Institutional change needed to reignite policy reform in Australia

Australia’s governance is going backwards. Without change, there is little prospect for many substantial policy reforms that would increase Australian prosperity, according to a new Grattan Institute report.

Gridlock: removing barriers to policy reform identifies the 1980s and 1990s as ‘golden years’ of policy reform, and documents how governance has deteriorated since then. Governments have failed to progress reforms that have been recommended for decades.

The report analyses a large sample of proposed policy reforms over the past decade and shows that unpopularity is now an insuperable obstacle to reform. This is a big change from the past when political leaders implemented many unpopular reforms, doing their best to explain why they were in the public interest.

Tribal beliefs that mark membership of political parties and factions have also become major obstacles to sensible reform, particularly in tax, superannuation, and energy policy.

While powerful vested interests blocked some reforms, they had much less influence when countered by the published reports of high-quality inquiries.

Unpopularity, tribal beliefs, and vested interests stand in the way of the public interest because of less effective media, a weakened public service, the power of ministerial advisers, a growing professional political class, and increasing political patronage.

Australia could break the gridlock in policy reform by increasing the expertise and independence of the public service, reducing the number of ministerial advisers closely tied to political parties and making them more accountable, tightening controls over political donations, campaign finance, lobbying, and post-politics careers, and setting up a federal anti-corruption commission with teeth to ensure that the rules of the system are followed.

Unfortunately, politicians from both major parties routinely block such institutional changes because they think they will reduce their prospects of re-election. The most politically realistic path to institutional change is for independent members of parliament to champion institutional changes, particularly when they hold the balance of power.

‘Problems with our systems of governance are cruelling the chances of policy reform,’ says the report’s author, former Grattan Institute CEO John Daley.

‘The slow corrosion of our institutions is gnawing away at Australian prosperity.

‘We hope this report galvanises people to change how Australian government works.’