The White Picket Fence

Tuesday, April 06, 2004

The Protocol: Managing Relations with NGOs

Report to the Prime Minister's Community Business Partnership

1. EXECUTIVE SUMMARY

This study examines how the maintenance of relationships between Australian Government Departments and non-government organisations (NGOs) is a growing responsibility of government. This phenomenon is part of a world-wide trend, and there are a number of reasons for it occurring, including the desire for greater community and stakeholder participation in the decision-making processes of government.

However, although extensive efforts have been made by Departments to engage with NGOs, there is little transparency about the nature of Department/NGO relationships. Transparency is important for a number of reasons. In many of their relationships with Departments, NGOs are granted privileges that are not available to members of the public. These privileges are primarily through the receipt of funding and the gaining of access. The benefits that NGOs receive in this way should be publicly disclosed, in the same way and for the same reasons as are commercial contracts between Departments and external bodies. Public disclosure of Department/NGO relationships will improve the quality of the consultation process and will encourage a review of the effectiveness of such relationships, which is something that rarely occurs.

This study demonstrates that currently little information about Department/NGO relationships is publicly disclosed. Although in a number of cases useful information is provided by Departments, for the most part what is revealed is done on a basis which is haphazard and not consistent. There is, it seems, no government-wide awareness of the need for transparency, and consequently a lack of commitment to transparency in the relationship.

This study recommends that a system of public disclosure and reporting -- that is, a protocol -- about Department/NGO relationships be implemented.

2. INTRODUCTION

In April 2003, the Prime Minister's Business Community Partnership (the Partnership) considered a proposal from us to undertake a study (the study) of the relationship between Australian Government Departments and Non-Government Organisations (NGOs), and develop a "trial protocol" for public disclosure of NGO standing with Government.

At the recommendation of the Partnership, the Department of Family and Community Services contracted us to undertake the study.

The objectives of a protocol would be to make information about NGOs that have significant relationships with Government publicly accessible and to increase Government and public awareness of the relationships between NGOs and Government.

The outcomes of the study will assist the Australian Government in managing its relationships with NGOs.

3. METHODOLOGY

In May 2003, the Secretary of the Department of Family and Community Services wrote to the Secretaries of selected Australian Government Departments seeking the co-operation of their Department in the study. The selected Departments were chosen on the basis that they undertook a representative range of activities with NGOs. Seven Departments and one agency agreed to participate in the study. These were:

Department of Communications, Information Technology and the Arts
Department of the Environment and Heritage
Department of Family and Community Services
Department of Foreign Affairs and Trade
Department of Health and Ageing
Department of Immigration and Multicultural and Indigenous Affairs
Department of Agriculture, Fisheries and Forestry
AusAID

Participation in the project required Departments to provide details about their relationships with NGOs.

In addition, information about the management of the taxation status of charities was provided by the Australian Taxation Office. This discussion was designed to inform the project of the management of data on the ATO website. In addition, notice was taken of the data held by the Department of Finance on grants made to NGOs.

3.1 INTERVIEWS WITH PARTICIPATING DEPARTMENTS

Interviews were conducted during July 2003 with officers from each of the participating Departments. Interviews with Department officers were structured around the following questions:

What information are NGOs required to provide to your Department before they are contracted and/or consulted?
Does the amount or type of information required change when the amount or type of involvement from NGOs changes?
In what form do NGOs provide information to your Department?
Where and how is this information stored?
What level of information is available to the public and how does the public receive and access this?
How is credibility gained by NGOs within your Department?
What are the processes or protocols followed before engaging with a NGO?
What evidence is required that a NGO is meeting its contractual agreements, or that a NGO-funded service is meeting its requirements and remains funded?

3.2 RESEARCH OF PUBLICLY-DISCLOSED DATA

In addition to the conduct of interviews, research was carried out on the publicly-disclosed data about Department/NGO relationships.

The following materials were analysed for this study and were the main sources of publicly disclosed material about Department/NGO relationships:

the Annual Report of participating Departments for 2001-02 and 2002-03
material produced by participating Departments regarding their community consultation procedures
the Internet website of every participating Department
the Internet websites of the major NGOs that maintain relationships with participating Departments.

In addition to the above sources of information about Department/NGO relationships, there are a variety of other means of public disclosure about such relationships, including through answers to ministerial and Department correspondence, Freedom of Information requests, parliamentary processes such as Questions on Notice and Senate Estimates hearings, and material provided through other Department publications. Information from such sources, however, may be difficult to access, may not be timely, and further some such sources (for example, Questions on Notice) may not be able to be accessed by members of the public.

A survey was also conducted of the "Portfolio Bodies" of each Department in the study as listed in the Australian Government Directory. These Bodies are listed in Appendix 1.

The Australian Government Directory is published on the Internet, and includes both statutory and non-statutory bodies. As a list of Department consultative mechanisms, the Directory is limited because it is does not purport to be a comprehensive list. For example, it includes a number of bodies (such as ministerial councils) on which NGOs would not be represented. The quality of the information about each Portfolio Body listed in the Directory varies because it is not based on specific criteria. For some Bodies a comprehensive listing of members is provided (but not their affiliations) together with a link to the website of the Body, while for others little more than its name is provided.

To indicate the wide range of NGOs that have relationships with Departments, Appendix 2 provides a sample of NGO involvement in one committee or consultative mechanism of each of the Departments in the study. The committees listed from the Departments of Environment and Heritage, Health and Ageing, and Communications, Information Technology and the Arts, and the Department of Agriculture, Fisheries and Forestry are included in the Australian Government Directory, while those for the Departments of Family and Community Services, Foreign Affairs and Trade, and Immigration and Multicultural and Indigenous Affairs are not.

4. DEFINITIONS

DEPARTMENTS

For the purposes of this study, the use of the word "Department" refers to any one of the seven Departments participating in the study. For ease of terminology, agencies such as AusAID, statutory authorities, and Australian companies associated with the Departments in the study are treated within the scope of the relevant Department.

NON-GOVERNMENT ORGANISATIONS

NGOs are defined as non-government "non-profit groups that combine resource mobilization, information provision, and activism to advocate for changes in certain areas". ⁽¹⁾ No distinction is drawn between different sorts of NGOs, whether incorporated or not, or whether an entirely domestic or a local affiliate of an international NGO. This study includes as NGOs business, industry, and professional associations, trade unions, "think-tanks" as well as citizen and community organisations. Academic and research organisations are not regarded as NGOs because their primary purposes are not those of "resource mobilization, information provision, and activism". Departments' dealings with international organisations such as The United Nations, the Organisation for Economic Co-operation and Development, and the World Bank are not included in this study as they are considered to be comprised of, or representing, sovereign governments.

RELATIONSHIPS

The study considers the "relationships" between Departments and NGOs. It is important to identify what aspects of Department/NGO relationships are included within the scope of the study. Not all Department/NGO relationships are examined because not every relationship gives a NGO a privileged status. Some of the varieties of Department/NGO relationships are listed in Table 1.

Table 1: Department/NGO relationships

Types of relationship	Within scope of study?	Reason why/why not included
1. Correspondence to Department by NGO	No	No special status
2. Lobbying Department by NGO	No	No special status
3. Submission to Departmental Inquiry by NGO	No	No special status
4. Provision of privileged information by Department to NGO	Yes	Special status
5. NGO Membership of Department Advisory Committee	Yes	Special status
6. NGO Membership of Department delegation	Yes	Special status
7. Department funding for NGO research	Yes	Special status
8. Department funding for NGO's administrative expenses	Yes	Special status
9. Department funding for program delivery by NGO	No	Special status but already subject to high level of disclosure

Table derived from Wood, R.J. 2001. Protocols with NGOs: The Need to Know, Backgrounder.

Each of the first three relationships can be undertaken by any member of the public. While the success or otherwise of any representations might depend on a variety of factors, such as the standing of a particular member of the public, no privileged status is gained from such a relationship.

Relationships 4 to 8 are the outcomes of a Department granting a NGO a status that is not accorded to a member of the public. Presumably, a NGO has fulfilled some qualification to gain that status (and it could be argued that, in theory, a member of the public that met the same qualifications as a NGO possessing a special status could also gain that status). Relationship 8 for example, would encompass reimbursement for expenses a NGO representative incurred to attend a conference, through to funding a national secretariat of a NGO peak body.

Relevant questions about the process of how NGOs gain that status are:

was there public advertisement of the opportunity to gain such status?
what were the qualifications required to gain such status?
what was the basis of selection of those NGOs that did gain such status?

Relevant questions about the benefits provided to NGOs by such status are:

what are the benefits gained by NGOs?
what is required of NGOs in return for the benefits?
are the benefits disclosed?

Relevant questions about the NGOs themselves that have such status are:

what information about the NGOs is disclosed (to the Department and/or the public)?
how do the NGOs account for their benefits?

Funding for program delivery brings about a relationship between the Department and a NGO which provides the NGO with a privileged status. However, subject to some limited exceptions, most relationships between Departments and NGOs under which NGOs are contracted to provide a specified good or service are not examined in this study. Whether such a relationship is examined in this study is determined by the level of disclosure about the relationship. The higher the level of disclosure, the less likely it is to be included. Commercial contracts, for example, are governed by a range of requirements including the contract itself, government purchasing and tender regulations, and probity considerations. Such contracts are entered into, and publicly reported in a reasonably transparent manner (although the actual terms of the contract may be commercial-in-confidence).

The involvement by NGOs in the policy development process is one of the most significant Department/NGO relationships. While it is a longstanding practice for Departments (and Ministers) to purchase policy advice under a consultancy contract, the provision of policy advice by NGOs to Departments, not under consultancy, but through consultative mechanisms is a rapidly developing phenomenon in public administration. There is no reason why non-contractual relationships between Government and external bodies should not be scrutinised in the same way that contractual relationships are. Under both contractual arrangements and non-contractual arrangements, the Government confers a benefit on a private citizen or organisation. Under contractual arrangements, that benefit is usually a commercial one, and the decision to confer that benefit must be able to be publicly justified (often, but not always done so in terms of "value-for-money"). Under non-contractual arrangements, a benefit is also conferred upon a private citizen or organisation, (although it might be more difficult to identify precisely what that benefit is).

The benefits accorded to NGOs through privileged participation on advisory committees can accrue into the future, and relationships can become selfperpetuating.

Over time, advisory committees can develop into policy communities -- regular meetings of the key interests in the policy field, with an opportunity to broker agreements. Governments see their role as providing a forum for discussions, ensuring the participants are representative of the broader community's interests, and proposing policy ideas that can be debated, modified and adopted with some measure of common support. ⁽²⁾

5. DEPARTMENT/NGO RELATIONSHIPS

5.1 THE EXTENT OF DEPARTMENT/NGO RELATIONSHIPS

The extent of Department/NGO relationships is growing -- but by how much is difficult to determine for at least three reasons. First, as discussed above, the nature of the relationships vary significantly. Second, there is no agreed standard for reporting relationships, and third, most Departments collect little information about those relationships. Accepting these limitations, nevertheless, some conclusions can be drawn using the data that are available.

According to the Department of Immigration and Multicultural and Indigenous Affairs, it undertook consultation with approximately 4,800 community groups and individuals and government and non-government agencies during the year 2001-02. ⁽³⁾ What constitutes a "consultation" is unclear, but nonetheless the scale of the activity between the Department and the outside community is clear.

The Department of Foreign Affairs and Trade collects information about its consultations as part of its Program Reporting processes. External consultations are undertaken with a range of bodies, including other agencies, State and Territory governments, businesses, and NGOs. Figure 1 indicates the number of consultations undertaken by the Department as disclosed in the Department's Annual Reports. The increase in the number of consultations reported is partly the result of changes in the definition of consultation used by the Department, and it should be stressed that consultations include interactions with a range of bodies external to the Department, not only NGOs. Nonetheless, regardless of the exact definition of consultation and regardless of with whom the Department is consulting, the conclusion can be drawn that undertaking consultation with external bodies is a growing responsibility of the Department. The number of consultations conducted by the Department "with other Commonwealth agencies, state and territory governments, business and non-government organisations in the context of the [D]epartment's development of foreign and trade policy advice" and the number of meetings organised of the Foreign Affairs Council and Trade Policy Advisory Council are specifically listed as "Quantity Indicators" by the Department. ⁽⁴⁾

Figure 1: Number of consultations undertaken by DFAT

Source: DFAT Annual Reports

The increasing trend whereby NGOs seek benefits from government can be seen in the environment portfolio. Figure 2 shows the total number of environmental organisations eligible to receive tax-deductible donations under the Income Tax Assessment Act 1997. The Department of Environment and Heritage maintains information about the organisations listed in the Register of Environmental Organisations. The Department's Grants to Voluntary Environment and Heritage Organisations Program provided funding to approximately 60 community organisations for the 2003-04 year, according to specified criteria, which included details about the administrative structure of the organisation. ⁽⁵⁾

Figure 2: Number of environmental NGOs eligible for tax deductibility

Source: Register of Environmental Organisations, Department of the Environment and Heritage

Little information about Department/NGO relationships is publicly reported compared with what is disclosed about other aspects of Departments' operations. There is no consistency of reporting across Departments, and it appears that within Departments there is limited knowledge about the nature of NGO relationships. No Department appears to have a comprehensive listing of, for example the committees which operate within the Department or of the interests and NGOs that are represented on those committees. Where information is provided about advisory committees on, for example, the Department's website or in its Annual Report, the amount of disclosure about committees is not necessarily related to its size or importance. Participation on advisory committees is only one type of Department/NGO relationship. NGOs may participate in Department delegations to international conferences, an extraordinarily important function for a NGO to perform -- indeed, one bordering on usurping the government's representative role. NGOs may participate in a variety of ways including as observers, non-voting participants, voting participants, non-negotiating participants, negotiating participants, and so on. NGOs may also be required to provide certain undertakings as a condition of their membership of a delegation. While in many cases information about participants in international conferences can be publicly obtained, in practice it can be difficult to access, and is unlikely to provide details about the conditions on which NGOs have participated. When NGOs do participate in delegations, information about which NGOs took part, why, and on what basis should be publicly disclosed.

5.2 THE PURPOSE OF DEPARTMENT/NGO RELATIONSHIPS

The purpose of a Department's relationship with a NGO depends on the nature of the NGO and the requirements of the Department.

The World Bank lists five functions that NGOs perform. These are:

Representation to aggregate citizen voice (unions, churches, NGO peak groups)
Technical Expertise to advise and lobby (advocacy NGOs, think-tanks, professional associations)
Capacity-building to support other NGOs (foundations, training organisations)
Service-delivery to implement projects or provide services (service NGOs, mutual aid societies)
Social functions to foster collective recreational activities (sport and cultural clubs). ⁽⁶⁾

These functions also indicate some of the different varieties of NGOs (and a NGO might perform more than one function). The function of a NGO is related to the purpose for which a Department enters into a relationship with a NGO.

