Mike Bolan A response to a Federal Government Minister, following his reply to my letter

THANK YOU for your reply. It was a pleasure to receive an acknowledgement, which is not our usual experience with federal Labor, as I explained at our meeting at the Launceston community cabinet.
The brevity of our time together reduced my ability to present or discuss useful details. The reason I chose to see you is that you are responsible for doing some excellent work on improving public perceptions of government (e.g. with political donations) which are going to be vital for Labor’s survival at the next election.

Our consultancy, A Better Australia, studies complex systems, that is the effects of relationships between system elements and we provide our clients with a complete picture of their situation.

We support the principles that Mr Rudd has outlined and we wish your government every success. It is in this vein that I write to amplify some of the issues that I originally raised with you that are not treated in your reply to us. We advanced our points because they represent a severe threat to Labor, as well as a substantive threat to our economy.

Overall our conclusions are that federal Labor needs to exhibit national leadership to:
• return genuine representation by removing the main causes of democratic deficits;
• inject billions into the economy by eliminating government waste, duplication and error;
• exhibit leadership by defining types and qualities of government services to taxpayers.

The issues that we identify are structural, give the appearance of corporatist corruption and are likely to have a major impact on voters’ perceptions of Brand Labor.

The effects are system wide and are impacting Australians’ perceptions of Brand Labor everywhere.Partial approaches to complete problems

The Liberals conceptual background is capital, Labor was created to support labour while the Greens sprang from a niche that argued for primacy of the environment.

From a systems perspective, each of the party’s views is incomplete. Capital, labour & environment are all essential components of our economy and continued existence. The policies and actions promulgated by each of the parties are thus likely to be flawed if only because they are likely to be incomplete.

Such potential flaws are amplified by approaches that any focus on one discipline, company or group e.g. economics over climate science.We have learned that the greater the number of interconnections in a network or social system, the greater the penalties for error. In other words, the risks increase exponentially as more disparate groups in the network are affected by any given initiative or change.

Consequently, the greater the number of interconnections in a network, the greater the spread of views needed to help avoid serious problems, ‘collateral damage’ or ‘blowback’. Unfortunately the structure, organisation and presumptions of government stand in the way of this reality, dooming politicians to repeated criticism and rejection. Instead of more consultation, governments are now taking the lazy way out and abbreviating assessments and relegating control to project proponents with a conflict of interest.

All of these problems can be addressed through a combination of effective national leadership and effective decision and action processes.

Formally excluding the public

Under Howard, in some kind of Thatcheresque reprise, the mission statements for many arms of government were modified to exclude the interests of communities, the public and taxpayers, leaving business and industry interests as the key priority. Hence our forests (for example) are not to be used in the best interests of communities or taxpayers, but instead are to ‘… assist the forestry industry to grow…’. ABARE’s remit isn’t to help Australia and its communities to best utilise their various resources, instead it’s to ‘…contribute to the competitiveness of the (resources) industries…’

The omission of the public and taxpayers from the focus of taxpayer funded departments is, in our view, an egregious error. If departments are not charged to give the wider interests of taxpayers full consideration, why is their work funded by taxpayers?

Such narrow priorities expose Australia, its political parties and its politicians, to substantial risks. How can politicians know whether the ‘advice’ that they are receiving is in the best interests of their constituents? In effect, many parts of government are acting inadvertently (presumably) to create political problems for the party in power. This is occurring because communities feel, and in many cases are, excluded from consideration by government.

From the objectives of groups like ABARE, it can only be industry that decides which initiatives will enable them to be more competitive, so industry will guide the agenda. This is exactly the perception that many Australians have developed of government, and of political parties, which stimulates perceptions of corruption and bias along with justifiable charges of ‘corporatism’.

While a focus on industry may be desirable, the exclusion of communities and the public interest presents a deeply biased and distorted view. The overall effect is to remove any requirement for government to ‘balance’ its decisions between competing interests by putting all of the focus on one social grouping and to leave Labor institutionally blind to community needs and interests. It also allows elected representatives to believe that they are doing their best for their constituents by following department recommendations and advice.

