Swan’s legacy, Hockey’s ally

The sight of the raw institutional dysfunction in the US government at the moment provides a useful reminder to Australians that we should both treasure and encourage the respect that Australians have for our federal government institutions.

By “government institutions”, I’m pointing not to Tony Abbott or Bill Shorten or to just the executive or Parliament, but to the whole federal structure, taking in the courts, the Reserve Bank, government departments and instrumentalities. While almost no self-respecting Aussie puts it this way, it seems to me that there is a basic belief across middle Australia that these institutions do OK, that they can be trusted to do at least a halfway competent job. Though we don’t want to actually say so …

That belief is vital to any attempts to use government to make Australia a better place.

And if you are interested in having people trust government, there are few more important institutions than the Australian Tax Office. It pays for the government while relieving many of us of a largish lump of money. People are bound to care about that.

Which is one reason why I was interested to spend a bit of time back in July with Chris Jordan, the ex-KPMG tax lawyer who Wayne Swan late last year appointed to head the ATO. I interviewed him for Public Accountant magazine, the magazine of the Institute of Public Accountants, which I edit. The interview is now up online at the Public Accountant website. It was one of my more enjoyable journalistic assignments of the past decade, because Jordan tells interesting stories while radiating an amiable charm.

Jordan’s background includes helping to found the Redfern Legal Centre in 1976.He also worked for a while for John Howard in Opposition in the mid-1980s, and later on working on the Howard Government’s abortive health and social services access card project. Through Howard, he knows Tony Abbott. In fact, he knows a hell of a lot of people – he’s a consumate networker. He is, for instance, very well regarded within the Business Council. In the broader world, very few people have a bad thing to say about him. He’s smart and he seems to be a good manager with a reformist streak.

That’s significant because it is likely to reduce any temptation within the new federal government to “take on” the Tax Office. Joe Hockey gave a few speeches in Opposition suggesting the ATO failed to understand how business worked – but though taking potshots at the taxman is easy work, he didn’t give in to the temptation to trash the ATO as an institution. Hockey was the minister with carriage of the health and social services access card push, so his relationship with Jordan is almost certainly excellent. And of course as treasurer, Hockey now needs the ATO to raise the revenue he needs to close the budget deficit.. My suspicion is that within a few months Hockey will declare himself very pleased with the way Jordan is improving the ATO, and leave it at that.

All that’s in sharp contrast to Hockey’s counterparts in the US Republican Party, who have long waged a campaign against the US Internal Revenue Service.

When I asked Jordan about the US debate, he reacted with extreme care, noting the differences between the Australian and US institutional arrangement – the Tax Commissioner formally reports to Parliament, not the government. But he understands the stakes.

Jordan has some interesting aspirations to improve the service provided by the ATO, which the Public Accountant article explores. If Wayne Swan had in mind to protect an important Australian institution, it seems to me – in these early days – that Chris Jordan was a good pick.

About David Walker

David Walker runs publishing consultancy Shorewalker DMS (shorewalker.net) and is an editor and writer for hire. David has previously edited Acuity magazine and the award-winning INTHEBLACK business magazine, been chief operating officer of online publisher WorkDay Media, held policy and communications roles at the Committee for Economic Development of Australia and the Business Council of Australia and run the website for online finance start-up eChoice. He has written on economics, business and public policy from Melbourne, Adelaide and the Canberra Press Gallery.
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20 Responses to Swan’s legacy, Hockey’s ally

  1. Paul Frijters says:

    sounds good, and fully agreed on the thesis that Australia works remarkably well, in large part because the social contract is perceived to be upheld. Australia has been lucky too in terms of the legacy it started out with from Europe, but boy has its institutional life thrived. Quite a few Australian-invented institutions have become the model for how to do it elsewhere. I am thinking of the PBSC scheme in its early days, the disaster-reaction institutions, plastic money, HECS, and the migration points system. A new one would be the electronic health system that Australia has managed to get going (politically initiated by Abbott!), where the UK and the US have conspicuously failed even though they threw lots more money at it..

    • I think the migration points-test was introduced in Canadian immigration reform in 1967, then introduced in Australia in 1979 as the Numerical Multi-factor Assessment System.

      • Paul Frijters says:

        True, but I understand that the Canadian variety was, in the early years, concerned a lot with humanitarian refugees and family reunification. My shallow reading was that Australia’s strong focus on almost purely economically desirable traits as the basis for points was novel at the time and that Canada only later started to do the same. But correct me if I am wrong on that!