In the context of growing demands worldwide for "transparency, accountability and participation", the OECD lists the reasons why the levels of public participation in the work of governments are increasing:

Improve the quality of policy, by allowing governments to tap wider sources of information, perspectives, and potential solutions in order to meet the challenges of policy-making under conditions of increasing complexity, policy interdependence and time pressures.
Meet the challenges of the emerging information society, to prepare for greater and faster interactions with citizens and ensure better knowledge management.
Integrate public input into the policy-making process, in order to meet citizens' expectations that their voices be heard, and their views be considered, in decision-making by government.
Respond to calls for greater government transparency and accountability, as public and media scrutiny of government actions increases and standards in public life are codified and raised.
Strengthen public trust in government, and reverse the steady erosion of voter turnout in elections, falling membership in political parties and surveys showing declining confidence in key public institutions. ⁽⁷⁾

In relation to policy development by Government, the OECD categorises the various forms of consultation through the policy cycle as shown in Table 2 (CSOs are civil society organisations which are analogous to NGOs).

Table 2: Information, consultation and active participation throughout the policy cycle

Stage of Policy Cycle	Information	Consultation	Active Participation
Design	- White Papers, policy documents - Legislative programmes - Draft laws and regulations	- Large-scale opinion surveys - Use of discussion groups or citizens panels - Invitation of comments on draft legislation	- Submission of alternative draft laws or policy proposals - Public dialogue on policy issues and options
Implementation	- New policy or regulations and their provisions	- Use of focus groups to develop secondary legislation	- Partnership with CSOs to disseminate information on compliance with new laws
Evaluation	- Public notice of evaluation exercises and opportunities to participate	- Inclusion of stakeholders in reviews of government evaluation programs and results	- Independent evaluation conducted by CSOs

Source: OECD, 2001: Citizens as Partners, page 22

While many of these innovations have not yet been implemented in Australia, some have been, particularly in the first part of the Policy Cycle -- the "Design" stage. At the "Implementation" stage, many Departments engage with NGOs to disseminate information about new laws and regulations. What has not yet happened in this country to any large extent is the involvement of NGOs with Departments in the evaluation of policy. In most cases, Departments' evaluations of policy are either carried out by the Department itself or by a commercial organisation under contract. When NGOs evaluate policy, it is often undertaken outside of any formal government process. This is not to argue the case that NGOs should be formally involved in the evaluation of government programs, however, as the scope of NGO involvement is evolving it begs a more explicit scrutiny of relations.

In Australia, NGO participation on advisory committees has traditionally occurred in one of two ways:

where an officer of a NGO is appointed to a committee ex officio because it is deemed necessary to have that NGO represented on the committee ("representative" capacity)
where an officer of a NGO is appointed to a committee because of either that officer's personal knowledge or skills or because of the knowledge and skills possessed by the NGO ("expert" capacity).

Seldom is an explanation publicly provided as to why a committee is either representative or expert. Further, it is not usual for Departments to provide details of the selection criteria for NGOs to participate on advisory committees. During the course of the study, when Department officers were interviewed about the basis for decisions about which NGOs were included on committees and which were not, it became evident that a large element of discretion was exercised.

The following are the public explanations for the participation of NGOs on committees taken from the Department of Communications, Information Technology and the Arts.

A representative committee:

NetAlert is an independent body established as part of the Commonwealth Government's commitment to educating communities about managing access to online content. The inaugural 11 member NetAlert Board is made up of industry, legal, community and educational organisation representatives from around the country. ⁽⁸⁾

An expert committee:

The Australian Information Economy Advisory Council will provide high level industry and community input to Government decision making on information industries and information economy issues. It is important to stress that members of the Council have been chosen for their individual expertise and demonstrated experience, rather than as representatives of particular companies or interests. ⁽⁹⁾

A committee that is both representative and expert:

The National Electronic Authentication Council will provide high level industry and community input to Government decision making on electronic authentication and e-commerce issues. Council members have been chosen for the communities they represent and for their experience and expertise. ⁽¹⁰⁾

A relatively recent development are committees to review the work of Departments. An example of such a committee is the Immigration Detention Advisory Group in the Department of Immigration and Multicultural and Indigenous Affairs whose members are chosen on the basis of their "commitment to, and understanding of, immigration issues" and their "personal experience and expertise". ⁽¹¹⁾

From an analysis of the Departments in this study, there are five reasons why Departments have relationships with NGOs. These are to:

provide policy expertise
deliver programs
provide practical expertise
allow for information dissemination
allow for transparency.

Broadly speaking, NGOs act in three capacities in their relationships with Departments. NGOs operate in the capacity of:

experts
stakeholders
the community.

The varieties of Department/NGO relationships are shown in Figure 3, which also demonstrates the capacity in which NGOs act.

Figure 3: Varieties of Department/NGO relationships

Source: The Author

These categories can overlap and they depend on the nature of the NGO. For example, policy expertise might be provided by an advocacy or research-focused NGO, while practical expertise would come from a NGO that represented the interests of an industry. NGOs have the ability to advocate for particular positions in each of their capacities, but particularly where they provide policy expertise.

The information flow is not exclusively from NGOs to Departments. Departments use NGOs to distribute information to stakeholder groups and to the broader community. A recent development is the desire of Departments to be transparent in their operations, and providing information to NGOs stands as a proxy for the sharing of information between Departments and the broader public. For example, the Department of Foreign Affairs and Trade regards one of its roles to be the promotion of "public understanding of Australia's foreign and trade policy" and to support this function it engages with NGOs. The Department states that it "consults with the business community, State and Territory Governments and community groups". ⁽¹²⁾ Likewise, the Department of Communications, Information Technology and the Arts has the statement that "The Department is open to the views of outside organisations and provides opportunities for members of the community and industry to contribute to developing aspects of Australia's communications, information technology, arts and sports sectors" and what follows is a list of a selected number of consultative bodies. That list, however, is not comprehensive and no information is provided as to how members of the public might involve themselves in the work of those bodies. ⁽¹³⁾

A related phenomenon is the requirement as part of Departments' "Outcome Measures" that stakeholders be specifically included in the policy development process. For example the following Outcome Measures are included in those of the Department of Health and Ageing:

A high level of stakeholder satisfaction with the quality and timeliness of Departmental/Portfolio inputs to national policy, planning and strategy development and implementation
Timely production of evidence-based policy research to inform and engage stakeholders in meaningful policy and program discussions
A high level of stakeholder satisfaction with the relevance, quality and timeliness of information and education services
Opportunity for national industry and consumer peak organisations to participate in the development and implementation of national policy through the National Aged Care Accreditation and Compliance Forum and the Aged Care Working Group. ⁽¹⁴⁾

The Department of Agriculture, Fisheries and Forestry has considered consultation with its stakeholders and associated NGOs in the following terms:

The main reason for consulting is to get feedback from our [the Department's] clients about our [the Department's] policies, programs and services. The benefits of consultation usually far outweigh the effort involved. Consultation builds trust between the Department and its clients and ensures a better policy or program fit.
Effective program and policy development should show a clear understanding of the client's needs and how they will be affected. The diversity of our [the Department's] client groups means we need to be flexible and innovative in consulting them. We [the Department] need to ensure that we include all client groups, not just "traditional" groups or peak industry bodies. Wider consultation broadens feedback and helps ensure our [the Department's] policies and programs are appropriate. ⁽¹⁵⁾

The ability of NGOs to participate in the policy process is not only provided for in Departments' Outcome Measures, but in a number of cases it is enshrined in legislation. The Environment Protection and Biodiversity Conservation Act 1999 requires the Minister to take into account comments from "any person" in specific circumstances. NGOs also have a specific right contained in the legislation to challenge a decision under the Act. The Product Stewardship (Oil) Act 2000 requires that the membership of the Oil Stewardship Advisory Council include members representing "a national organisation representing oil producers", "a national organisation representing oil recyclers", "a national consumer "organisation", and "a national non-governmental organisation that has a substantial interest in sustainable industry". The formal representation of NGOs in this way through legislation takes the standing of NGOs to a new level and, as such, requires public disclosure of NGOs' roles in the process.

5.3 GOVERNMENT DECISION-MAKING AND NGOs

It has only been in the last few decades that attention has been devoted to the question of Department/NGO relationships. Traditional models of governance in a representative democracy assumed a direct relationship between the electorate and their representatives. Theories of executive government and responsible government made no distinction between ministers and their departments, with an emphasis on the role of Parliament. Such a model is encapsulated in Figure 4.

Figure 4: Model of traditional political accountability

Source: derived from GS Reid, 1966. "Parliament and the Executive: The Suppression of Politics" in Australian Politics, A Reader edited by H Mayer, Cheshire, Melbourne.

Under such a model, attention was focussed on formal relationships. Such formal relationships were usually through the parliamentary process or were under contract when they were between Government and third parties. While the forms of commercial arrangements between Departments and external organisations have been the subject of debate for many years, other sorts relationships have not been scrutinised in the same way.

The representative formal model has been criticised on the basis that "citizens have little further input once votes are cast" ⁽¹⁶⁾ and it was clear, even by the 1960s, that such a "traditional" model was becoming outdated. At the time it was noted that "pressure groups" were beginning to have a key influence on the political process and were changing their techniques of engagement.

What used often to be mainly negative attitudes to government, expressed in public protest, have tended to be replaced by a more positive desire to "co-operate" with the bureaucracy and to influence its actions from within. A group such as the Associated Chambers of Manufactures is quite likely to employ ex-public servants to help in its negotiations. Public servants interested in forwarding a particular policy find it useful to remain in a regular consultative relationship with outside interests, and may even encourage them to form a group for the purposes of mutual information and bargaining. ⁽¹⁷⁾

The maintenance of "regular consultative relationships" is now an essential element of the work of government and indeed has been in enshrined in the Performance Targets and Strategic Plans in many departments. While the "consensual/consultative/corporatist" model of policy-making is more often associated with continental European countries than with those in the English and American traditions, it has been suggested that there are factors in Australia that encourage the involvement of NGOs in policy.

... in Australia -- mainly because of our liberal-democratic political traditions -- most policy arenas are characterised by "pressure-pluralist" policy networks. The institutional factors that typically underpin such a pattern of interaction include:
a state which is fragmented, which is open and porous to external demands and pressures (i.e. strongly liberal democratic), and which has only a limited capacity for centralised coordination; and
a non-state sector, which is fragmented with multiple groups and associations displaying relatively weak internal leadership and organisational capacities.
In such a network, policy is typically made through a struggle of competing interests, with little capacity for leadership or strategic direction. The type of policy making that typically emerges from such a network tends to be ad hoc and reactive. ⁽¹⁸⁾

An alternative to the model of traditional political accountability takes account of the developing role of NGOs in the political process. Some of the most significant changes from the traditional to the modern model are the separation of functions between Ministers and their departments, and the position of NGOs outside of the electorate. These changes can be seen most clearly in the context of Departments which, in order to fulfil requirements for community consultation, engage in narrowly-defined processes with NGOs as proxies for the community. Increasingly civil society organisations are acting as intermediaries for the electorate as a whole. The challenges to the model of traditional political accountability have been appreciated by the OECD, "[t]he emergence of new relations between executive governments and citizens in policy-making are not intended to reduce or replace traditional representative government nor the central role of parliaments". ⁽¹⁹⁾

The NGO phenomenon, if taken too far, constitutes a challenge to representative systems and traditional political accountability. The collection of all possible NGOs, for example, does not constitute public opinion. NGOs represent only some public opinion. To some extent, politics is a contest between organised and unorganised public opinion, between particular interests and the public interest. More recently, many NGOs purport to represent universal interests, which they argue, represent the public interest, for example, human rights and the environment. NGOs give voice to the public, which in liberal democracies in an age of extraordinary ease of public communication is not a difficult task. The hard task is to decide what is in the public interest. When laws are to be framed and public funds allocated, only elected officials should make such judgements. Moreover, officials need to make these decisions in a way that does not expand the universe of government by buying off of all interests with taxpayer largesse.

Figure 5: Model of modern political accountability

Source: The Author

While the role of NGOs as a voice of the public is developing apace, the ability of the representative system to manage and decipher these voices in under considerable pressure. Political accountability must therefore incorporate not just access for groups, but a record of the access that, in effect, is used by government to demonstrate that while access cannot be equal it can be managed in a rational and equitable way, the proof of which is to keep the unorganised interests informed of the government's relations with the organised interests.

In Australia, the participation of NGOs and of the community generally in the public policy process is now accepted. According to two leading authorities in the area:

Whereas secrecy was once the hallmark of the political and policy domains alike, community expectations have shifted. Groups outside government expect involvement in decision making. The legitimacy of much public policy now rests on an exchange between citizens and their government.
Public servants and politicians must find ways to discuss with relevant communities of interest and draw them into the policy process, while avoiding unreasonable delays, simple vetoing by unrepresentative groups and abrogation of responsibility to vested interests. ⁽²⁰⁾

What is noteworthy is that notwithstanding the emphasis on the process of consultation, there appears to be little or no discussion about ensuring that the process of consultation itself is open and transparent. If it is the case that the legitimacy of public policy depends on the consultation that led to the policy, it is incumbent upon policy makers to disclose as much as possible about the consultation process.

5.4 BALANCING POLICY PERSPECTIVES

The OECD has recognised the challenge for Department officers working in an environment in which particular individuals or organisations seek to represent positions on behalf of others.

Striking a balance between the role and relative weight of organisations representing sections of civil society with respect to views voiced by individual citizens and coping with the increasing fragmentation of public interest are issues which will require greater attention. ⁽²¹⁾

The comments contained in an OECD report about consultation on health policy in Canada are applicable to consultation on other policy areas in Australia.

There are a number of key challenges to effectively involving the public in policy development. They include:
Balancing the viewpoints of experts -- for example, physicians and policy analysts -- with those of citizens and patients. This is especially challenging given the centrality of medical expertise to health policy development and the complexity of the subject matter.
Differentiating between concentrated interest (those who have a direct stake in how well the health care operates, including patients, physicians, etc) and diffuse interests (citizenry at large whose consideration involve competing public priorities, including tax cuts and economic growth)
Ensuring that citizen and consumer groups are accountable to their constituencies and membership and ensuring that there are mechanisms in place to ensure their accountability.
Capturing the diversity in Canada's size, demographics, economic activities and ethnicity -- particularly challenging in a national consultation.
Making space for citizens to be involved in consultations as civic-minded individuals rather than only as members of an organisation or stakeholder group. ⁽²²⁾

In the United Kingdom, a study of Local Strategic Partnerships (LSPs) which were designed to co-ordinate social services to local government areas by bringing together a range of organisations reveals the limits of consultation. "The emergence of LSPs...tends to enhance the prominence of a small, elite group of local actors ..." ⁽²³⁾

In the Australian context a similar point has been made:

While consultation is valued by government for addressing legitimacy problems over contentious decisions, consultation has its own legitimacy issues...Who can claim a voice in consultation? If government alone decides, it risks imposing its preferences and so undermining the benefits of consultation. If self-appointed spokespersons for the public interest dominate the process, the results may not accurately reflect community feeling.
There are also problems of how to weight differing voices. Access to the consultation process and capacity to state a case are seldom distributed evenly. It is always easier to deal with interest groups who can speak authoritatively for their membership. However, there is a risk such groups will eclipse other, representative but less organised interests, or fail their members and not be representative at all. ⁽²⁴⁾

Notwithstanding that many Government departments encourage community and NGO consultation, it is not clear that consideration has been given to the need to balance policy perspectives in the ways discussed above.

5.5 DISCLOSURE

One of the explanations for the development of Department/NGO relationships is a desire to increase the transparency of the work of government.

