicit.  The reactionary contributions begin with the presumption for continued public ownership and argue that privatisation is not a continuous evolution of economic policy, but that in the economies surveyed -- Australia, UK, US -- despite the fact that there have been "slash and burn turn(s) of the cycle" of ownership, there should be no presumption that government will vacate the field.  The governments in the countries surveyed may have vacated the field of economic ownership, but there is no suggestion that they have vacated the regulation of the marketplace, nor (often at the behest of the electorate) most other aspects of life.  A second contributor wants to start a "counter reformation" and have the market well and truly subsumed by politics.  He confuses the ability to charge a commercial price with a lack of public accountability.  "Increases in profitability arise precisely because managers are not subject to constraints imposed through public accountability, and are therefore free to manage enterprises so as increase revenue and reduce costs".  It could be argued that price is a form of public accountability, and that to this author accountability really means hidden subsidy.

The sceptics have a problem specifying the "public interest".  One asks, "how can managers of GOCs be motivated to act in the broader interests of society?  For example, "Governments may like the [GOC] to operate efficiently, in the sense of producing its relevant outputs at the lowest possible cost.  However, governments may also be concerned about unemployment.  If efficient operation of the [GOC] involves a significant reduction of the workforce and a rise in unemployment, these two objectives will conflict".  This is surely a confusion of the enterprise with the economy.  If in the short run a government uses it own enterprises to bolster employment in an inefficient operation (or indeed in protecting a private one) it will in the long run the risk of leading to higher unemployment.

One of the important innovations of the corporatisation period has been not only the discipline of the market on enterprises, but also the discipline on politicians of specifying non-economic objectives, or economic objectives broader than the enterprise.  One contribution produces a survey of members of various boards of Queensland GOCs, which indicates difficulties in Ministerial intervention in the affairs of the GOC.  For example that the Minister-as-shareholder may promote electoral maximising rather than wealth-maximising behaviour.  Quite so, but if the "public interest" is to be achieved, it is difficult to state who else other than the Minister may be in a position to know the public's interest.  A useful suggestion may be to insulate a GOC from certain excesses of ministerial intervention, for example, when a Minister holds down insurance premiums for workers' compensation until after an election, by ensuring the premium setting process is transparent.  A high degree of specification of governance parameters, that is setting out a thorough menu of performance on non-financial criteria, or community-service-obligations is a desirable thing, but is unlikely to prevent a Minister from asserting that his interventions are not in the public interest.  However, one of the interlocutors advises, "A risk of inappropriate Ministerial intervention may be the price we pay for the opportunity for appropriate intervention".

Another contributor criticises the perennial Productivity Commission critique that GOCs are not efficient, and supports Senator Stott Despoja's suggestion of a Public Interest Commission!  Why not just get rid of government altogether, which I suspect is the entire purpose of the governance discourse that has crept into political-economy in the last decade.  It is as if the underlying objectives of GOCs are only social.  It may be more helpful to commence with the assumption that their objectives are economic, and then specify the non-economic objectives and preferably implement these available outside of the operation of the GOC.

Another discusses a case study the Energy and Water Ombudsman Victoria, and questions whether the privately funded (by licence holders) structure can be part of the doctrine of responsible government.  The assertion is that energy and water are public goods, which the state has chosen to deliver privately, but that the "provision of essential services is properly situated in the public realm".  Surely, the issue is not what the state wants, but what the customers want, presumably a good service at best price.  What were once deemed essential services are clearly no longer public goods.

There is a presumption that "market governance", governments letting go of economic entities (but not of regulation) is tantamount to the "fraying of Ministerial accountability".  The presumption is that the consumer, for the purposes of goods and services provided by a GOC, is also a citizen.  Hence, the call for direct accountability of the scheme by "consumer/ citizens".  This would involve the election of consumer representatives by their relevant constituencies, which in practise usually means the funding of consumer advocacy groups and their pet projects.

In terms of the dispute resolution processes available for contracted parties and consumer/ citizens, the contribution kindly presents an alternative view, in the form of a judge's remark.  "The courts have not taken the view that a privately founded, privately managed organisation ... is necessarily to be subject to control by the courts.  That is certainly not to say that such an organisation may treat itself as above the law;  it is merely to acknowledge that the courts will not discourage private organisations from ordering their own affairs within acceptable limits".  Quite so.

There are contributions that accept corporatisation and who wish to enhance its usefulness with suggested reforms that may help achieve some of the benefits of market-based governance without giving up governmental control.  "Sometimes these benefits are best achieved by replicating the governance of private firms".  One contributor addresses the problems of managerial agency costs and inappropriate Ministerial intervention with a number of innovative strategies.

The first is a contractual solution, to let parties resolve issues contractually without legislative intervention.  In fact, the contract may be part of legislation, but a particular device such as an appropriately crafted Statement of Corporate Intent, may go long way to solving the issue of the divergent interests of a Minister in the responsibility for a GOC.  Another, quite intriguing gambit, is to create a class of private investors with a stake in the GOC by the issue of subordinated debt.  The idea is to create an investor class that has an incentive to monitor and whose purchase and sale decisions provide a market signal about the GOC performance.  Other contributors suggest ways to define those who should have standing to sue a GOC in private actions, to mimic the environment of the private firm.

Such suggestions seem to be greatly advanced in the exercise of accepting the presence of government-owned corporations in the market place and creating the best opportunity for them to perform as economic entities, rather than the reluctant starters who would rather "social" objectives be achieved by economic entities.  The difficulty for the reluctant corporatisers is that, the more corporate responsibilities are loaded onto GOCs, the greater the reason to privatise.  The desire to account for each potential adverse aspect of the market, by incorporating into the governance of every GOC, every conceivable fail-safe arrangement, rather defeats the purpose of the corporatisation.  Those who want to broaden the scope of corporate governance by incorporating the political agendas subsumed under corporate social responsibility only serve to produce a strong argument to allow the GOC to escape the clutches of government, and at least then face merely the competition of its peers and the ordinary weight of regulation.

In essence, the dominant contributions in the book reflect the prevailing orthodoxy of the Griffith University Key Centre for Ethics, Law, Justice and Governance:  that we live in a post-parliamentary, post-democratic, post-market age;  that the combination of representative government and the regulated market are insufficient to deliver a just outcome for everyone.  Rather than the liberty to make ones own way in the world, the dominant value is that every citizen has recourse to every forum to resolve his or her every problem, and that every problem is public and shared by every other citizen.  I guess they know their market.

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