Social housing and Aboriginal affairs – brief reflections on the Commission of Audit report

The Australian Federal Government commissioned National Commission of Audit Report was released yesterday. You will find the full report here. It has been well covered in the Australian media. Here are just a few examples:

• Chris Uhlmann, Commission of Audit: From crazy brave to politically suicidal, no easy options for Federal Government
• Ian Verrender, Learn from history and heed audit's warning
• Markus Mannheim, Suck it up, Canberra taxpayers, and keep pouring cash into Tony Shepherd's pet project
• Phillip Thomson, Noel Towell and Tom McIlroy,Commission of Audit recommends public service job cuts, mergers
• Peter Martin, Tax: the flaw at the heart of the National Commission of Audit
• Mark Kenny, James Massola, Axe falls hard as audit recommends gutting Medicare, cutting pensions

And so it goes on. Well, what does it all mean? Not a lot, actually.

I spent two hours today to read the report and attachments. I focused especially on those areas I was most interested in, so skimmed other parts. Obviously two hours is not a lot, but here are a few observations.

The report starts with what we might call an economic model, for it has to project the future. Then in analysing what should be done, it builds in what we might think of as a set of ideological assumptions, of values. Some are explicit, others implicit. It creates a new federal construct that then sets a frame for some of its recommendations. From there, it drops to detailed analysis of specific policies and programs guided by its economic assumptions and conclusions, its ideological assumptions and values. and its new Federal construct.

I happen to agree with some of its analysis. For example, I believe that power should be shifted back to the states, subject to to the creation of new states. Others such as the implicit assumptions about the maximum size of government or some of the simplistic modelling I disagree with. However, it’s when you get to the very specific detail of individual proposals that I think that they have gone plain crazy. Perhaps that’s harsh, but let me illustrate.

Take Aboriginal affairs. There are elements in their analysis that I strongly agree with, but the idea that the Feds should stop spending on things like housing and instead put all the cash into a voucher scheme for Aboriginal education borders on the plain crazy.

Or housing. The Commission suggests that this is a state responsibility and the Feds should pull out except for rent assistance. I might agree with that, so long as the the other recommendations about enhanced state revenue and powers were approved. But then, they make a very silly suggestion. Rent assistance should be extended to public housing tenants so long as rents are then increased to market. I don’t even know how to begin to say just how silly this is.

Rents in public housing are based on a percentage of income.There are other models, but that’s the one that generally applies. If Commonwealth rent assistance is made available to public housing tenants as it is to community housing tenants, something I support, then housing authorities can restructure rents so as to attract the maximum amount of rents assistance while leaving tenants to pay the same. In most cases, that rent will be below market. If tenants now have to pay market less Commonwealth rent assistance, rents will increase to the point that some tenants will be up for rent that exceeds their income. That’s a crazy result.

If you are going to bring reform, new approaches, to particular policy areas, then you have to have experts in that area matched by technically competent non-experts. You need them both to avoid capture by the status quo.  You also need time and the freedom to generate new ideas. Sadly, none of this has happened in this case. The result is a bit of a mess. Ah well!