Calls for greater government transparency and accountability have grown, as public and media scrutiny of government actions increases and standards in public life are codified and raised. Governments in all OECD countries are under pressure to integrate public input into the policy-making process, and respond to citizens' expectations that their voices be heard and their views considered in policy-making. ⁽²⁵⁾

Where Department/NGO relationships do exist, there is little transparency about those relationships. As the OECD has noted "Measures to ensure that the policy-making process is open, transparent and amenable to external scrutiny and review are crucial to increasing government accountability overall". ⁽²⁶⁾

In recent years, a focus of both government and academic research has been on how to involve communities and stakeholders in public policy development. A great deal of effort has been devoted to the process of consultation, but there has been almost no attention given to the public disclosure of that process of consultation. In 2001, the OECD released a major work on the engagement of citizens in policy formulation. In the same year, the Australasian Political Studies Association (APSA) held a symposium on "Community Consultation". ⁽²⁷⁾ In both the OECD's work and in the outcomes of the APSA symposium, there was little discussion about disclosure of consultation processes, which was in marked contrast to the many statements about the importance of consultation.

The components of participation have recently been defined as:

a measure of citizen involvement in decisions that might otherwise be the sole prerogative of executive government
a commitment to seeking the views of those affected by a decision
some transfer of authority from government to citizens
a transparent process which ensures citizens are informed about policy processes. ⁽²⁸⁾

While community and stakeholder participation is now regarded by Departments as important, an essential element of that participation, transparency, is almost entirely absent in Australia. As yet there is no transparent process which ensures citizens are informed about policy processes.

An implication of the importance of transparency in the policy process is in relation to the establishment of the standing granted to individual NGOs. As has been noted, "in order for consultation to occur, governments needed bona fide and representative organisations with which to consult". ⁽²⁹⁾ No mechanism exists in the Government whereby citizens are informed as to how conclusions are reached about the bona fides and representativeness of NGOs granted standing. Without such a mechanism, it is possible that, in terms of point three above -- that is, transfer of authority from government to citizens -- there is nothing more than the transfer of authority from government to NGOs.

NGOs are often consulted by Departments in order to give advice to Government. If a consultant were to provide advice on commercial terms, Departments would be required to undertake a transparent process to engage that consultant. The principle at stake in commercial contracts is that consultants receive a benefit from the government in the form of a monetary payment and therefore that there should be public disclosure of this benefit. In the case of a NGO providing advice to a Department, the NGO receives a benefit. The benefit may be a direct monetary payment (for example through sitting fees) or it may be a benefit in some other form (for example through access to a Minister) that confers legitimacy on the NGO. A NGO gaining access to a Minister or government official can have a commercial value. In the context of the reporting of donations to political parties, the Australian Electoral Commission has recognised that access to a Minister might have a commercial value to those third parties that seek such access. ⁽³⁰⁾

Providing disclosure about the policy advice received by government is an important element of guidelines issued by the Australian National Audit Office (ANAO) regarding policy development. There is no reason why the guidelines issued by the ANAO should not apply to policy advice and consultations involving NGOs. The ANAO states that Departments should:

Conduct an initial assessment of information needs to set priorities and develop a strategy for acquiring it, but retain sufficient flexibility to respond to new information requirements that may be gathered during the policy process.
Where consultants are engaged, determine the selection criteria and document the evaluation to ensure that the chosen consultants are of appropriate quality and that the process is transparent.
Report the impact of limitations on information to ensure that decision-makers can accurately assess the risks associated with making a decision on the level of information provided.
Where it is material to the advice, identify the source of information in briefs and cabinet submissions to:

allow ministers to take into account the sources of information
enable others to contest the information and its use, and
establish a basis for future policy development. ⁽³¹⁾

6. CONCLUSIONS

The aim of this study is to consider the nature of Department/NGO relationships and to examine what is publicly disclosed about them. It is not the purpose of the study to suggest that the range of NGOs with whom Departments have relationships should be limited in a particular way, for an important element in a representative democracy is that the community's elected representatives are free to gather information and advice from as wide a range of sources as possible. But given that during this process of information-gathering and gaining advice some individuals and organisations in the community gain privileges not available to all, it is therefore appropriate that there is some public disclosure of those processes.

In principle, reasons why Department/NGO relationships should be disclosed are no different to the reasons that Departments' financial relationships should be disclosed. The existence of a Department/NGO relationship places NGOs in privileged positions which are not accorded to other members of the community. From their relationships with Departments, NGOs have the capacity to gain information not available to the public at large, and they have the ability to influence government administration directly. Other than the right to elect their representatives, members of the general public do not have that capacity. It is entirely legitimate, therefore, that information is made public about both the relationship itself, and about the NGO with which the Department has a relationship.

Departments' financial relationships are disclosed because Departments are allocating and distributing the financial resources of Government. The process by which this is done should be transparent, and in most cases it is. Departments are required to provide details of contracts entered that are greater than a certain value, and to list consultancy arrangements. This has been regarded as normal practice for many years. The formation of a Department/NGO relationship also involves the allocation and distribution of resources -- although the resources are not of a financial kind. Instead, those resources are resources of access and information

6.1 TRANSPARENCY

An important conclusion from this study is that, across the Australian Government, Department/NGO relationships are insufficiently transparent. At the level of individual Departments what is revealed about Department/NGO relationships varies between different parts of the same Department. The concept that Department/ NGO relationships should be transparent is an underdeveloped aspect of the growth in community and stakeholder consultation.

It might be argued that the reason why transparency is provided for financial relationships but not for other sorts of relationships, is that (for example) in the case of a NGO providing advice to a Department, the Department should be accountable for its decisions, not for the way it arrived at that decision. Such an argument is flawed because it ignores the fact that the quality of the process by which a decision is made is just as important as the merits of the decision itself. This is a fundamental principle of judicial review of government action. When a Department awards contracts for goods or services, it is essential that a process be adhered to. When a NGO provides advice to a Department, it is irrelevant to the issue of disclosure whether or not that advice has been followed. What is significant for the purposes of this study is the process by which the NGO provided that advice. Given that there is a growing tendency for Departments to claim that their decisions are a direct result of consultation with NGOs, the need for some transparency is becoming imperative. The position of the Department of Immigration and Multicultural and Indigenous Affairs, for example, is not unique in this regard. In relation to the Humanitarian Program of immigration the Department stated that "The priority areas for the program were Africa, the Balkans, the Middle East and South-West Asia, reflecting UNHCR's international resettlement priorities as well as the views of community groups in Australia [emphasis added]". ⁽³²⁾ Australia's Humanitarian Program is set annually by the Government after a public consultation process which includes soliciting input from the United Nations High Commissioner for Refugees, individuals and community groups, through a call for public submissions advertised in major weekend newspapers and ethnic media. Those consultations also included in 2003 and 2004 a meeting by the responsible Minister with peak NGO bodies from the Refugee and Humanitarian sector. ⁽³³⁾

6.2 ACCOUNTABILITY

Accountability and transparency are related in that if individuals' or organisations' activities are not known about, it is almost impossible for them to be held accountable for those activities. A useful description of accountability as it applies to public administration is:

From a narrow efficiency perspective, accountability is a tiresome overhead, because it adds appreciably to the costs of making decisions. On the other hand, accountability of public officials is the cornerstone of an effective democracy. Accountability is not a "thing" in itself, but a set of relationships through which political and bureaucratic actors must account for their integrity and their performance. There is a framework, partly conventional and party statutory, which sets out these relationships and which has changed and evolved as problems have occurred and new opportunities have arisen. ⁽³⁴⁾

This description stresses the integrity of what is done, and the idea that, over time, the framework of accountability changes. It is clear that in relation to Department/ NGO relationships a new framework of accountability is required. One of the reasons a new framework is needed is because, increasingly, legislation obliges Departments to actively engage with NGOs and stakeholders, and the Environment Protection and Biodiversity Conservation Act 1999 is an example of this trend. Currently, there are no means for ensuring the integrity of Department/NGO relationships.

6.3 EVALUATION

There is little evidence that Departments routinely evaluate their relationships with NGOs. The Australian experience whereby Department/NGO relationships are not evaluated is replicated in many other OECD countries.

There is a striking imbalance between the amount of time, money and energy which OECD Member countries invest in strengthening government-citizen connections and their efforts to evaluate the effectiveness of these measures and their impact on public policy-making. No OECD Member country currently conducts a systematic evaluation of their efforts to enhance access to information, citizen feedback, consultation and active participation -- although all those participating in the surveys expressed an interest in improving their capacity for evaluation. ⁽³⁵⁾

None of the Departments in this study maintains a process for the systematic evaluation of Department/NGO relationships, although from time to time there have been reviews, for example, of funding national representative bodies of NGOs.

Again the comments of the OECD are relevant:

One explanation for the lack of well-developed evaluation frameworks may lie in the absence of clear goals on the part of government units when undertaking information, consultation and active participation. ⁽³⁶⁾

7. RECOMMENDATIONS

Given the conclusions of this study it is recommended that the Commonwealth Government initiate the public reporting of its relationships with NGOs.

The stages of this process are:

identifying the data to be reported
collecting the data
reporting the data.

7.1 IDENTIFYING THE DATA TO BE REPORTED

The data to be reported comprises two main elements: information about the Department/NGO relationship, and information about the NGOs with which Departments have relationships.

The suggested categories of information to be collected are set out in Table 3. It must be stressed that the detail should be determined by the nature of the relationship -- that is, the standing awarded. Governments will need to decide what is sufficient information for its purposes and to be shared with the public. With these views in mind, Table 3 suggests a full menu of disclosure, of which only some might be chosen.

Table 3: Information protocol for NGOs

EVIDENCE OF THE FOLLOWING:

Governance

Legal Status
Constitution, or Articles of Association

   Operating Status
      The organisation is voluntary
      The organisation is non-profit making
      The organisation is independent from government

Capacity Accountability

   Nature of expertise (for expert NGOs)
      Research undertaken
      Experience in the field
      Qualifications of those engaged

Membership (for representative NGOs)
Status of members

   Elections
      System of election for organisation governing body
      Process for policy/decision-making by organisation

Institutional Leadership
Qualifications of those with leadership position in organisation

   International Affiliations
      Off-shore affiliates (if any)
      Off-shore funding (if any)
      Degree of non-resident involvement in organisation activities

Reporting to stakeholders/community
Method and frequency of reporting about organisation's activities

Financial Accountability

Financial Position
Financial position of the organisation

   Use of funds
      That monies raised are used in the manner specified when donors are sought
      Proportion of raised funds applied to programs and to fund raising

   Fund-raising disclosure
      Solicitation materials are accurate, truthful, and not misleading
      Solicitation materials contain a description of activities for which funds are sought

Relationship Accountability

Relationship Conditions
The conditions under which the Department/NGO have entered the relationship

Relationship Evaluation
The manner in which the relationship will be evaluated

Source: Adapted by the author from various sources.

7.2 COLLECTING THE DATA

To satisfy the requirement to be transparent it is not necessary that Departments themselves collect all of the above information. In relation to data about the status of the NGO, it is sufficient that the Department satisfies itself that what is reported by the NGO is accurate.

7.3 REPORTING THE DATA

Table 4 sets out the categories of information relevant to four types of Department/ NGO relationships. There are some categories of information which should be held by Departments, but which would be inappropriate to disclose publicly. For example, where a NGO receives funding to conduct research, it is not necessary to report on the status of its members. Where a NGO participates on an advisory committee because it is representative of stakeholders, however, it is relevant to know about its membership composition.

Table 1 identified six relationships which established a special status for NGOs, and in Table 4 four are listed. This is because one of those relationships "Provision of privileged information by Department to NGO" will almost invariably arise because of the existence of one of the other sorts of relationships, and the other relationship not listed -- "Department funding for program delivery by NGO" -- already requires a degree of disclosure.

A convenient method of public reporting of Department/NGO relationships is through the Internet, and it is a method already utilised effectively by some Departments. For example, the Department of Health and Ageing operates the Australian Pharmaceutical Advisory Council (APAC) as "a consultative forum to advise the Commonwealth Government on a wide range of pharmaceutical policy issues." APAC comprises 29 organisations, the majority of which are NGOs. The member organisations are listed on the Council's website together with descriptions of each organisation, and in most cases there are direct links to the websites of the organisations. ⁽³⁷⁾ The Department of Family and Community Services uses the Internet effectively in relation to a number of its consultative bodies, for example the National Family Carers Voice which is "an advisory body made up of family carers from across Australia who provide the Government with advice on how it can better address family carer issues." National Family Carers Voice has a dedicated website which provides details about its work, its members, and how it can be contacted by members of the public. ⁽³⁸⁾

Table 4: Department/NGO disclosure

Categories of Information	Membership of Advisory Committee		Membership of Delegation		Funding for Research		Funding for Administrative Expenses
Governance
Legal Status	+	-	+	-	+	-	+	-
Operating Status	-	-	+	-	+	-	+	-
Capacity Accountability
Expert
Nature of expertise	+	-	+	-	+	-	+	-
Stakeholder/Community
Membership	+		+				+
Elections	+		+				+
Institutional Leadership	+	-	+	-	+	-	+	-
International Affiliations	+	-	+	-	+	-	+	-
Reporting to stakeholders/community	+	-	+	-			+	-
Financial Accountability
Financial position	+		+		+	-	+	-
Use of funds	+		+		+	-	+	-
Fund-raising disclosure	+		+		+	-	+	-
Relationship Accountability
Relationship conditions	+	-	+	-	+	-	+	-
Relationship evaluation	+		+		+		+

+ Information collected by Department
- Information publicly disclosed

Source: The author

The data publicly available over the Internet is outlined in Table 5 (on page 30). Contained in the Department's Annual Report, would be the details of the four listed categories of Department/NGO relationship (all Department Annual Reports are available on the Internet). Reported either also in the Annual Report, or on a separate section of the Department's website would be a Listing of Consultations that sets out the information outlined in Table 3. Information specific to individual NGOs would be reported on the website of each NGO. Prior to Departments entering into a relationship with a NGO, the NGO would be required to agree to reporting of such information about itself.

Table 5: Public reporting of department/NGO relationships

7.4 A MODEL WEBSITE

The next element of the Protocol is to create and maintain a single Australian Government website. The website, for the sake of illustration, called "Australian NGO Link" would be an interactive site that would enable any person to make an assessment of the myriad relations between government and NGOs. It would enable the individual to assess in any year, or for a number of years, the standing of each NGO, and sources of government funding of any NGO with significant relations with a government department or authority. It would also enable the assessment of the government's use of NGOs across the whole range of departments and programs.

In Figure 6, which contains three illustrations of a model website, a citizen is able, with access to the Internet, to investigate the relationship between the Australian Government and NGOs with whom it has a significant relationship.

Figure 6: A model website

APPENDIX ONE

Department Portfolio Bodies as listed in Australian Government Directory. It should be noted that the listing of "Portfolio Bodies" includes a range of bodies including ministerial councils on which NGOs are not represented, and government agencies, as well as advisory and consultative bodies on which NGOs are represented. The Directory is based on information that Departments have chosen to provide rather than meeting specific criteria. This Appendix demonstrates the wide variety of mechanisms for policy development.

