Books Australia

Stone not gathering moss

7 February 2020

10:00 PM

7 February 2020

10:00 PM

Restoring Hope: Practical Policies to Revitalise the Australian Economy Andrew Stone

Quadrant Books, pp.588, $44.95

If you are part of that multitude of Australians who fear that our country is drifting backwards – becoming less prosperous, less secure and less confident yet without the gumption to tackle our decline – this is the book you should read.

Dr Andrew Stone is probably the best policy thinker I’ve known. He was my economic adviser in opposition and in government. The presence of two former Reserve Bank governors at the recent launch of Restoring Hope in Sydney testifies to Stone’s professional standing as an economist. Yet a boffin who ‘knows the price of everything but the value of nothing’ he most definitely is not. Stone appreciates, in a way that academic economists sometimes don’t, that policy measures have to be politically achievable as well as economically desirable.

This book, therefore, is not a centre-right wish-list of all the things a Coalition government should be doing in a perfect world but can’t in the real one. Rather, it’s a manual for what a sensible centre-right government could do now, because it doesn’t need the states or the Senate to get it done; and because it will set up fights with the Labor party that the Liberals should be able to win.

Stone is only too well aware of the Coalition’s tendency either to announce solutions to problems voters weren’t aware they had; or to adopt less destructive versions of the policies that the Left are calling for. He’s rightly scornful of the legions of business ‘leaders’ and think-tankers who demand ‘reform’ without specifying exactly what it should be; or who demand the politically impossible of their leaders. He’s also rightly contemptuous of politicians who put forward their commitment to measures years and years hence as their badge of seriousness about policy: whether that’s the Left’s pledge to be ‘carbon neutral’ by 2050; or the right’s support for tax cuts that are several elections away. By contrast, Stone presents what he thinks are the best practical measures to deal with the ills that currently bedevil us: stagnant wages, unaffordable housing, disappearing manufacturing jobs, clogged infrastructure and an official class that’s lost faith in the country that it’s their duty to lead.

The most significant change Stone calls for is a sharp reduction in immigration from current levels of nearly a quarter of a million a year back to the Howard-era average of about 100,000 a year. Even that, he says, is high by Australia’s historical standards and high by comparison with other developed countries that haven’t surrendered control of their borders.

Stone points out that adding a city the size of Canberra to our population every two years through immigration alone is putting massive downward pressure on wages and massive upward pressure on housing prices. He also points out that immigration numbers aren’t just the so-called ‘permanent intake’ that the government has just reduced slightly to 160,000 a year. It’s everyone included in the Net Overseas Migration number of people coming for a year or longer and who, therefore, want a job, a house and a car. The big factors driving NOM are businesses that prefer to import relatively cheap labour rather than train up their current workers; and universities that see overseas students (often seeking a migration rather than an educational outcome) as their principal source of revenue. He accepts that cutting immigration would infuriate powerful lobbies but thinks it would help to cement the re-alignment of working people (for whom housing and wages matter most) with the conservative side of politics. Most significantly, like border control, immigration is largely a matter for the executive government where the states and the Senate can’t readily run interference.

Rightly, Stone thinks that cheap power is the only comparative advantage Australia has ever had in manufacturing, given our high wages rates and small local markets. He approvingly quotes Minister Matt Canavan’s maiden speech that if we don’t restore cheap power, we will end up with cheap wages. Sensibly, he has little time for those touting renewables that are only cheap when the sun shines or the wind blows. Unusually, for a market-oriented policy advocate, Stone says that the electricity market has been so corrupted by green-tape that only government can ensure the continued delivery of this essential service: an affordable and reliable power supply. Just as unusually, for someone who is a constitutional conservative, he accepts that a power grid crossing state borders properly makes this a Commonwealth responsibility.  A national government that can make a virtue of ordering a wholly-owned government business to develop the Snowy 2.0 pumped-hydro scheme should equally order the construction of Hazelwood 2.0 plus the compulsory acquisition and operation, if needs be, of the Liddell coal-fired power station.

There are a host of interesting if less politically bold ideas here. I especially liked the suggestion that universities should be partly liable for the unpaid HECS debts of their students, as a way to combat their tendency to enrol too many people in frivolous degrees. On the other hand, his suggestion that unemployment benefits should be paid from ‘lifetime Newstart accounts’, to my mind, is the one time his inner economist trumped the practical political adviser.

Stone was a key figure in the Coalition’s policy development prior to the 2013 election. My policy mantra: ‘axe the tax, stop the boats, build the roads, and fix the budget’ owed much to his insistence that policy be clear, simple and a response to obvious problems that voters could relate to. Now, in his view, a comparable prescription would be: ‘cut immigration hard’, ‘build coal-fired power’ and ‘make universities pay’.

Despite everything, the Abbott agenda was realised; albeit, in the case of budget repair, only after six years of hard graft by successive PMs, treasurers and the indefatigable Finance Minister Mathias Cormann. Every government that wants to make a difference needs an Andrew Stone to help keep it focussed. A government that doesn’t have a Stone should at least consult his book.

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