        • I’ve never been able to find an original source document, but this chart is from an article (Boyd) in the 1976(1) issue of the journal Demography. It seems very similar in scope of migrant selection to the NUMAS system Australia introduced in 1979:

          CHART I
          On October 2, 1967, Canada adopted new immigration regulations; there are three main
          categories of immigrants:
          A. Independent.
          B. “Sponsored” dependents-husband, wife, fiance or fiancee, generally close relatives.
          C. “Nominated relative”-apply likewise to close relatives; responsibilities of nominator include willingness and ability to provide care, maintenance for the person, to otherwise
          assist him in becoming established.
          The independent immigrant must obtain 50 out of 100 assessment points based on the system
          described below. Nominated relatives also are assessed on the basis of education, age, personal
          assessment, occupational skill, and occupational demand criteria discussed below.
          The assessment system for potential immigrants is based on:
          1. Education and Training: up to 20 assessment points to be awarded on the basis of one year
          of school per unit.
          2. Personal Assessment: up to 15 points on the basis of the immigration officer’s judgment of
          applicant’s adaptability, motivation, and initiative.
          3. Occupational Demand: up to 15 units if demand for applicant’s occupation is strong in
          Canada.
          4. Occupational Skill: up to 10 units for professionals, ranging down to one unit for the un-
          skilled.
          5. Age: 10 units for applicants under 35, with one unit deducted for each year over 35.
          6. Arranged Employment: 10 units if the candidate has a definite job arranged.
          7. Knowledge of French/English: up to 10 units depending on degree of fluency.
          8. Relative: up to 5 units if applicant has relative able to help him become established.
          9. Employment Opportunities in Area of Destination: up to 5 units when applicant intends to go
          to area of Canada where there is a strong demand for labor.

        • Paul Frijters says:

          Hi Henry,

          yes, they clearly were earlier with their points system. But were economic elements the main way actual migrants came in. According to this source, written by the migration policy institute

          “The 1976 act, which emphasized family reunification and humanitarian concerns over economic interests, was replaced in 2001 with the Immigration and Refugee Protection Act, a policy that stresses education, language, and adaptability. Those applicants with trade certificates and second degrees are awarded more points, and experience points are skewed to favor younger workers.

          The 2001 act has begun to influence migration flows to Canada and has generated public debate about the capacity of the Canadian economy to absorb a large number of highly skilled migrants. Highly educated immigrants typically gain entry through the economic class, which now makes up more than 60 percent of all admitted immigrants. ”

          As I understand it, skilled migration has been the bast majority (well over 60%) of all migrants to Australia for yonks, much earlier than 2001, underlying my belief that the Australian system, as it operated in practice, was novel in its emphasis on economics. But again, I am no expert on this so am happy to be convinced otherwise.

  2. Alan says:

    And yet the political science discussions point out Australia in 1975 as the only example of a government shutdown outside the US. Some of the 1975 issues have never been addressed.

    • Nicholas Gruen says:

      There is a big difference between the shutdowns in Australia and the US. The former were done in pursuit of an election, the latter done without the possibility of the deadlock being broken by an election.

      One stylised fact from at least the shutdowns we know about here and in the US is that the people don’t seem to like their governments being shut down or even the thread being made. It played badly for Fraser (until it got resolved essentially in his favour from the GG) and it’s playing badly for the GOP.

      • Alan says:

        That’s true, but its worth recalling the double dissolution was at least something of an accident. There could be a double dissolution only because other bills, not the supply bills themselves, could be invoked to justify the dissolution. If government shutdowns are a mark of poor governance, we, the only other country to suffer one, can hardly point to them to as evidence of the superiority of our institutions.

        • Sancho says:

          It’s arguable that any democracy will go through periods of poor governance, so at least Australia has a mechanism for breaking stalemates.

          Keep in mind though, that the US situation has come about almost entirely because state governments there determine federal electoral boundaries and have neatly gerrymandered the place up so that it’s all but impossible for Republicans to lose control of the House.

          If we’re giving thanks for institutions, let’s hear it for the AEC.

        • David Walker says:

          Minor point, but I don’t think that the 1975 crisis proceeded to the point of a shutdown of any government facilities. I am open to being corrected, however.