Australian Government Department of Agriculture, Fisheries and Forestry

Australian Fisheries Management Authority
Australian Landcare Council
Australian Pesticides and Veterinary Medicines Authority
Australian Wine and Brandy Corporation
Cotton Research and Development Corporation
Dairy Adjustment Authority
Dairy Australia
Fisheries Research and Development Corporation
Forest and Wood Products Research and Development Corporation
Grains Research and Development Corporation
Grape and Wine Research and Development Corporation
Land & Water Australia
Meat and Livestock Australia
Murray -- Darling Basin Commission
Murray -- Darling Basin Ministerial Council
National Consultative Committee on Animal Welfare
National Land and Water Resources Audit
National Rural Advisory Council
Natural Resource Management Ministerial Council
Northern Territory Fisheries Joint Authority
Plant Breeder's Rights Office
Quarantine and Exports Advisory Council
Primary Industries Ministerial Council
Queensland Fisheries Joint Authority
Rural Industries Research and Development Corporation
Statutory Fishing Rights Allocation Review Panel
Sugar Research and Development Corporation
Torres Strait Protected Zone Joint Authority
Western Australian Fisheries Joint Authority
Wheat Export Authority

Department of Communication, Information Technology and the Arts

Australia Business Arts Foundation Ltd
Australia Council
Australian Broadcasting Authority
Australian Broadcasting Corporation
Australian Communications Authority
Australian Film Commission
Australian Film, Television and Radio School
Australian National Maritime Museum
Australian Postal Corporation
Australian Sports Commission
Australian Sports Drug Agency
Bundanon Trust
Cultural Ministers Council
Film Australia Limited
Film Finance Corporation Australia Ltd
Information Management Strategy Committee
National Archives of Australia
National Gallery of Australia
National Library of Australia
National Museum of Australia
National Office for the Information Economy
NetAlert Ltd
Networking the Nation
Online Council
Playing Australia, Festival Australia and Contemporary Music Touring Program
Special Broadcasting Service Corporation
Taxation Incentives for the Arts Committee
Telstra Corporation Limited

Department of the Environment and Heritage

Antarctic Animal Ethics Committee
Antarctic Ethics Committee (Human Experimentation)
Antarctic Science Advisory Committee
Australia -- Netherlands Committee on Old Dutch Shipwrecks
Australian Antarctic Names and Medal Committee
Australian Greenhouse Office
Australian Heritage Commission
Bureau of Meteorology
Environment Protection and Heritage Council
Great Barrier Reef Consultative Committee
Great Barrier Reef Marine Park Authority
Great Barrier Reef Ministerial Council
National Cultural Heritage Committee
National Environment Protection Council
National Oceans Office
New South Wales World Heritage Properties Ministerial Council
Office of the Renewable Energy Regulator
Research Assessment Committees
Science Program Management Committee
Sydney Harbour Federation Trust
Tasmanian Wilderness World Heritage Area Ministerial Council
Wet Tropics Ministerial Council

Department of Family and Community Services

Australian Institute of Family Studies
Centrelink
Commonwealth Advisory Committee on Homelessness
Community Services Minister's Advisory Council
Community Services Minister's Conference
Emergency Relief State Advisory Committees
National Childcare Accreditation Council Inc.
National Disability Advisory Council
National Supported Accommodation Assistance Program Coordination and Development Committee Representatives

Department of Foreign Affairs and Trade

Australia -- China Council
Australia -- France Foundation
Australia -- Indonesia Institute
Australia -- Japan Foundation
Australia -- Korea Foundation
Australia-India Council
Australian Centre for International Agricultural Research
Australian National Commission for UNESCO
Australian Trade Commission
Editorial Advisory Board
Australian Secret Intelligence Service
Export Finance and Insurance Corporation
Foreign Affairs Council
Trade Policy Advisory Council

Department of Health and Ageing

Acute Care Advisory Committee
Aged Care Planning Advisory Committees
Aged Care Standards and Accreditation Agency Ltd
Australian Community Pharmacy Authority
Australian Council for Safety and Quality in Health Care
Australian Health Ministers Advisory Committee Working Party on Highly Specialised Drugs
Australian Health Ministers' Advisory Council
Australian Health Ministers' Conference
Australian Institute of Health and Welfare
Australian Hearing
Australian National Council on AIDS, Hepatitis C and Related Diseases
Australian National Council on Drugs
Australian Pharmaceutical Advisory Council
Australian Pharmaceutical Advisory Council
Australian Radiation Protection and Nuclear Safety Agency
Australian Technical Advisory Group on Immunisation
Communicable Diseases Network Australia New Zealand
CRS Australia
enHealth Council
Health and Community Services Ministerial Council
Food Standards Australia New Zealand
HIC (Health Insurance Commission)
Health Services Australia
Hearing Services Advisory Committee
Intergovernmental Committee on AIDS, Hepatitis C and Related Diseases
Intergovernmental Committee on Drugs
Measles Elimination Advisory Committee
Medical Services Advisory Committee
Methadone and Other Treatment Subcommittee
Ministerial Council on Drug Strategy
Monitoring and Evaluation Coordination Committee
National Aboriginal and Torres Strait Islander Health Council
National Advisory Committee to BreastScreen Australia
National Advisory Committee to the National Cervical Screening Program
National Advisory Council on Suicide Prevention
National Breast Cancer Foundation
National Disaster Relief (Health) Committee
National Drug Research Strategy Committee
National Drug Strategy Reference Group for Aboriginal and Torres Strait Islander Peoples
National Expert Advisory Committee on Alcohol
National Expert Advisory Committee on Illicit Drugs
National Expert Advisory Committee on School Drug Education
National Expert Advisory Committee on Tobacco
National Expert Advisory Group on Safety and Quality in Australian Health Care
National Health and Medical Research Council
National Immunisation Committee
National Pathology Accreditation Advisory Council
National Public Health Partnership
Pharmaceutical Benefits Advisory Committee
Pharmaceutical Benefits Pricing Authority
Pharmaceutical Benefits Remuneration Tribunal
Pharmaceutical Health and Rational Use of Medicines Committee
Private Health Insurance Administration Council
Private Health Insurance Ombudsman
Professional Services Review
Radiation Health and Safety Advisory Council
Rural Health Support, Education and Training Program Committee
Taskforce on Diabetes

Department of Immigration and Multicultural and Indigenous Affairs

Aboriginal and Torres Strait Islander Commission
Aboriginal and Torres Strait Islander Services
Aboriginal Hostels Limited
Aboriginal Land Commissioner, Northern Territory
Aboriginal Legal Service, Victoria
Aboriginals Benefit Account
Anindilyakwa Land Council
Australian Institute of Aboriginal and Torres Strait Islander Studies
Central Land Council
Council for Multicultural Australia
Indigenous Business Australia
Indigenous Land Corporation
Migration Agents Registration Authority
Migration Review Tribunal
National Accreditation Authority for Translators and Interpreters
Northern Land Council
Refugee Resettlement Advisory Council
Refugee Review Tribunal
Registrar of Aboriginal Corporations
Tiwi Land Council
Torres Strait Islander Advisory Board
Torres Strait Regional Authority

APPENDIX TWO

A sample of NGOs represented on, and associated with Commonwealth Government Advisory committees. NGOs listed are defined as "represented" or "associated with" on the basis either of their nomination onto the committee or because of individual members' associations with the NGO.

Agriculture, Fisheries and Forestry, Australia
National Consultative Committee on Animal Welfare

National Farmers' Federation
Australian Veterinary Association
RSPCA Australia
Animals Australia

Department of Communication, Information Technology and the Arts
NetAlert

Australian Secondary Principals' Association
Internet Industry Association
Australian Council for Children's Films and Television
Australian Council of State School Organisations
Australian Parents Council

Department of the Environment and Heritage
National Environment Consultative Forum (included the following NGOs)

Australian Conservation Foundation
Climate Action Network Australia
Conservation Council of Western Australia
Conservation Council of South Australia
Conservation Council of the South East Region and Canberra
Environment Centre of the Northern Territory
Environment Victoria
Friends of the Earth
Greenpeace Australia Pacific
National Toxics Network
Nature Conservation Council of NSW
Queensland Conservation Council
The Wilderness Society
WWF Australia

Department of Family and Community Services
National Family Carers Voice

ACT Young Carers Network
National Ethnic Disability Alliance
The Australian Federation of Disability Organisations
National Disability Advisory Council
Australian Parents Advocacy
Association for Children with a Disability
Council on the Ageing
Carers Australia
Mental Health Council of Australia

Department of Foreign Affairs and Trade
WTO Advisory Group

National Farmers Federation
Australian Information Industry Association
Australian Chamber of Commerce and Industry
Australian Conservation Foundation
Minerals Council of Australia
National Tertiary Education Union
International chamber of Commerce of Australia
Australian Industry Group
Australian Council for Overseas Aid
Environment Business Australia
Australian Food and Grocery Council

Department of Health and Ageing
Australian Pharmaceutical Advisory Council

Australian Council of Social Service
Australian Medical Association
Australian Medical Writers Association
Australian Nursing Federation
Australian Pensioners' and Superannuants' Federation
Australian Self Medication Industry
Australasian Society of Clinical and Experimental Pharmacologists and Toxicologists
Complementary Healthcare Council of Australia
Consumers' Health Forum of Australia
Council on the Ageing, Australia
Doctors' Reform Society
Federation of Ethnic Communities' Councils of Australia
Generic Medicines Industry Association
Medicines Australia
National Aboriginal Community Controlled Health Organisation
National Pharmaceutical Services Association
National Prescribing Service
Pharmaceutical Society of Australia
Pharmacy Guild of Australia
Returned and Services League
Royal Australian College of General Practitioners
Royal Australasian College of Physicians
Royal College of Nursing Australia
Society of Hospital Pharmacists of Australia

Department of Immigration and Multicultural and Indigenous Affairs:
DIMIA/NGO Humanitarian Issues Dialogue

Australian Refugee Association
Amnesty International
Austcare
Australian Catholic Migration and Refugee Office
Australian Council for Overseas Aid
Australian Red Cross Society
International Commission of Jurists
National Council of Churches in Australia
Refugee Council of Australia
Salvation Army
Victorian Foundation for the Survivors of Torture and Trauma

ENDNOTES

1. Spar, D.L. and La Mure, L.T., 2003: "The Power of Activism: Assessing the Impact of NGOs on Global Business", California Management Review, 45(3): page 79.

2. Bishop, P., and Davis G., 2002: "Mapping Public Participation in Policy Choices", Australian Journal of Public Administration, 61(1): page 20.

3. Department of Immigration and Multicultural and Indigenous Affairs, Annual Report 2001-02: page 95.

4. Department of Foreign Affairs and Trade, Annual Report 2002-03: page 92.

5. Kemp, D., "Funding to Support Environmental and Heritage Organisations", Press Release, 13 November 2003.

6. See footnotes 14 and 15 in Wood, R.J. 2001: "Protocols with NGOs: The Need to Know", Backgrounder, 13/1, Toowoomba.

7. Organisation for Economic Co-operation and Development, 2001. Citizens As Partners: Information, Consultation and Public Participation in Policy-Making: page 19.

8. Alston, R., "Internet Content Advisory Board Announced", Press Release, 26 November 1999.

9. Alston, R., "Australian Information Economy Advisory Council", Press Release, 20 November 1998.

10. Alston, R., "New E-Commerce Authentication Council Member, Announced", Press Release, 17 September 1999.

11. Department of Immigration and Multicultural and Indigenous Affairs, www.immi.gov.au/detention/idag.html.

12. www.dfat.gov.au/trade/consultations.html.

13. Department of Communications, Information Technology and the Arts, Annual Report 2001-02: page 123.

14. Department of Health and Ageing, Annual Report 2001-02: page 145.

15. Agriculture, Fisheries and Forestry -- Australia, 1999: Guidelines for Reaching Our Clients -- Women.

16. Bishop and Davis, op cit., 2002, page 17.

17. Spann, R.N., 1966: "The Commonwealth Bureaucracy" in Mayer H., (ed) Australian Politics: A Reader, Cheshire, Melbourne, page 470.

18. Bell, S., 2002: "Institutionalism" in Summers, J., Woodward, D., and Parkin, J., (eds) Government, Politics, Power and Policy in Australia (7th ed), Longman, Frenchs Forest, page 372.

19. OECD, 2001, op cit., page 24.

20. Bridgman, P., and Davis, G., 2000: The Australian Policy Handbook (2nd ed), Allen and Unwin, Crows Nest, page 76.

21. OECD, 2001, op cit., page 76.

22. Ibid., page 93.

23. Geddes, M., 2003. "Limits to Local Governance: Recent Experience in the United Kingdom" Paper presented to Partnerships, Community and Local Governance Conference, Centre for Public Policy, The University of Melbourne, September.

24. Bridgman and Davis, 2000, op cit., page 77.

25. OECD, 2001, op cit., page 11.

26. Ibid., page 15.

27. The papers of which were published in Australian Journal of Public Administration, 2002, Vol 61 (1).

28. Bishop and Davis, 2002, op cit., page 27.

29. Sawer, M., 2002: "Governing for the Mainstream: Implications for Community Representation", Australian Journal of Public Administration, 61(1): page 40.

30. Australian Electoral Commission, 2002: Funding and Disclosure Handbook for Third Parties.

31. Australian National Audit Office, 2001: Better Practice Guide -- Some Better Practice Principles for Developing Policy: page 2.

32. DIMIA, Annual Report 2001-02, page 3.

33. Information provided by Department for the purposes of this study.

34. Stewart, J., 2002: "Public Sector Management" in Summers, J., Woodward, D., and Parkin, J., (eds) Government, Politics, Power and Policy in Australia (7th ed), Longman, Frenchs Forest, page 69.

35. OECD, 2001, op cit., page 65.

36. Ibid., page 66.

37. www.nmp.health.gov.au/advisory/apac.html.

38. www.facs.gov.au/internet/facsinternet.nsf/content/nfcv.html.

Monday, April 05, 2004

Choosing GM for Breakfast

Address to the State Council Conference of the NSW Liberal Party,
Sunday Breakfast, Queanbeyan, 4 April 2004

INTRODUCTION

Some of you may already know that GM fish & chips are an Australian staple. For those of you who don't, or who don't know how this came to be, I will let you in on the secret.

But right now we are at breakfast, and clearly there are no fish & chips (GM or conventional) available at the buffet. So let me help you choose some other GM food for breakfast. Before I do that, let me explain something about GM crops and GM food so we can make an informed choice.

In Australia, we enjoy a wonderful selection of cheap food. Our agricultural industries have a long and proud history of developing state of the art technologies. As a consequence we grow enough food for us, and a lot extra for export. Did you know that Australian rice growers produce enough rice to feed 40 million people a meal every day of the year?

Few Australians know hunger. Thanks to modern, mechanised, high-yielding agriculture, we have full, and for many of us, fat bellies. Full and fat, many people now feel they can criticise farming practices from a distance.

So, what have you enjoyed so far from the buffet this morning? How many of you had milk in your cereal or at least in your tea or coffee?

According to a report released by Victoria's Bracks government just two weeks ago, the Victorian dairy industry imports significant quantities of GM soybean meal to feed its cows. You might be surprised that Victorian cows are fed GM food or that we import feed for dairy cows.

GM FOODS AND CROPS ARE OUT THERE

GM producing countries dominate world grain trade and account for 80 per cent of world maize exports, 70 per cent of soybeans, 50 per cent of cotton seed and 40 per cent of canola. The percentage of the market held by GM producing countries is predicted to increase as the world area harvested to GM broad acre crops increases. There was a 15 percent increase between 2002 and 2003.