One result is politicians coming to believe that community protests are coming from ‘a noisy minority of ill informed critics’ which is what many politicians do indeed say!The public’s representatives have been isolated from balanced community inputs. Many of the arms of government are now totally dedicated to supporting business or industry views without any consideration of community needs regardless of the high taxes paid by community members.

Democratic deficits

Democratic deficits create the politics of dissatisfaction that cause governments to be voted out and therefore should be uppermost in the minds of any party wishing to stay in power.

Structural and managerial reasons for representational distortions include –
• removal of references to the community or public or taxpayers from the charters of many active government agencies, thus removing communities from consideration (e.g. ABARE, Forestry)
• Ministers acting for the public services or the law, instead of acting to modify governance to better meet community needs
• an institutional focus on quantities of money instead of qualities of service
• performance assessed by performers rather than customers
• technologies available to governments & business – unavailable to the public (e.g. computer modeling)
• lobbying power differentials that advantage business (e.g. money, access)
• business skills to present superior presentations compared to communities

These root causes of democratic deficits need to be reviewed in the light of pragmatic party politics.

To constantly have government departments and agencies creating dissatisfaction by favouring one sectional group in society makes no sense at all because the result is deepening division and anger.

These problems are exacerbated by the total costs of government shifting to unsustainable levels.Total costs of government excessive and increasing

The total annual costs of government can be estimated as the total of:
• total taken in federal taxes (approx $300 bn)
• total taken as local and state taxes & charges (est $30 bn)
• additional costs created for compliance (>$86 bn in 2005)
• costs of errors and their correction (e.g. loss of MDB; total est >$20 bn)
• costs of total subsidies provided to selected groups (est $50 bn).

This puts the total costs of government at over 50% of GDP and it is ordinary taxpayers who ultimately pick up this tab – businesses just pass their costs on to consumers via price. There is therefore no justification for the exclusion of wider taxpayer interests from government consideration. Taxation without representation won’t play well in the longer term.

The effect of these growing costs delivers a major opportunity for an effective leader to act to eliminate waste, error and duplication thereby effectively injecting billions into the economy while simultaneously increasing community satisfaction with government.

Opportunity versus threat

Too often in Australia, opportunities for constructive change are cast solely as threats, thereby creating a defensive and reactive response. Instead of exploring options, decision makers find themselves defending the status quo, which can be dysfunctional when threats are created by the operation of our system. Climate change and the financial crisis are good examples of this class of problem.

Instead of being defensive, we can conceive of threats as opportunities for constructive change.

In the case of climate change it’s an opportunity to change our lifestyles to something more sustainable and affordable – to create jobs and opportunities by moving to local supply and local distribution systems – to increase our resilience in the face of threats – to reduce costs by moving to renewable energy forms – and so on.

Seen in this light, responses to threats such as climate change are not costs – they are investments in a better and more sustainable future for ourselves and for future generations.

It costs nothing for effective leadership to clarify these matters and stimulate the community and businesses to strive for something better. But it does take skill and understanding.

Similarly, it costs virtually nothing for effective leadership to recognise, measure and make corrections to avoid error. As it stands, public service deficiencies are producing ruinous outcomes for the public, from the loss of the Murray Darling through water over-allocation thru to a failure to inspect WA gas pipelines thru to worsening public transport systems that are costing communities and businesses billions in lost time.

The quality of services provided to taxpayers is decreasing even as government overall revenues are increasing. This indicates a leadership tolerance for error that Australia can no longer afford.

Leadership needed

Australian governments are in a situation that is not dissimilar to that of many large industries in the ’80s and ’90s – high overheads, high rates of error, diminishing levels of customer service. The strategies for dealing with those problems are well understood, practiced and documented.

In Australia there is an opportunity for a national leader to clarify the levels of service and support that Australians should expect. A standard for behaviour and outputs is thus set for all government departments and agencies – this was the meaning of the Customer Service charter that I proposed to you.

The current service levels are completely unacceptable when they force pregnant women to abort in public toilets in hospitals, or drag the unemployed through the courts because Centrelink has mistakenly overpaid them, or force millions to wait for degraded public transport systems, or keep immigrant children in poor detention facilities for extended periods.

