Operation Rebound: policy prestidigitation in action

So quick bright things come to confusion

Midsummer Nights Dream, Act 1, scene 1.

The Northern Territory Government today (22 May 2020) released a Green Paper on its economic plan to ‘rebound’ from the economic and health impacts of the Covid19 pandemic (link here) and announced the membership of its Territory Economic Reconstruction Commission (link here).

The key elements of the plan include a set of  policy objectives, summarised most succinctly in the Chief Minister’s Foreword to the Green Paper:

Our third priority is to rebound the Territory economy so there is more growth and more jobs for all Territorians. This is about the future, but this work starts right now. This includes prioritising investment in job-creating projects, upskilling workers, working with industry to grow private enterprise, and securing future private investment.

This is what Operation Rebound is all about: doing whatever it takes to recover, rebuild and rebound so the Territory economy is stronger in the future.

Put simply, we are here to help.

And that means:

• Making it easier for businesses to recover, grow and create more jobs.

• Getting new investment into the Territory as quickly as possible.

• Kick-starting plans for economic diversification, building on our comparative advantages and exploiting our strategic location.

• Improving the Territory’s investment readiness and competitiveness, and strengthening key trading relationships.

• Identifying opportunities to work with the Australian Government on recovery efforts.

The Green Paper is full of high-blown rhetoric and marketing spin:

‘ Jobs First. Recover. Rebuild. Rebound.’ … ‘$40 billion by 2030 – the path to reconstruction’…‘Operation Rebound sets out our immediate response based on what we know or expect now, but we continue to be agile and respond as necessary as new challenges and opportunities arise.’

It lists 27 ‘immediate rebound initiatives’ none of which involve additional government investment. I recommend readers look carefully at the complete list. A small number of these address Indigenous policy issues directly, and I include them below to give a flavour of the overall level of (in)action:

(xv) supporting Traditional Owners and Land Councils to progress the development of projects in their communities and on their land…

(xviii) building economic opportunities in the delivery of human services to achieve better outcomes in Aboriginal communities…

Others are pure rhetoric:

(i) change the way government does business to build on the agility demonstrated through the COVID-19 response…

(iii) consolidating Darwin as a National Resilience Centre to support emergency response and resilience activities both in Australia and the region

The Government describes its strategy as follows:

Positioning the Territory to rebound strongly from the current crisis requires a comprehensive strategy addressing five focus areas:

1. securing investment to create long term jobs;

2. sustaining our population and the liveability of the Territory;

3. supporting Territory businesses to keep existing jobs and create new jobs;

4. driving industry growth and resilience in our supply chains;

5. mobilising the full resources of government.

In short, the Government has outlined a detailed plan, without allocating any resources to implement it. There is no indication that even one extra dollar has been allocated.

Instead, the Government has set up a Territory Economic Reconstruction Commission, with terms of reference (link here) to advise and report (but not make decisions) to the Government with a further body, Team Territory to provide specialist advice to the Reconstruction Commission.

Team Territory will comprise two of the three members of Team NT, an existing business development body comprised of Clare Martin (a former Chief Minister), Dick Guit (a former businessman) and Paul Tyrrell a former CEO of the Chief Minister’s Department.

The terms of reference for Team Territory (link here) mention the existence of a further entity, Team Rebound, described as follows:

Team Rebound will comprise a small number of high performing public servants who will provide project management and secretariat support to the Reconstruction Commission and Team Territory. Team Rebound will report directly to the Chief Minister, and be overseen by the Jobs Standing Committee of CEO’s, chaired by the CEO of the Department of Trade, Business and Innovation.

So to reverse the chain of command, the Chief Minister oversights the Jobs Standing Committee of Departmental CEOs, which in turn oversights Team Rebound which supports Team Territory and the Reconstruction Commission, and Team Territory provides specialist advice on feasibility of proposals to the Reconstruction Commission which advises the Chief Minister and the Government.

To my mind, this convoluted structure will likely achieve little; its major purpose appears to be to give the appearance of policy commitment and action while waiting for private investment to return to the NT economy. The technical term for this type of circular administrative architecture is ‘policy prestidigitation’.

Admittedly, the NT economy is small, and its future is tied to forces largely beyond the control of the NT Government, and the Government is carrying high levels of longstanding debt.  Nevertheless, the Territory is also home to a large cohort of extremely disadvantaged Indigenous citizens, who are in desperate need of tangible investments in public infrastructure and services.

The pandemic has led to massive market failure in a very short time. All the economic advice is that the ‘rebound’ will extend over a much longer period, and the Territory is coming off a particularly low base. It will be a huge mistake to rely on markets to rebound of their own accord. The solution to massive market failure is public intervention in the form of fiscal stimulus.

With global interest rates low, the NT Government could do worse than borrowing $10 billion and asking its Treasury public servants to devise a medium term investment strategy focussed on improving services and infrastructure designed to strengthen the economic opportunities for the poorest half of the NT population. This might be linked to a public request to the Commonwealth to fund (as part of its own medium term stimulus) the interest payments on this debt for the next decade.

Instead of political flim flam, Australia is desperately in need of visionary leadership from its governments. Governments have succeeded in managing the immediate impact of the pandemic by taking unprecedented action and following the advice of the medical profession. The next phase demands similar levels of vision and political courage. Unfortunately, all I see here is a slide back to spin and marketing. Australia will suffer, and the Territory will suffer proportionately more from this lack of political and economic leadership. And it goes without saying that Indigenous Territorians will bear the brunt of this ineptitude.