Uptake of the technology has been rapid in North and South America, but anti-GM campaigning has slowed or blocked plantings in most of Europe, Africa and parts of Asia.

Interestingly, Europe is having second thoughts, and there are signs EU governments are trying to dig themselves out of the anti-GM hole they crawled into during the 1990s. GM maize was recently approved for commercial planting in the UK. The only other EU country growing GM is Spain -- it has been growing GM maize for about 5 years.

In New Zealand, anti-GM sentiment was very strong and so a confused government held a royal commission into the issue. The commission found that GM is not inherently dangerous; that New Zealand could not afford to ignore the potential benefits of the technology; and recommended the lifting of the moratorium. Field trials of the first New Zealand GM crop were recently approved -- GM herbicide tolerant onions.

Australia is interesting. In 1988 we were the first country to release a GM organism, a successful crown gall bacterium to prevent the disease of roses, apples, pears and peaches. Since then, we have made only one other release, GM cotton, first planted in 1996. This has been impressively successful, grown on 90 per cent of cotton farms in NSW and Queensland, with the latest varieties reducing insecticide use by 75 per cent. The previous GM variety reduced insecticide use by an average 56 per cent. This meant about 2 million litres less pesticide entered the environment each year.

GM FISH & CHIPS

Few people know that about 35 per cent of Australian vegetable oil is from cotton seed. The GM percentage of the current cotton crop is 55 per cent (the limit on proportion of crop planted to GM was previously 30 percent but this has now been increased). Therefore, about 20 per cent of our vegetable oil is derived from genetically modified plants.

And, I don't know whether you really want to know this, but about 30 percent of each chip you eat, by weight, is oil (the oil content will vary with the cooking temperature).

Is there a problem?

Well, vegetable oil produced from GM cottonseed and canola is absolutely identical in chemical composition to non-GM oils because all the genetic material is denatured in the refining process. These oils are thus exempt from being labeled GM. In the same way the milk from Victoria is not labeled GM.

Premium cottonseed oil is used by many takeaways because it cooks hot and retains heat.

So, the news is that we have all been eating GM fish and chips since 1997.

Curiously, anti-GM campaigners are wrongly promoting GM canola as the first GM food crop by conveniently ignoring that cotton is an important source of vegetable oil.

The cotton industry, presumably fearing a backlash from the multinational anti-GM lobby, is saying nothing. This is unfortunate given the popularity of GM technology with cotton farmers and the environmental and economic benefits.

GM CANOLA

In 2002, Greenpeace launched its anti-GM campaign in Australia and the "Network of Concerned Farmers" was formed. They have mounted a formidable campaign and we now have a situation where Labor State Governments in Tasmania, SA, WA, NSW and Victoria are blocking the planting of our next potential GM crop, GM canola, on the basis it will impact on our overseas markets and our clean green image.

GM canola gives a 20-30 per cent higher yield and has been developed for the use of the environmentally softer herbicide, glyphosate.

The situation in NSW and Victoria is as follows:

Last year the Federal Government's Gene Technology Regulator determined that GM canola is just as safe for human health and the environment as conventional canola. So the NSW and Victorian governments slapped one and three year moratoriums, respectively, on the crop to prevent commercial plantings.

At the same time the Victorian government commissioned two reports supposedly to consider market implications. Both reports were released two weeks ago and both concluded that GM products are being traded on the world market; that GM producing countries dominate the world grain trade; that there is little or no evidence of any market access problems; and that there is no premium for non-GM product. Similar conclusions were reached in a detailed study undertaken by the Australian Bureau of Agricultural and Resource Economics (ABARE) and this was also the finding of a 2003 report by WA's Department of Agriculture.

Yet incredibly, the Victorian Premier, claiming market access issues, decided a little over two weeks ago (25th March) to extend the moratorium for another four years and not give the go-ahead for field trials. His excuse (market access) is in direct contradiction of the findings of the two reports he had commissioned.

Interestingly, while Premier Bracks claimed that the local dairy industry supported the ban on GM canola, one of the reports explained that the Victorian dairy industry currently imports significant quantities of GM soybean meal to feed its cows -- as I mentioned earlier in my talk.

The three-word title of an article in the Herald Sun by columnist Andrew Bolt last week seemed to sum it up well, "Safe, good, banned".

NSW is about a year into its three year moratorium. Just last Thursday (1st April) -- exactly one week after the Victorian decision against the field trials -- the Carr government also decided against the large scale field trials and also cited marketing reasons.

NSW agricultural Minister, Ian Macdonald, said the decision to hold back on the large trials was a result of opposition from grain exporter AWB. The Australian newspaper ran with the heading, "Wheat Board snuffs GM canola trial".

Yet 3 days earlier, on the Monday (29th March), the AWB had put out a press release clearing stating it support for the trials -- "AWB reaffirmed its support for co-existence trials for GM canola to proceed in Australia as an important step in ensuring the grains industry moves forward."

The AWB has, however, given mixed messages and in the same media release the AWB reiterated that it was against the "immediate commercial release of GM canola" citing concerns for the marketing of Australian wheat. The AWB, with a marketing monopoly on the Australian wheat crop, apparently does not want to bother too much with GM issues at the moment.

Canada, of course, successfully markets its conventional wheat while also growing and marketing GM canola.

The NSW government did give the go ahead for a limited field trial of "no more than 420 ha (of GM canola)" purportedly to "test different varieties of GM canola plants against traditional varieties".

Graeme O'Neill, writing in the March issue of Agbiotec Reporter, suggested any large-scale trial would become a must-see attraction for canola farmers from the other states. Farmers would see taller and more robust plants.

While perhaps not the 3,500 ha trial O'Neill and others were anticipating, the 420 ha may move the issue forward -- but at a snails pace. We are already 8 years behind Canada.

THE TABOO FOOD

Why don't environmentalists approve of GM? Some say because it is not "natural". GM is about science and technology. Then again, so much of what we use and consume is not natural and a product of science and technology.

Yet strawberry flavored lip-gloss is not being banned. On the contrary, more women are apparently using lip-gloss, as opposed to lipstick, because it looks more "natural".

We can perhaps glean some understanding of current trends from a book, The Blank Slate by Steven Pinker. He writes about the psychology of modern society and makes the point, "many behaviors have been amoralized, switching (in the eyes of many people) from moral flaws to lifestyle choices. The amoralized acts include divorce, illegitimacy, working motherhood, homosexuality ... As if to compensate for all the behaviors that have been amoralized in recent decades, we are in the midst of a campaign to moralize new ones."

In Sydney last year, Greenpeace re-launched its True Food Guide. The big names of the Australian food scene attended the launch where Margaret Fulton declared that she hoped to keep Australia free from GM food and thus our food "safe to eat for my children, grand children and great grandchildren".

Never mind that the takeaway down-the-road was probably selling fish and chips cooked in cotton seed oil.

This moralizing comes at an economic and environmental cost -- that includes the long term competitiveness of Australian agriculture.

It is not the role of state governments in Australia to ban food crops on the basis of belief. Yet this is fundamentally the reason farmers are being prevented from growing GM canola -- because GM food is a taboo food for the environment movement. Indeed, environmentalism has emerged as the new religion, with multinational campaign-group Greenpeace representing the new church, complete with charity status and tax exemptions for its multi-million dollar earnings.

IN CONCLUSION

Now, you haven't all quite finished your breakfast. But if you have, there is always the opportunity to choose a GM breakfast tomorrow ... and the next day. When you do, remember the environmental benefits of GM including reduced use of pesticide.

So what might we chose?

I'm from Queensland and our dairy industry was the most hard-hit by deregulation, because our cows were never as efficient as those Victorian beasts. They said it was all about Victoria having a more suitable climate. But I'm not convinced. It might just be the GM soybean meal Victorian farmers have been feeding their cows.

So I recommend, if you're not averse to something sweet for breakfast, and if you want to be as efficient as the Victorian dairy industry, forget the tropical fruit from Queensland, and try some cinnamon donuts made from GM soy (Yum!).

They are now available at most Safeway and Woolies supermarkets. Be sure you are eating the real thing by checking the label, the third ingredient, in fine print should read "soy flour (GM modified)".

But you can do more. Write to the manufacturer and ask that the donuts be cooked in premium Australian GM cotton seed oil -- at least until GM canola is available.

Thank you.

Sunday, April 04, 2004

Weak States Lap up Federal Largesse

The Australian Federal system is broken and needs to be either scrapped for fixed.

While this has been apparent for years, the situation is getting worse.

Nothings illustrate the flaws of the system better than the ways and means by which the Commonwealth allocates grants to the states.

As a result of tax reform and the GST, some States have become inordinately dependent upon the Commonwealth for revenue. In 2003-04, the Commonwealth will provide grants totalling $55.8 billion, representing over 40 per cent of total state sector receipts. While Victoria and New South Wales retain a degree fiscal independence, all the other states rely on the Commonwealth for over 50 per cent of their revenue.

The problems lie not just with the level of dependence but with the way the grants are allocated amongst the states. The bulk of the grants are provided as untied grants and allocated according to the principle of fiscal equalisation. That is, they are allocated in a manner which allows each state and territory to provide an equivalent level of services, irrespective of cost or the state's own revenue raising ability.

While the Commonwealth Grants Commission, which oversees the process, goes to extraordinary lengths to avoid creating perverse incentives and to base decisions on accurate, objective data, it falls far short on both counts.

The main flaw with the process is that allows states, particularly the smaller states, to develop a hand-out mentality and to avoid necessary structural adjustments.

For example, Tasmania has long been a net beneficiary of the process, receiving a disproportionate high share of total grants. In 2003-04, Tasmania received grants totalling $3,026 per person, which was 56 per cent higher than the all-state average. Victorians, in comparison, received only $1679.

The main reason for Tasmania's large share has been its relatively backward economy. However, as detailed in the Report of the Nixon Committee, released in 1995, Tasmania's poor economic record is largely a result of poor state government policy; excessive regulation, high taxes, poor investment climate and poor infrastructure decisions. The grants system has allowed successive Tasmanian Governments to sustain these poor policies, in spite of their deleterious impact on the state's economy and their ability to raise funds.

Tasmania has also benefited from alleged "special disabilities" in the provision of state services. While some of disabilities, such as the State's high proportion of retirees and low income people are real, others are either a result of policy choices or statistical illusions. For example, the state's largest so-called disability is its disproportionately large number of small scale schools, hospitals and state facilities. However, the reason for the small scale operations is that Tasmanian Governments have been able to avoid the rationalising of services which has taken place in the larger states, thanks to the grants process.

Tasmania is not alone. South Australia and the Northern Territory, which this year will receive per capita grants of respectively 39 per cent and 493 per cent above Victoria's also suffer from growing dependency.

While all Australians suffer from the perverse effects of the federal system, the main victims will be the people who get trapped in the declining economies of Tasmania and South Australia.

Its time for a change. Unfortunately, leadership is lacking.

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Friday, April 02, 2004

A Review of the Benefits of Regulated Network Services

Energy Forum Papers

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More Salt for Murray's Hypothetical Wounds

Government institutions, as the custodians of important information on farm issues, once provided detailed assessments based on actual data. The current situation, however, is increasingly one where environmentalists on behalf of government institutions talk-up impending catastrophe based on the hypothetical.

Of concern is an article in the February issue of the business magazine Company Director. Supplied by the Marketing Manager at the Murray Darling Basin Commission (MDBC), the message to potential agribusiness investors is that dryland salinity is going to get much worse.

Quoting the National Land & Water Resources Audit's Australian Dryland Salinity Assessment 2000, the MDBC warns that, "the area with a high potential to develop dryland salinity in Australia would increase from 5.6 million ha in 2000 to 17 million ha in 2050 and within the Murray-Darling Basin it has estimated that about 3.4 million ha of land in the eastern and southern regions will be at risk by 2050".

Interestingly the Assessment does not distinguish between what might normally be considered irrigation salinity as opposed to dryland salinity.

The Assessment determined that areas with groundwater within 2 metres of the surface are at high risk of dryland salinity. The forecasted groundwater levels were, "based on straight-line projection of recent trends in groundwater levels". The article in the Company Director commented that, "salt is being mobilised on a massive scale as a result of rising groundwater".

Yet there appears to be no data to support the notion that we currently have a situation of rising groundwater in the Murray Darling Basin. Indeed groundwater levels in the Murray, Murrumbidgee and Coleambally irrigation areas -- the regions considered at most risk -- have generally declined during the past five years.

The CSIRO has provided the following reasons for the general decline in groundwater levels: improved land and water management practices; relatively dry climate over the past ten year; increased deeper groundwater pumping and higher induced leakage from shallow to deeper aquifers; and lower water allocations during the last couple of years.

The Assessment misrepresents the trend with respect to groundwater levels. It is evident that the document is always speculating.

Even when values are shown for years before the assessment was published (e.g. 1998), the values are "predictions", not measured statistics.

The Assessment does not provide any information about the actual measured extent of dryland salinity nor test its projections against actual outcomes.

Yet this piece of propaganda has been taken very seriously by government.

Incredibly, the misinformation has already helped secure $1.4 billion in funding for the National Action Plan for Salinity and Water Quality.

Recognising and assessing the dryland salinity threat is important. Indeed there was recently a salinity "slug" that moved down the Darling River system which was effectively managed by the MDBC.

Confusing an important task, however, with misinformation and exaggeration, risks undermining business confidence while also squandering resources and information.

Enough of the politicking, please. We need important government institutions to start providing real data on the real state of the environment.

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WA Takes a Commercial Risk in Shunning GM

Last week's decision by Premier Gallop to declare the entire State of Western Australia a "GM-free area" is likely to come back and haunt the government. The purported concern for WA's "clean green status" will eventually be exposed as populism playing to prejudice and ignorance.

WA canola growers are now well and truly restricted to the continued production of triazine-tolerant (TT) canola. This variety, however, is not "clean and green" but rather its production is dependent on atrazine, a herbicide being phased out in Europe on the basis it poses an unacceptable environmental risk.

The WA Department of Agriculture acknowledges that dependence on atrazine is a problem because of concerns over groundwater contamination.

The reality is that GM crops are cleaner and greener than conventional varieties and in the case of canola give a 20-40 per cent higher yield.

Canada started growing GM canola in 1995 and is now the major world exporter with Japan and China major markets. GM cotton has also been an impressive success now grown on 90 per cent of cotton farms in NSW and Queensland with the latest varieties reducing pesticide use by 75 per cent.

GM cotton is a competitor to canola as 35 per cent of the vegetable oil consumed in Australia is from cotton seed.

Interestingly, the first plantings of GM cotton in 1996 passed without much notice as it predated the Australian launch of the anti-GM Greenpeace campaign and the formation of the "Network of Concerned Farmers".

The anti-GM campaigners now conveniently ignore cotton as an important source of vegetable oil and wrongly promoting GM canola as the first GM food crop. The cotton industry, fearing a backlash from the multinational anti-GM lobby, is saying nothing. This is unfortunate given the popularity of GM technology with cotton farmers and the environmental and economic benefits it has brought the industry.