Similarly, leaving taxpayers and communities from all consideration in resource and other portfolios serves no-one except the service deliverers for whom it saves a little time, and for a few large industries that such policies help to protect. It also sends a clear signal to public services that the community doesn’t matter, that it is some kind of inconvenience getting in the way of efficiency.

There can be no defence for these travesties of service in a modern economy. Whichever leader takes up the cudgels to include taxpayers and communities in government consideration once again, and sets levels of service that are acceptable to the public (as opposed to the public service), is likely to gain major traction with a majority of voters. After all they will be representing a majority of taxpayers.

Similarly on taxes, while Labor’s tax cuts and fiscal stimuli are a good beginning, there is a huge opportunity to reinvigorate the economy just by eliminating pointless waste, thereby injecting tens of billions of dollars into the economy.

The threats are also opportunities – to save billions of dollars, to increase taxpayer satisfaction with government, to focus the nation’s energies and efforts, to start to create a new future that creates new jobs yet costs less in both finance and pollutants.

This can be accomplished by;
• Reconnecting departmental goals to taxpayer and community priorities
• Injecting billions into the economy by eliminating government waste, duplication and error
• exhibiting leadership by defining types and qualities of services to taxpayers.

These are huge leadership opportunities and we trust that you can engage with both them, to start to steer Australia into more functional directions through better representation and management of its resources, information and activities. These directions are made more pressing by the global financial problems which will make the total costs of government unaffordable and the waste caused by government entirely intolerable.

We are happy to provide further information or to meet with you, or your representatives, on request.


Mike Bolan


Example 1. A current example of democratic deficit that is creating voter hostility

An instructive example of the problems created by a business only focus is the Gunns pulp mill process. In that case the project sponsor, Gunns Ltd, was the only group authorised to determine community, social and regional business impacts. All public and business submissions were vetted by Gunns. Taxpayer monies were provided to Gunns for development of their proposal and public monies were also spent on marketing their proposal. The mill ‘approval’ decision was provided to a pulp mill supplier associated with the project (Sweco Pic). By contrast, taxpayers were refused any assistance and objectors were demonised by government as ‘anti development’ or ‘Green’.

The inherent bias and conflicts of interest in the process caused immense public concern, and a huge groundswell of ordinary people concluded that they had been betrayed by their own representatives. Recent polls now show that about 70% of voters oppose the project – not because it’s an industrial project but because their concerns and needs were entirely left from all official consideration – as if their views were of no consequence.

The result is called ‘taxation without representation’.

Given the fact that Tamar taxpayers paid about $6 billion in taxes over the 4 year period, while Gunns received about $1 bn in mixed public subsidies, cash payments and below market or free resources, it should become more evident why leaving the public from government consideration is such a risk. In this case it appears those who receive tax revenues will be treated much more favourably by government than those who pay the bulk of Australia’s taxes.

The clamour of objection may seem hard to understand for those briefed by government and by industry, but seen in the light of lack of representation and resulting powerlessness, perhaps it is easier to appreciate.

Example 2 Examples of taxpayers, communities being excluded from departmental consideration.

The Department of Resources, Energy & Tourism plays an important role in assisting the government to achieve its objectives by providing high quality advice and services to achieve improved competitiveness and sustainability of the resources, energy and tourism industries.”

The Department of Innovation, Industry, Science and Research strives as a key priority to encourage the sustainable growth of Australian industries by developing a national innovation system that drives knowledge creation, cutting edge science and research, international competitiveness and greater productivity. The Department is committed to developing policies and delivering programs, in partnership with stakeholders, to provide lasting economic benefits ensuring Australia’s competitive future.

ABARE’s objective is to contribute to the competitiveness of Australia’s agricultural, fishing, forestry, energy and minerals industries and the quality of the Australian environment by providing rigorous and independent economic research analysis and forecasting.

DAFF’s goal is to assist our forestry industry to grow, improve and capitalise on new opportunities while protecting the environment and contributing to the prosperity and quality of life in rural and regional Australia. (Ed: the latter can be achieved simply by forestry employing local people)