        • Alan says:

          Student allowances had run out and would not have been paid in the following week. The salary votes for the bureaucracy and the army were close to being depleted as well. Unlike the US there is and was no Antideficiency Act to keep any of the federal government operating.

          Until the moment when the equally-divided senate passed the budget, some hours after the dismissal, the electoral office vote was empty. The constitutional nightmare loomed where there would be no lawful authority to fund an election. The ‘our system works’ school of thought is a lot happier standing on the edge of a precipice than I am.

        • Tel says:

          I predict that a repeat of the 1975 situation is very unlikely to happen ever again in Australia. We may meet up with other deadlocks, but not a supply blockage.

          In the USA, it can happen any time. Even after they sort it this time around, it could still happen. That said, please note that less than 20% of the US government has shut down in any meaningful way (the remainder being “essential”) and the National Park Service removed the handles from taps and drinking bubblers (at what cost?!?) while Obama was giving Republicans a lecture on spiteful behaviour. Dysfunctional yes, but not for the reasons most people think.

          Mind you, the USA has lots of other problems. I’m not a great fan of our Superannuation system, but when you compare it to the USA and their Social Security you just have to shudder. Think that with regular raising of the debt ceiling being a basic requirement of even day-to-day operation in the USA, what are they going to do when Social Security really needs serious money allocated from the Federal budget to cover all those IOU notes?

  3. Tel says:

    That’s significant because it is likely to reduce any temptation within the new federal government to “take on” the Tax Office.

    Yes, well getting caught blatantly politicising the Tax Office and using that to attack one’s political enemies would be a bit of a no, no… y’d think it would. I guess someone should explain that to Obama while he is knifing the Tea Party (a group of people more than capable of defending themselves, so they don’t need my help).

    Getting back to Australia. It was easier being a self-employed contractor under the Howard government than under the following Labor government (speaking from personal experience). That’s not entirely the ATO’s fault, because policy changed, for example they started searching for ways to make people who sit at home on the Internet, also pay the elf-n-safy tax by getting compo insurance and thus subsidising our medical system. Clearly though, the ALP has a vested interest in herding people into unions. Self employed contractors rarely join unions, so self-employed people became the enemy to be defeated.

    http://www.independentcontractors.net.au/_blog/Latest_News/post/new-minister-tells-ato-to-behave/

    I’m sure there’s more history on that website for those who want to check it out, and this is not a recent issue, just a recent change of power balance has started it rolling back in the other direction once again. The ATO is a pawn as much as anything.

    • Sancho says:

      Presumably that’s a reference to the IRS’s excess scrutiny of Tea Party groups, which didn’t actually happen and was so thoroughly debunked that even the most attention-hungry Republicans don’t mention it any more.

  4. Alan says:

    I predict that a repeat of the 1975 situation is very unlikely to happen ever again in Australia. We may meet up with other deadlocks, but not a supply blockage.

    Can we have a reason that goes beyond prediction? It’s worth recalling that supply was quite frequently blocked in Australian colonies before federation. By contrast the US, which is apparently very prone to government shutdown, went 200 years without one until the Ford presidency.

    • Mike Pepperday says:

      I think that is very interesting. I wonder why. JAR Marriott, writing around 1910, reckoned that our problem was that our upper houses were not aristocratic gentlemen but rather rabble like the democratic lower houses. But that doesn’t seem to be explaining anything.

      • Alan says:

        The colonial legislative councils were appointed for life by the executive, so it may just have been entrenched parties doing over their oppositions.

  5. Mike Pepperday says:

    “…the Tax Commissioner formally reports to Parliament, not the government.”

    I didn’t know this. I reckon that it is crucial, that this is what keeps the electoral commission, the Reserve Bank, the Ombudsman and possibly other agencies from being suborned by the executive.

    Paul—

    You can add to your list another institutional model: the Australian ballot, aka the secret ballot.

    I think our ehealth system might fail like the others. All I know is that I got a leaflet in my mailbox encouraging registration so I thought I would. I gave up when I looked at
    http://www.ehealth.gov.au/internet/ehealth/publishing.nsf/Content/brochure-ivc

    The procedure is totally bonkers. If banks carried on like that no one would bank online. 

  6. senexx says:

    Yes. In the long run I agree Australian Institutions do a great job.
    I cannot dispute Nick Gruen’s interpretation of shutdowns.
    I remain annoyed about 1975 that the block of supply caused the change of government yet that is the exact same supply post-change that did go through – thus explaining the real reason for the change.

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