In Sydney last year, Greenpeace re-launched its True Food Guide. The big names of the Australian food scene attended the launch where Margaret Fulton declared that she hoped to keep Australia free from GM food and thus our food "safe to eat for my children, grand children and great grandchildren". Never mind that the takeaway down-the-road was probably selling fish and chips cooked in cotton seed oil.

We can respect Margaret Fulton's desire to not eat GM food -- in the same way that we respect the rights of Moslems to not eat pork -- but the anti-GM campaigners do not appear to accept other people's right to choose GM. It should not be the role of state governments in Australia to ban food crops on the basis of belief. Yet this is fundamentally the reason farmers are being prevented from growing GM canola -- because GM food is a taboo food for the environment movement. Indeed, environmentalism has emerged as the new religion, with multinational campaign-group Greenpeace representing the new church complete with charity status and tax exemptions for its multi-million dollar earnings.

The announcement by Premier Gallop was reported nationally as the NSW and Victorian governments considered applications for large scale commercial field trials of GM canola.

Following the decision of the Federal Government's Gene Technology Regulator last year that GM canola is just as safe for human health and for the environment as conventional canola, the response of the Victorian government was not to welcome a cleaner and greener alternative for the state's farmers but to slap a one year moratorium on GM canola. At the same time the Victorian government commissioned two reports supposedly to consider market implications.

Both reports were released last week and both concluded: GM products are being traded on the world market; GM producing countries dominate the world grain trade; there is little or no evidence of any market access problems; there is no premium for non-GM product.

Similar conclusions were reached in a detailed study undertaken by the Australian Bureau of Agricultural and Resource Economics (ABARE) and this was also the finding of a 2003 report by WA's own Department of Agriculture.

Yet incredibly, the Victorian Premier, claiming market access issues, decided just last Thursday to extend by 4 years the moratorium on GM crops and not give the go-ahead for the field trials.

His excuse is in direct contradiction of the findings of the two reports he had commissioned. Interestingly, while Premier Bracks claimed the local dairy industry supported the ban on GM canola, one of the reports explains that the Victorian dairy industry currently imports significant quantities of GM soybean meal to feed its cows.

NSW has a current three year moratorium but is yet to make decisions regarding the large scale field trials of GM canola. South Australia and Tasmania also have moratoriums.

In their recent announcements, both the WA and Victorian Premiers have played up the "clean green" concept while ignoring issues associated with the herbicide atrazine. A much higher proportion of WA canola growers, approximately 90 per cent, plant TT canola so the issue is much more important in WA.

Two major problems loom. The WA canola industry could find itself stranded if the herbicide atrazine is eventually banned in Australia. Perhaps of more concern, however, is the issue of market access as raised by Graeme O'Neill in the latest issue of the biotechnology magazine Agbiotech.

O'Neill suggested that a logical extension of the European ban on atrazine is that Europe will refuse to import canola grown with the herbicide. If Japan were to follow the European ban on triazine herbicides, WA could lose its most lucrative canola market. Ironically Japan and the European Union both now accept GM oilseed imports.

Australia has been a secular, rational nation with efficient agricultural industries able to develop and adopt state-of-the-art technology. On the basis of quasi-religious belief and prejudice, however, State Governments are now imposing bans on a technology that promises improved yields while reducing environmental impacts.

At risk is our international competitiveness and an opportunity to use genuinely cleaner and greener technology.

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Should Companies Engage with Anti-business NGOs?

The public case for engagement of the critics of business is twofold.

First it is claimed that engagement will help re-engender trust in the business sector. Trust in business and many of society's key institutions has declined. On the other hand trust in non-government organisations (NGOs) is high.

And so, the claim goes, in order to recover public trust businesses should adopt NGOs as stakeholders -- adopting their values, objectives, and of course fund them.

Another argument is that the engagement and partnerships will be "good for business" and will be good for shareholder value.

Both arguments are however, seriously flawed.

While many of the anti-business NGO have built-up trusted brand names, their brands are built largely on false and untested claims.

Few of the NGOs clamouring to be stakeholders are anything more than tightly held clubs of activists.

While NGOs like to portray themselves as instruments of "people power", this is largely an illusion. By falsely claiming to represent people, they are actually undermining democracy.

They also like to claim to be forces for better governance. Yet recent studies such as a one by the One World Trust, a UK NGO, illustrate that NGOs have poorer standards of governance and accountability, then the business and international organisations they seek to "reform".

One could argue that this lack of transparency lies at the centre of their credibility. While many people have heard of NGO brands like Oxfam, Greenpeace and WWF, few actually know much about how these organisations operate and perform. Unlike government and business, NGOs are not subject to sustained scrutiny of their accounts, priorities and actions. As this scrutiny inevitably falls upon the sector one should expect levels of trust to decline.

Few NGOs who target business empathise with the businesses with which they seek to engage. They bring no technical expertise, no knowledge of markets, no expertise in management or regulation and possess a disdain for capitalism. What's more, many of their demands are contrary to the best interests of the business' traditional stakeholders with whom business have contractual relationships with, such as shareholders, suppliers, customers and the like.

Of course, not all NGOs that target business are anti-business per se; large numbers are just rent-seekers, who have jumped on a bandwagon that promises money and a career.

The power of NGOs comes from their power to embarrass, their ability to generate media and target brand names. Their power comes from the NGOs ability to create risk.

So how do companies deal with these new self-appointed stakeholders?

Engagement is being held up as an answer. It is impossible to give a definitive answer as to whether companies should or should not engage. But it is fair to say that companies are right be cautious.

The world has moved on from the days of the anti-globalisation demonstrations in Seattle. We are now confronted by a world at war against terror. Much to the chagrin of campaigners, most NGO campaigns have lost their potency.

Governments are also becoming far more aware about the threat that NGOs pose to their sovereignty and political power. For all the rhetoric about corporations ruling the world, it is governments who possess real power and who jealously guard it from rivals. A very real risk of business engagement with some NGOs is its potential to undermine a firm's government relations strategy.

A consequence of both these developments is that the NGO sector can expect a contraction in the "space" that it operates in.

As to the decision of whether to engage or not with NGOs, perhaps the most interesting development has taken place within NGOs themselves. All but the most radical NGOs regard engagement as part of their strategy.

This subtle but important distinction has major implications for business. The mere fact that NGOs have come to expect engagement is an important change in the dynamics. It means that corporates have a tool at their disposal to demand more accountable and transparent behaviour in exchange for engagement.

The truth is that, these days, engagement matters far more important to NGOs than business and corporate executives should never forget this. Managers should treat engagement as a privilege for activists and not an automatic "right".

ATSIC and Labor

Mark Latham's announcement of the Labor party's intention, if elected, to abolish ATSIC is designed to trump the government, which is still considering its response to the November 2003 report "In the Hands of the Regions: A New ATSIC".

Labor's proposal broadly follows the recommendations of the report, especially with respect to the regional devolution of service delivery and decision-making. Labor favours a directly elected national body, the Report an indirectly elected body, consisting of the currently constituted 35 regional council chairs. Is this a significant shift from the Labor platform, which, as recently as January, promised to "continue the development of ATSIC as a self-determining indigenous organisation"? Not at all, it simply recognises that, as Latham stated, "the current model has not delivered sufficient gains to indigenous communities" and "It's been very much damaged by ... Geoff Clark".

Latham added the political point, ATSIC had been "gutted by the Howard Government", which "had left a vacuum in indigenous policy".

I think Latham is correct, there is a vacuum in indigenous policy. How does Labor, or for that matter, the government intend to fill it?

In many ways, the two sides are artfully avoiding the real issues, finding comfort in ATSIC's discomfort. For example, Senator Kerry O'Brien, the Labor shadow minister, argues that the new national body should not make spending decisions. In this regard, it is no different to the government, which has established ATSIS, to make funding decisions.

Labor is also close to the government in recognising that the major responsibility for the delivery of services to indigenous communities rests with state governments. Senator O'Brien wants to talk to the state governments to try to create a "bundling of resource delivery and a federal-state-territory agreement on regional and community plans".

Labor wants to make indigenous services a national priority, "to list indigenous services and governance on the COAG agenda". Such priority is already assured, with reports in recent months from the Commonwealth Grants Commission and the Productivity Commission.

Labor wants to promote regional governance "to ensure that services and resources are getting through to the people who need them". This was a major theme in the ATSIC Review, and no doubt the government will similarly give some credence to the new fashion of regionalism.

Labor wants to strengthen indigenous participation in national policymaking by having its new directly-elected national indigenous body, "have responsibility for providing independent policy research and advocacy, delivering policy advice to government ..." The government would, no doubt, also like to see a body providing advocacy and research advice.

Beyond this apparent convergence, the pretence should end. The real difference between the Labor and the government, both are too frightened to admit, is that Labor believes in collective self-determination, and the government believes in individual self-determination.

To illustrate the difference, think of Redfern.

Redfern was a reclaimed white slum, which, with millions of taxpayers dollars became a black slum. It became a refuge for Aborigines, many of whom had significant personal problems, to escape the woes, which beset them in rural and regional NSW. The solidarity they found in Redfern was not sufficient to help those who needed something more. In fact, political solidarity probably only helps the competent to cut their political teeth and either move on to a new level of politics, or make a living out of government programs designed to help their comrades.

Similarly, disbursing the Redfernites will not help much either if Aborigines continue to rely on government services. Better delivery of Government services is not the issue. Regional coordination is not the issue. The issue is having Aborigines, or anyone else for that matter, make best use of their abilities.

Political structures and coordinated service delivery are no substitute for helping self-determining individuals achieve their potential. The key to this is to have the correct individual incentives to make choices of real consequence.

This means that governments must intervene in Aboriginal lives, not in the way they and the missionaries did in the past. But intervene, through truancy officers and patrol officers to make it clear that Aborigines must access the skills they need to survive. They must take the pathways common to all to a productive and fulfilling life.

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Thursday, April 01, 2004

Time to Get Into Party Spirit

This week the ACTU is meeting to finalise its election strategy against the Howard government. Doug Cameron, the left-wing union leader, was reported in The Australian Financial Review yesterday as saying that unions would support the election of a Latham Labor government with "renewed vigour". That's hardly surprising.

Labor has promised to wind back not only the coalition's, but also the Hawke and Keating industrial relations reforms.

The belief that the financial and industrial relations changes of the 1980s and 1990s are now embedded in the country's economic and political system is wrong.

Australia achieved, literally, world-record rates of economic growth precisely because we abolished many of the measures that Labor is now proposing to reintroduce.

Labor is committed to restoring the central role of the Australian Industrial Relations Commission, eliminating individual workplace agreements, and giving unions further automatic rights to enter workplaces.

Most dangerous is the proposal to discriminate in favour of companies that are "union-friendly" in the awarding of government contracts. If the Liberals suggested that companies that were "workers' choice-friendly" should gain such a preference there would be an outcry. But when it's Labor and the unions, the situation is taken for granted.

The $40 million that the union movement has donated to the ALP since 1995 delivers a lot of influence.

The problem for Australian democracy is that one of our two major political parties has access to substantial resources (both financial and human) while the other does not.

Last year, Labor raised at least $2million more than the Liberals.

Liberals can no longer rely on their traditional funding base from the private sector. Increasingly, companies are deciding either not to make political donations at all or, if they do, they are contributing in equal proportions to both parties.

This decision is short-sighted and self-defeating. It is the result of the timidity of directors in the face of a feared backlash from company stakeholders.

The irony is that the stakeholders the directors are attempting to placate are usually hostile to the company, and antagonistic to the notion of the market economy that allows the company to operate in the first place.

The consequences of business vacating the political field to the ACTU and a growing coalition of left-wing interests is starting to become obvious.

Labor's industrial relations policy is one example. Another is the new Financial Services Reform Act. It requires that superannuation funds and fund managers report on the extent to which they take account of "labour standards". This provision was inserted at the instigation of the ALP.

Precisely what it is about "labour standards" that must be reported is unknown, but nevertheless it is legislation that must be complied with.

The rule of law requires that individuals (and corporations) obey the law -- no less and no more. Laws must be clear and easily understood.

Labor's union-friendly preference policy is, in principle, obnoxious -- and it can be implemented without legislation.

Nothing prevents a future ALP government from making it a term of government contracts that businesses be union-friendly. From the ACTU's perspective it would be simple and effective. The question of what is a union-friendly business would not be decided by parliament -- it would be left to bureaucrats and ministers. How companies wishing to obtain government contracts are expected to comply with such a requirement is impossible to tell.

Australian company directors often complain when they compare the attitude towards entrepreneurial activity shown in the United States to that in this country.

Obviously there are many reasons for the difference, but one of them is that in America, company boards, and individual directors personally feel a responsibility to support the political process.

In the United States, company directors are far more likely to be honest in their assessment about the effects on their business operations of either a Republican or Democratic administration.

In Australia, anyone responsible for either a small, medium, or large-scale enterprise would be hard-pressed to genuinely claim that Labor's industrial relations policy would be good for their business.

But do Australian companies put their money where their mouth is in the same way the ACTU does for the ALP?

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Wednesday, March 31, 2004

A New Education Myth: Latham's Reform Plans

Mark Latham's policy that good teachers in bad schools should be paid more is a good idea. It represents a recognition from the Labor Party that market forces apply in education as they do in every other walk of life.

If teachers are paid the same regardless of whether they are at a "good" government school in a middle-class suburb where most students come from two-parent families -- or at a "bad" school in an economically depressed area where many of the students come from single-parent families suffering poverty, it is obvious what the outcome will be.

And this is precisely what has occurred. The best and most experienced teachers in the government system are overwhelmingly concentrated in schools which are selective or situated in affluent locations.

The conclusion from research conducted both in Australia and overseas is that the main reason why students from "bad" schools perform poorly compared to students from "good" schools is not because of students' background. It is because of the qualities of the school itself, particularly the standard of teaching and educational leadership offered by the headmaster or principal.

The great myth of education policy in this country is that non-government schools outperform government schools because government schools must teach any student that wishes to attend, while non-government have the privilege of choosing who they enrol.

In fact the reason why non-government schools achieve higher outcomes is because they employ better teachers than do government schools, and they are largely free from the dictates of state education departments and teacher unions.

The idea of using salary incentives to attract teachers to bad schools, and more generally to improve the pay of good teachers is hardly new or radical.

Over the last few decades both Liberal and Labor politicians have supported the concept. For example, it was a plank of the education policy of the first Kennett government in 1992, and nearly ten years, Latham himself floated the proposal in What did you learn today?

And yet nothing has happened.

This year a teacher at the top of the pay scale in a government school in Sydney will be paid $59,000 per year regardless of their competence, and regardless of the type of school at which they teach.

Why?

Because the union of teachers in government schools, the Australia Education Union (AEU) is implacably opposed to both merit pay and differential salaries because such measures require an assessment of the performance of individual teachers and of their school.

As recently as November last year the Victorian Branch of the AEU said its gravest fear was the introduction of performance-based pay scales.

Since the 1970s the AEU has consistently argued that instead of paying good teachers better, governments should employ more teachers to reduce class sizes.

Such a strategy increases the unions' membership, but its educational worth is dubious.

This is appreciated by parents who are increasingly choosing non-government schools ahead of government schools even though in many cases non-government schools have larger class sizes and fewer resources than their government counterparts.

Providing a bad government school with additional poor or inexperienced teachers is of little value. But if such a school could replace half of its teachers on salaries of $59,000 with the same number of teachers each paid $85,000 the result would be quite different.