Indigenous economic and social development in northern Australia in a post-pandemic world

In 2007, Neil Westbury and I wrote a chapter in our book Beyond Humbug arguing that Indigenous economic and social development in the north would be a net contributor to Australia’s defence and national security.

I was therefore interested to read a short and persuasive report from the Australian Strategic Policy Institute (link here) focussed on the deficiencies in Australia’s fuel security and its potentially adverse national security implications[1].

In particular, it struck me that core elements in the report’s argument could be transposed to the Indigenous policy domain as further evidence that the Government has dropped the ball on effective policy in support of Indigenous economic and social development in northern Australia. I have previously posted critically on this issue (link here and here).

Set out below are admittedly selective extracts from the ASPI report that in my view apply with equal or greater force to the Indigenous policy domain:

The government’s Our north, our future: White Paper on developing northern Australia identified the need for greater public–private partnership in the development of Australia’s north. It established two major northern funding programs: the Northern Australia Infrastructure Facility (NAIF; $5 billion) and the Northern Territory Investment Fund ($200 million), but neither has delivered much. It’s clear that nation building in the north needs considerably more thought and commitment than it has received until recently (page 7)….

…Northern development has been a wicked problem for governments since federation. In periods of strategic uncertainty, it has taken on significant value. However, the north’s remoteness from Australia’s population centres has meant that economic investment is a costly endeavour with little benefit at the polling booth. To the casual observer, such analysis might appear glib, but a long-term investment in northern development is a fleeting policy focus. Over the past 50 years, consecutive governments have relied upon market forces and demanded a return on investment to drive nation building in Australia.

Australia’s declining strategic certainty and its Covid-19 lessons on national resilience indicate a need for a change. Or, more accurately, perhaps policymakers will need to do more to ensure that our national interests and strategy aren’t subordinated to commercial profits or economic models that we now see have major gaps and flaws. …

…The Our north, our future: White Paper on developing northern Australia identified the need for greater public–private partnership in the development of Australia’s north. The White Paper established two major northern funding programs: the NAIF and the NT Infrastructure Development Fund. Unfortunately, the NAIF is under parliamentary review for lack of capital allocation and the NT Infrastructure Development Fund has been closed down due to a lack of capital allocation. The debt-based model of both failed to contribute to a sovereign investment model.

… Covid-19 has already shown that market forces don’t always promote adequate national resilience in multiple areas, from broadband bandwidth to the capacity to produce essential medical supplies. … The Covid-19 pandemic has made it increasingly clear that Australia’s current model for nation-building infrastructure investment is far too narrowly focused. The notion that such investments should be funded mainly by those who directly benefit from them rather than also considering who benefits from the increased capacity and resilience more broadly is reducing the country’s resilience. (page 24)…

… The debt-based NAIF and user-pays nation-building efforts are unlikely to result in anything more than passing peaks of economic activity. Unfortunately, those arrangements aren’t supporting the kinds of massive nation-building efforts needed in Australia’s north, where the Australian Government should be considering ambitious investments. Private–public partnerships focused on providing national and regional energy resilience should be given priority (page 25)….

... The government’s policy position that ‘the most appropriate and sustainable structural solution to the maintenance deficit in public infrastructure is a transition to a user-pays model’ isn’t helping to build a safe and secure northern Australia.

Covid-19 has provided the Australian Government with an enormous opportunity to review and reset its nation building policies. Case studies such as the one presented in this report highlight the complexity of the challenge, but they also illustrate how post-covid-19 nation-building and economic stimulus packages could be used to build our national resilience (page 27) [emphasis added].

There is not much to disagree with in these extracts from an Indigenous policy perspective. Perhaps my only caveat would be to suggest that in the Indigenous policy domain, housing provision should be the policy priority. The reasons are intuitively obvious; reduced overcrowding will deliver multiple ongoing benefits: it will improve children’s educational outcomes, reduce domestic violence, reduce the risk of disease transmission, provide opportunities for local employment in construction, repairs and maintenance, and assist the recruitment of locally engaged teachers, nurses and police.

Moreover, going forward, key policy themes for governments in relation to remote communities should be risk and resilience: building community resilience, and reducing the risk of the current and importantly future pandemics. These objectives require increased and sustained new investment. If not now, when?

The key constraints to implementing the policy prescription outlined by the ASPI report authors, but transposed to an Indigenous context, are twofold: a lack of vision by governments – unlike the authors of this report, governments appear unable to recognise that the stimulus will be ongoing (see this article by Adam Triggs – link here) and needs to be channelled into nation and community building, and a lack of an appropriate institutional framework for converting the stimulus that will likely be ongoing for the next five years (see the short article I wrote recently advocating a post-pandemic reconstruction agency for the Indigenous policy domain – link here) to building Indigenous resilience and economic and social opportunity.

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[1] Coyne J., McCormack, T., & Crichton-Standish, H. (2020). Running on empty: a case study of fuel security for civil and military air operations at Darwin airport, Australian Strategic Policy Institute, Canberra. There is much else of interest in the report that I haven’t been able to comment upon.