This is precisely the sort of policy being pursued by the Blair Government in an effort to deal with what it calls "underperforming schools".

Whether Latham has the courage of his claimed convictions time will tell, but so far the signs are not good.

The Howard government's university legislation, which would give universities the same sort of flexibility that Latham wants for government schools is being blocked by Labor in the Senate.

Likewise, notwithstanding his cries about the "crisis of masculinity" Latham refused to support the Coalition's measures to allow for male only teacher scholarships.

The lesson of the last Labor leader who attempted to confront the AEU should not be forgotten.

In 1999 John Brumby the then leader of the Victorian Labor opposition suggested something very similar to what Latham is proposing. A few months later Brumby was forced to quit after a caucus revolt orchestrated by the teachers' union.

Unfortunately for Latham he can't have it both ways. He can't reform government schools and satisfy the demands of one of Labor's core constituencies.

If Mark Latham was serious about the policies he's announced he deserves to be applauded. The only problem is he isn't. If he was serious he wouldn't have committed himself to implement his policy "in cooperation" with the AEU -- which is precisely what he has done.

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Making a Meal Over GM Ban

It turns out that aside from chomping on kebabs in his recent visit to the Middle East, Victorian Premier Steve Bracks was also undertaking market research. He discovered, according to a press release on Thursday, that many parts of the Middle East have reservations about GM foods. He offered this as a major reason for banning the production of GM canola in Victoria. Canola is the most important oilseed grown in Australia and is the basis for a range of products including margarine and cooking oil.

Victoria's action puts pressure on the NSW Government to do likewise.

In announcing the ban, Mr Bracks acknowledged that all scientific studies and the Commonwealth's Gene Technology Regulator had declared the product safe for human health and the environment. His case rested on an alleged wish to avoid jeopardising key Victorian markets, like the Middle East, where he claimed there were some concerns.

Yet the report he commissioned (by ACIL Tasman) could find no evidence anywhere that any such concerns adversely affected prices. That report also pointed out that Australia's main competitors which have embraced the new technology (the US, Canada, Argentina) have lost no market share. In the US, GM production accounts for over 80 per cent of soy, 40 per cent of corn and 75 per cent of canola.

Moreover, the Middle East, far from shying away from GM foods, is actually a major importer of GM grains from North America! And the timing of the decision is exquisite, since last week saw the lifting of the EU's embargo on GM canola, removing the restraint from the only area where it had been in place!

It also turns out, according to the data assembled by the Victorian Government's consultants, that Australia actually imports GM products. Soy meal is imported from the US and its main use is as feed for dairy cattle.

So why introduce the ban?

Well there is the usual noisy clutch of anti-science groups and the organic farmers. There is also support from some other farmers who want to proclaim their goods as GM free and avoid any costs entailed in segregating them from GM products. They care little that their fellow farmers are denied a product with massive productivity advantages.

There is another constituency the government quotes in support of its decision. This includes some major players in the Victorian dairy sector, ironically a sector that is already using GM products for stock feed. Dairying may, however, feel it stands to gain from the decision to exclude home grown canola. After all, butter and margarine (mainly produced from canola) are vintage competitors. Older Australians will recall the days when governments advantaged butter by insisting on margarine being coloured pink. Some dairy producers may see a threat from GM canola, which is 15-30 per cent more productive than regular canola. That would pretty soon translate into a price reduction of this order and lower prices to the consumer.

Preventing a competitor obtaining an advantage is a classic industry strategy. Equally, the proper role of government is to combat this.

The dairy industry actually has no issues with GM products, and the United Dairyfarmers of Victoria have criticised those in the industry that gave comfort to the Victorian government position. The industry is keenly awaiting the development of faster growing or salt tolerant GM grasses as inputs to its own products.

The Bracks decision also flies in the face of a major arm of the government's industry strategy. It closes many doors on the biotechnology industry. Paradoxically, the Victorian government has been engaged in a bidding war with Queensland to attract biotechnology research to the state. It has funded bodies like the BioMelbourne Network to promote biotechnology in foods "such as papaya, soybeans and corn". This is now looking like a bucketful of wasted money, especially since its main rival, Queensland, already produces GM crops and has no problem abiding by the decisions of the Commonwealth's expert, the Gene Technology Regulator.

In this respect, the experience of the European Union is salutary. EU Commissioner Philippe Busquin lamented that the EU moratorium on GM crops taken without sound scientific evidence, had severely harmed European capabilities. He said, "If we do not reverse the trend now, we will be unable to reap the benefits of the life science revolution and become dependent on technologies developed elsewhere".

Of course, Bracks' claims of industry support for his fundamentally anti-technology decision are purely a smoke screen. In putting the ban in place, the Bracks government is pandering to irrational green hysteria. Unfortunately, the decision speaks volumes about the Premier's lack of leadership and willingness to abandon technology and soundly based public policy at the first whiff of a green panic campaign.

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Tuesday, March 30, 2004

Bracks Sowing GM Seeds of Doubt

If the Bracks Government were honest, it would tell us the real reason it announced the ban on the commercial planting of genetically modified (GM) canola.

Instead of being honest, however, the State Government has given reasons that can not be supported by logical argument, and that fly in the face of expert advice.

Indeed, the Premier is misleading when he claims that the growing of GM crops in Victoria will adversely impact on our grains and dairy export markets and his decision will cost farmers up $135 million per year.

So much for his government concern for rural communities. Last year, in anticipation of the Australian Office of the Gene Technology Regulator giving the go-ahead for the planting of GM canola, the Victorian Government slapped a one-year ban on its commercial planting.

At that time we were promised an independent review of market implications.

It was accepted that there were no human health or environmental issues.

The independent review by Professor Peter Lloyd, released the same day the Premier announced he was extending the ban on the commercial production of GM canola to 2008 (25th March 2004), clearly states: "the Victorian canola industry is an export-orientated industry ... In almost all countries food and products processed from GM canola varieties can be sold, subject in some countries to labelling requirements".

Hence, the crucial question is -- is there a premium for non-GM canola seed over GM canola seed in overseas canola markets?

The answer is a clear "no".

A detailed study undertaken last year by the Australian Bureau of Agricultural and Resource Economics (ABARE) reached the same conclusions: GM products are being traded on the world market; GM producing countries dominate the world grain trade; and that there is no premium for non-GM product.

The Bracks Government commissioned a second report from ACIL Tasman, also released when the decision to continue the ban on GM canola was announced.

This report is also clear in its findings, stating, "while there are some sensitivities to GM crops in Australia's key markets for agricultural produce, there is little or no evidence of any general price discrimination or market access problems."

Interestingly, while the Premier claimed the dairy industry supported the ban on GM canola, the ACIL report explains that the Victorian dairy industry currently imports significant quantities of GM soybean meal to feed its cows.

If the dairy industry is already using GM products, why would it seek to impose restrictions on domestic canola growers?

Double standards are common in the GM debate. Indeed few people realize that fully 35 per cent of the vegetable oil consumed in Australia is from cotton seed -- and the cotton industry has been growing GM crops since 1995.

Interestingly, the first plantings of GM cotton predate the Australian launch of the anti-GM Greenpeace campaign and the formation of the Network of Concerned Farmers.

The anti-GM campaigners are now conveniently ignoring cotton as an important source of vegetable oil and wrongly promoting GM canola as the first GM food crop.

The cotton industry, fearing a backlash from the multinational anti-GM lobby, is saying nothing. Because cotton seed oil extracted from GM cotton is identical to the product crushed from non-GM seeds, no-one has been the wiser.

In Sydney last year, Greenpeace re-launched its True Food Guide.

The big names of the Australian food scene attended the launch where Margaret Fulton declared that she hoped to keep Australia free from GM food and thus our food "safe to eat for my children, grand children and great grandchildren".

Never mind that the takeaway down-the-road was probably selling fish and chips cooked in cotton seed oil.

We can respect Margaret Fulton's desire not to eat GM food -- in the same way that we respect the rights of Moslems not to eat pork -- but the anti-GM campaigners do not appear to accept other people's right to choose GM.

We might choose to eat GM because of real environmental benefits, particularly in terms of reduced insecticide and herbicide use.

For example, the latest GM cotton varieties reduce pesticide use by an impressive 75 per cent. The new GM canola varieties will also require smaller quantities of safer pesticides while giving a higher yield. GM cotton has been an impressive commercial success and is used by over 90 per cent of Australian cotton growers.

The Bracks Government made a big mistake in banning the commercial planting of GM canola. The real reason was not concern for export markets, but fear. Fear of the unknown and fear of a backlash from fearmongers such as Greenpeace.

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Friday, March 19, 2004

Let's be Clear on Native Veg Clearing Rates

Let's be clear on native veg clearing rates

New tree clearing laws will soon come into effect in NSW. They will change the way applications to clear native vegetation are assessed. Under the new rules, locally-based experts on regional Catchment Management Authorities, rather than bureaucrats, will deliberate over applications. The NSW Farmers' Federation has welcomed the changes on the basis the new regime will provide more flexibility and decisions to reject applications will need to be based on "clear scientific reason".

Local decision making was promoted in Queensland a few years ago. The regionally developed plans, however, were never going to be implemented once it became evident that this would result in what the environment movement deemed to be too high a clearing rate. New Queensland legislation, purportedly to outlaw broad-scale tree clearing by December 2006, is due to be introduced into the Queensland Parliament this week.

The tree clearing rate in Queensland averaged 437,000 hectares per year over the period 1991-2001. This includes approximately 757,000 hectares "panic cleared" in 1999-2000 immediately before the introduction of the Vegetation Management Act 2000. However, according to the Queensland Government report Land Cover Change in Queensland 1999-2001, even then, during the height of clearing, the annual clearing rate was only 0.71 per cent of the 81 million hectares of woodland, forest and shrub cover across Queensland.

According to page 14 of the same report, there has been a 5 million hectares increase in the area classified as woody vegetation in Queensland over the period 1992 to 2001.

John Benson's much quoted Setting the Scene: The Native Vegetation of New South Wales report of the Native Vegetation Advisory Council of NSW (1999) emphasizes loss of biodiversity associated with broad-scale tree clearing and shows the total area that has been cleared of native vegetation for each bioregion in NSW (Benson is from the Royal Botanic Gardens, Sydney). The report, however, does not indicate the net change in native vegetation cover. It indicates 35 million hectares of land was cleared before 1921 (page 27) and a number of anecdotes are added to allow the reader to assume that subsequent clearing has made the problem worse.

Curiously, the report does not have a total figure for the State. A simple tally reveals that a lesser value of 28 million ha is recorded being cleared by 1998. Subtracting the 1998 value (28m ha) from the 1921 value (35m ha) would suggest that, despite all clearing in NSW since 1921, there has still been a net increase in native vegetation of approximately 7 million ha. In other words, the general trend is one of increasing native vegetation cover.

The new laws in Queensland and NSW have been developed in a political environmental that has assumed a trend of increasing native vegetation loss -- in particular that there has been a reduction in the extent of forest cover. The official statistics, however, suggest a trend of increasing forest cover for both States.

Re-growth and woodland thickening in the rangelands of both NSW and Queensland is well documented in the scientific literature. The phenomenon, however, has been largely ignored by the political process driven by green campaigning that has given the very false impression that broad-scale tree clearing is the key issue -- reducing overall forest cover and destroying the environment.

Despite some good intentions, I can't see any of the vegetation management issues being resolved in the short to medium term. At what point can we conclude that there has been sufficient conservation if we do not know, or can not agree, what the long-term trends are with respect to re-growth and woodland thickening?

We need better information, including relevant statistics and honest discussion. It may also need to be acknowledged that our grasslands are as valuable and as vulnerable as our forests.

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Tuesday, March 09, 2004

Cut the Tax on Properties

It is time for relief for Victorian taxpayers, and the place to start is a reduction in conveyancing fees.

The Bracks Government has been the beneficiary of an enormous tax windfall. Over the last four years, tax receipts have grown 27 per cent more than expected by the government.

Instead of giving the windfall back to taxpayers or reducing its taxing effort, the Government has spent the lot, primarily on more and better-paid public servants.

It is now times to redress the tax imbalance.

Aside from fees and fines, now 119 per cent higher than predicted four years ago, the most egregious increases have been in property taxes; specifically conveyancing duty.

The Victorian Government levies seven different taxes on property which are expected to raise a total of $3.5 billion in 2003-04. This will represent 35 per cent of the State's total tax receipt -- a level greater than in any other State or Territory.

The largest property tax, by a substantial margin, is the conveyancing duty which is levied on all property transactions, including the sale of private homes. Receipts from conveyancing duty are now expected to increase to $2.3 billion in 2003-04 or $400 million above budget. Moreover, over the last four years, the conveyancing duty receipts have more than doubled, generating $1.2 billion in windfall revenue.

Clearly the boom in house prices and in sales has contributed to the rapid growth in conveyancing receipts. However, these are not the only reasons. As detailed by the Productivity Commission in their Discussion Paper on First Home Ownership, Victoria has imposes the most onerous set of conveyancing duties in the country. Even after adjusting for differences in average house prices, Victoria's effective rate of duty is 30 per cent above the average of all States. Moreover, its duty rate is higher for most classes of buyers, including First Home Buyers.

The reasons are clear. Victoria levies high duty rates which kick in at low property values, and its highest duty rate is reached at relatively low values.

Conveyancing and other stamp duties have a number of pernicious effects which make them particularly bad taxes. First, they inhibit necessary capital adjustments. For example, they inhibit people from moving home in search of work. Or, as is currently the case with Loy Yang A, inhibit the necessary sale of assets. Second, they are imposed multiple times on the same asset. For example, duties are imposed on the same piece of land as it passes from developer, to builder and to the final purchaser, and are imposed on the sale of the property, as well as on its mortgage and its insurance policy. Third, receipts tend to be very lumpy and induce governments to commit to unsustainable levels of expenditure. And there is little doubt that when the property bubble deflates, the Bracks Government's fiscal position will be exposed.

The solution lies in reducing stamp duties across the board.

The next question is: how to fill the gap in income? I suggest that the most equitable way would be to cut back on the waste that has been built up over the last four years of easy money.

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Friday, March 05, 2004

Exploring the Past to Define the Future

Have you heard of the "wet paddocks cause rain" phenomena? These are stories that confuse cause and effect.

Just as an appreciation of the immediate history of an area can help determine whether or not the ground was wet before it rained, the writings of the early explorers can give us an appreciation of the state of the environment before European settlement.

In my column, "Putting Murray River where its mouth is" (The Land, February 5, p15), I suggested that the River's mouth could reasonably be considered to be where the River enters Lake Alexandrina near Wellington -- rather than below the barrages and the lakes which is the current official position of the mouth. There has been considerable interest in this issue including a rebuttal from John Formby ("Misled on Murray", The Land letters, February 19, p20).

Famed explorer, Charles Sturt, also thought the mouth was where the River enters Lake Alexandrina. Sturt recorded his impressions in February 1830 as follows, "The view was one for which I was not altogether prepared. We had, at length, arrived at the termination of the Murray. Immediately below me was a beautiful lake, which appeared to be a fitting reservoir for the noble stream that had led us to it; and which was now ruffled by the breeze that swept over it".

Charles Sturt was in a whale boat, food supplies were low, and he was apparently suffering from tooth-ache.

He spent the next several days crossing Lake Alexandrina and his observations provide insight into the lake's environment before European settlement. Stuart wrote, "I was surprised at the extreme shallowness of the lake in every part, as we never had six feet upon the line". And, "Thus far, the waters of the lake had continued sweet; but (on the second day) the transition from fresh to salt water was almost immediate".

As he attempted to reach the ocean from the southern extremity of the lake complex he observed, "it was in vain that we beat across the channel from one side to the other it was a continued shoal (submerged sandbank), and the deepest water appeared to be under the left bank.

"The tide, however, had fallen, and exposed broad flats, over which it was hopeless, under existing circumstances, to haul the boat. We again landed on the south side to the channel, patiently to await the high water".

But subsequent attempts were also futile with Sturt reporting that, "Shoals again closed in upon us on everyside. We drag the boat over several, and at last got amongst quicksands ... I found we had struck the south coast deep in the bight of Encounter Bay".

The next day he reported, "If I had previously any hopes of being enabled ultimately to push the boat over the flats that were before us, a view of the channel at low water, convinced me of the impracticability of any further attempt. The water was so low that every shoal was exposed, and many stretch directly from one side of the channel to the other".

In 1830 Sturt wrote that the Murray River terminated at the entrance to Lake Alexandrina. The southern perimeter of the Lake, now officially the Murray's Mouth, was then a maze of impassable sandbars. The explorer's observations indicate that Lake Alexandrina was shallow and salty and without a navigable passage to the ocean many decades before water was first extracted from the Darling and Murray Rivers for irrigation.

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Tuesday, March 02, 2004

The Fortunes of Economics

Economics and its Enemies: Two Centuries of Anti-Economics
by William Oliver Coleman
(Palgrave-Macmillan, London, 2002, hardback, 328 pages, A$198)

In this excellent work of scholarship, the Tasmanian academic William Coleman reviews the attacks on economics that have persisted since its foundation and which continue unabated today. In the opening chapter, the author draws the battlelines between the accusers and the defendants, and describes the field of action. This patient and methodical introduction leads into a careful and balanced description of two centuries of conflict over economics.

This absorbing study provides not only detailed information and a telling commentary, it is also entertaining. Coleman organises the many sources of criticism and condemnation directed at economics and economists, starting with Smith, Hume and the Physiocrats, and following the trail until economics reached maturity with Marshall and the Marginalist School. He makes a genuine assessment of both sides of the argument, explaining the confusions caused by economic texts as well as the malicious self-indulgence of the enemies of economics. Yet he is never condescending and restricts his judgements to the final chapter. His patience must have been sorely tested by such restraint.

The lesson is that the enemies of economics are drawn principally from political interests of one sort or another. For the most part, these enemies defame rather than discredit any analysis or logical argument that weakens or undermines their rhetoric. Their goal is to destroy economics as an intellectual pursuit; to demolish its precepts rather than simply to criticise.

This is illustrated by the contradictory use of economics in the revolutions that ended the Age of Enlightenment. Economic reasoning based on self-interest and economic freedom brought by markets was first decried as anti-monarchist and disruptive of social order in the lead-up to the French Revolution. This was then condemned when the Republic was established because "the citizens" saw self-interest as supporting hierarchy. When the monarchy was restored economics was again regarded as disruptive of law and order. Some would argue that this confusion about economics has remained with French politics until the present day!

Although Classical economists regarded themselves as apolitical, economics generated strong reactions in political circles. The Age of Revolution saw Napoleon establish aggressive nationalism, following the United States' more peaceful model. Nationalism elevated public policy and history/ culture above abstract economic theory. The rise of the new Germany in 1870 coincided with the establishment of The German Historical School which introduced the inductive historical method into economics. Economics had to be part of national development. The protectionism advocated earlier by Hamilton and List was incorporated into industrial policy and mercantilism revived. This all-encompassing nationalism was to exact an enormous price from Europe in the next hundred years! The German Historical School is now part of history but, Coleman notes, its ghosts linger in so-called "development economics".

Politicians' concerns about economics and nationalism are nowhere better illustrated than in Coleman's chapter on economists in Totalitarian States. Stalin would not tolerate alternative opinions. First he bullied, then brutalised eminent Russian economists, before he eradicated them. This must have been a considered decision because he is reported to have had a large collection of economics books that he had annotated. This chapter is disturbing to read because memories of the Stalinist monster-state and Hitler's Third Reich are revived.

Coleman spends some time on the disaffection of 19th century churchmen with economics. The main concern was that, by arguing for self-interest and individual freedom, economics undermined social order and respect for national institutions -- in particular, the status of the Church. This was part of a common cause against universal education and intellectual freedom that saw the Church speak out against progress in scientific advances as well as economics. The Romantic School (Coleridge, Wordsworth, Southey, et al.) were motivated to support the Church to protect the privileges they enjoyed under the established order. Coleman examines the Romanticists at length. He notes that their objections to rational thought and social change have found renewed expression in contemporary environmentalism -- who is to put a price tag on "the priceless"? The Romantics and other professional scribes are treated gently until the final chapter, when Coleman exposes not only their general ignorance of the works of the economists they attacked, but also their own disturbed mental states, ill health and drug addictions.

It was Carlyle and Ruskin who most vigorously opposed "the dismal science". This catch phrase was devised by Carlyle (1849) when commenting on The Nigger Question (p156), where he referred to the economic damage arising from the emancipation of slaves. Ruskin was equally reactionary: "Slavery is not a political institution at all but an inherent, natural and eternal inheritance of the human race". These savage attacks arose because most economists supported the abolition of slavery. Reference to "the dismal science" by modern "public intellectuals" shows how little they understand of economics, and how little research they do.

While Coleman declares the failure of anti-economics, on grounds of misrepresentation, distortion and unworthiness, he criticises economics and economists too. Anti-economics is undermined by ignorance of economics, but it fails because economics frustrates political interests, affronts moral principles with self-interest and humiliates those demanding social status. Because anti-economics misdirects its fire, economics also loses. Coleman argues that if the criticisms had been better directed, economics would have to become more relevant, by reducing its erudition and being more comprehensible to its audience, which is the general public.

This leads me to some specific comments on this volume. First the commentary ends too soon. Economics has continued to be abused, criticised and rejected since the beginning of the 20th century, while the subject has been strengthened by intense internal disputes. Yet, except for the excellent, though disturbing, chapter on the totalitarian states, the coverage of this volume ceases around 1900. Since the dust jacket is adorned with an image of Keynes, one would expect more comment on this towering personality's contributions. Keynes receives only five passing references in the book.

Probably the publisher is to blame for the misleading graphic, as well as the price of the book, which takes it beyond the budget of most potential readers. This is unfortunate, because it is an amusing and readable history which makes a serious contribution to increasing understanding of long-standing conflicts, which are still repeated by present-day enemies of economics. I hope that William Oliver Coleman can be persuaded to take up his pen again to bring this story up to date -- I am sure it will continue to unfold.

Turnbull a force for change

Not often can members of either the Liberal Party or the Labor Party claim with a reasonable degree of certainty that they have preselected not only a future cabinet minister, but also a possible prime minister.

Whether on Saturday the 158 Liberal members in the federal seat of Wentworth had in mind the occasion of the preselection of Menzies in 1934, Whitlam in 1952 or Hawke in 1979 is uncertain.

But what is certain is that Malcolm Turnbull's entry into federal politics at the next election will be just as momentous as was that of those three. Overnight, Turnbull's victory has changed the dynamics of the Howard succession and the Liberal party room.

The fact that, according to any measure of ability, Turnbull when he becomes an MP should immediately be given a senior frontbench position is the first reason for the significance of his preselection.

The plans for the advancement of dozens of junior ministers and backbenchers have been thrown into disarray, and there is the suspicion of self-interest from those MPs who have expressed disapproval at his vigorous approach to the challenge of a sitting Liberal member.

Turnbull's preselection is also significant because of its longer-term consequences for the Liberal Party and for national politics generally.

If the Liberals win the next federal election he will help shape the government's fourth-term agenda. If they lose, which is unlikely, but not impossible, his energy and intellect will be required to rebuild the party.

As chairman of the Liberal Party's think tank, the Menzies Research Centre, Turnbull has championed more than just the republic: reforms to school education, refashioning welfare to families and the redesign of the tax system are all issues on which he has made important contributions. He puts his position forcefully and passionately, and even his opponents have conceded that regardless of whether they agree or disagree with him, they always know where he stands.

In certain aspects Turnbull has much in common with his two fellow New South Welshmen, both of whom at various times he has been opposed to -- Tony Abbott and Mark Latham.

They each would be loath to admit it but the style of politics they all practise is remarkably similar. Each is keen to experiment with new ideas, and in contrast to the risk-averse attitudes of many other politicians, they will dare making a mistake -- and if they're wrong, they'll admit it.

They are also different from their peers in that they are not afraid to display and discuss their personal and political philosophies and indeed they take every opportunity to do so.

Despite their political differences, they are relatively socially conservative, and each emphasises the strengthening of individual and family responsibility as a key objective of government policy, particularly in helping to overcome social disadvantage.

Whether Turnbull, Abbott or Latham ever becomes prime minister, time will tell.

But regardless of whether they do or not, each has already helped change Australian politics.

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Attacking Rehame

In years gone by it was comparatively easy to understand what was happening in industrial relations. Unions would organise workers to engage in strikes, pickets and other industrial action to pressure the "bosses" to improve wages and conditions. It was a form of orchestrated "class war" in which everyone seemed to know their place and their role. The business of being a union was structured entirely around the maintenance of this class war.

But things have changed because of one basic fact: union membership in the private sector is now down around 18 per cent. More importantly, union membership and influence in most businesses is now so small (often non existent) that unions have enormous difficulty starting, let alone maintaining, class war within individual companies.

The outcome is that the business of being a union is under severe stress. And to survive, some unions have undertaken far-reaching reconceptualisation of their processes and campaign models. In applying these new models against targeted firms and industries, unions have changed the nature of the game in ways that firms do not understand. One of these new campaign models creates industrial leverage by attacking a company's brand name.

Recently, the media monitoring company Rehame was subject to such an attack. The campaign against the company is the early phase of a union push to capture the media monitoring industry and it closely follows campaigns conducted against call centres and the clothing industry. In this new industrial warfare, nothing is what it seems and it takes business some time to understand what is happening and to sort out how to respond.

Media monitoring businesses engage people to read newspapers and magazines, listen to radio and watch television and to pull out material that names or affects the business of its subscriber clients. In the industry, transcripts of media reports are usually delivered to clients within hours (sometimes minutes) of a media report appearing. Some aspects of the business involve high-tech monitoring, but much entails people simply sitting and reading or listening. The low-tech aspects ideally suit people who want to work from home -- including students, retirees, parents and others who want the lifestyle and income benefits of such work.

The trouble for unions is that industrial organization of people who work from home is almost impossible. Unions need employers to operate sweat-shop like factories if the business of being a union is to survive. If a company follows family friendly type practices where people can work from home, unions have difficulty leveraging for members. Hence the campaign against Rehame where unions alleged that people who work in their own homes are working in sweatshops. This, "your home is a sweatshop" slogan, confuses community perceptions and masks union agendas. And in their efforts to stop people having the right to work from home, the Victorian Government has been lobbied to discriminate against Rehame to stop them offering people these small business options.

To achieve the end game, the company's name is likely to be subject to considerable and sophisticated attack on a wide variety of fronts from coalitions of community groups organized through unions. The company may risk losing clients and its competitors will duck for cover (all the while claiming that they are well-behaved) or could use the situation to gain increased market share at their opposition's expense. The campaign intent is to stop the offering of work to small business people who operate from home.

Eventually a "white knight" industry association will negotiate a "peace" which, in effect, will deliver the union's agenda. A "code of practice" will be established in conjunction with government and legislation stipulating the price of media monitoring operations in minute detail will likely follow. The "settlement", operating outside normal industrial relations legislation, will effectively control vital aspects of how the industry is able to operate. The campaign loop will be closed. The industry will be captured.

How do we know this? Because this is what transpired in the clothing industry over ten years, and in part, in the call centre industry in just four years. It will probably happen much faster in the media monitoring industry.

These campaign and control mechanisms effectively destroy domestic outsourcing operations. But, paradoxically, there is no evidence that unions win more members as a result. Instead, domestic outsourcing stops. Companies shift their focus offshore and external outsourcing proceeds apace. Witness the trends with call centres and the collapse of domestic clothing manufacturing! The campaigns actually destroy local jobs.

In the electronic age, most media monitoring can be done in India, Malaysia, Hong Kong or wherever fluent English-speakers reside.

Industrial relations is no longer just about class warfare controlled through industrial relations legislation. There is an entirely new paradigm of aggressive war in which every business is lined up for targeting. And the process is just in its infancy!

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RICHARD J WOOD

Today, those who subscribe to the principles of individual liberty, limited government, the free market, and the rule of law call themselves by a variety of terms, including conservative, libertarian, classical liberal, and liberal.

I see problems with all of those terms.

"Conservative" smacks of an unwillingness to change, of a desire to preserve the status quo.

Only in Australia do people seem to refer to free-market capitalism — the most progressive, dynamic, and ever-changing system the world has ever known — as conservative.

Additionally, many contemporary Australian conservatives favour state intervention in some areas, most notably in trade and into our private lives.

"Classical liberal" is a bit closer to the mark, but the word "classical" connotes a backward-looking philosophy.

Finally, "liberal" may well be the perfect word in most of the world — the liberals in societies from China to Iran to South Africa to Argentina are supporters of human rights and free markets — but its meaning has clearly been corrupted by contemporary Australian liberals.

The philosophy that animates my work has increasingly come to be called "libertarianism" or "market liberalism."

It combines an appreciation for entrepreneurship, the market process, and lower taxes with strict respect for civil liberties and scepticism about the benefits of both the welfare state and foreign military adventurism.

The market-liberal vision brings the wisdom of the Australian Founders to bear on the problems of today.

As did the Founders, it looks to the future with optimism and excitement, eager to discover what great things women and men will do in the coming century.

Market liberals appreciate the complexity of a great society, they recognise that socialism and government planning are just too clumsy for the modern world.

It is — or used to be — the conventional wisdom that a more complex society needs more government, but the truth is just the opposite.

The simpler the society, the less damage government planning does.

Planning is cumbersome in an agricultural society, costly in an industrial economy, and impossible in the information age.

Today collectivism and planning are outmoded and backward, a drag on social progress.

Market liberals have a cosmopolitan, inclusive vision for society.

We reject the bashing of gays, Japan, rich people, and immigrants that contemporary liberals and conservatives seem to think addresses society's problems.

We applaud the liberation of blacks and women from the statist restrictions that for so long kept them out of the economic mainstream.

Our greatest challenge today is to extend the promise of political freedom and economic opportunity to those who are still denied it, in our own country and around the world.

My ever-growing areas of expertise include the environment, deregulation, workplace relations, energy, and governance.

On these and other topics I speak at conferences, lectures and seminars, and publish a wide variety of magazines, occasional papers, and comprehensive issue backgrounders.

I also participate in the mainstream debate, appearing in newspapers and journals worldwide.

Take some time to look around my website.

I have currently an enormous range of papers, publications, commentary and issue analysis online, as well as information on upcoming events around the country.

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