An important industry is deregulated in the name of efficiency and growth, with competition and innovation expected to do the job formerly left to regulation of protecting consumers and ensuring stability. Initially, everyone benefits. But the industry uses its growing wealth to distort the political system in its own interests. The media cheers them on both for ideological and commercial reasons. Competition vanishes as a few companies grow ever bigger. Crooks take advantage of the lack of regulation. Consumers and other businesses suffer. Firms that want to do the right thing face ever-growing pressure to succumb and join in the gouging and rorting. Eventually so egregious are the misconduct and rip-offs that governments are compelled — against furious lobbying by the industry and its media allies — to dramatically intervene, both to punish wrongdoers and re-establish the rule of law.
Sounds familiar, right? But which industry am I talking about? Financial services? How about the energy sector? How about vocational education? How about the retail sector’s wage theft epidemic? Or how about residential development? In NSW the state government announced the “biggest shake-up in building and construction laws in our state’s history”, bringing to an end decades of lax regulation in which developers and builders found innovative ways to evade responsibility for shoddy work.
The Opal tower scandal in Sydney that prompted the crackdown represented an almost perfect cycle of neoliberal policymaking: ramp up immigration, putting a rocket under property prices, forcing ever more people into high-rise apartments built by developers making millions from the system (in Sydney, a system that often features local councils handing out super-profits to mates based on dodgy zoning decisions) in an industry lacking adequate regulation to protect people making the most important investment of their lives.
Aged care is next, via the royal commission. A royal commission is needed when existing legal and enforcement structures have failed. In two major industries in two years, governments have been forced to admit such failure. One at the heart of the economy, one central to our personal hopes of a dignified and comfortable end of life. In a third crucial industry, electricity, the reaction from government — from the notional champions of deregulation — has been a complete backflip on deregulation, in favour of massive intervention.
Where next? The road transport industry, where the Turnbull government celebrated the deregulatory victory of abolishing the Road Safety Remuneration Tribunal? Disability services, where the influx of government funding is luring shonks and spivs? In our burgeoning defence manufacturing industry, where protectionism, flag-waving and national security secrecy combine to shield industry players from scrutiny?
The problems are not sui generis for each industry; rather, they are a symptom of a wider problem of the fundamental instability of neoliberalism — under which deregulation becomes a pretext for the stripping away of basic regulation and protections for consumers, workers and other business — combined with a profoundly flawed political system in which vested interests pump millions into political parties, policymaking is conducted in collaboration with those vested interests with no transparency or visibility, and what’s left of any regulatory framework is enforced by gutted regulators or even outsourced to industry itself. And the whole process is backed by a compliant media that supports those interests and opposes any threat to them — witness the campaigning by The Australian and the Financial Review against a banking royal commission.
Heavy-handed reforms by politicians fearing an electoral backlash is just treating the symptoms of a deeper problem that isn’t going away. Those reforms won’t even last — in time new politicians will arrive and spruik the benefits of deregulation. The media will forget what happened the previous decade. Voters will be told of the virtues of competition and getting out of the way of business. Companies and trade unions will continue to pump money into politics. Politicians and bureaucrats will continue to work in near-total secrecy (we don’t even know which lobbyists and CEOs frontbenchers and key crossbenchers meet with at the moment). Major media outlets will continue to run campaigns for powerful industries.
So it will keep happening. The gouging. The rip-offs. The pressure on businesses that want to do the right thing to join in. The soft corruption of political donations and lobbying. The hard corruption that we’ll never know about because of the lack of a commonwealth anti-corruption body. The Australian way of making policy is now broken. Fixing that is the challenge, not addressing the scandal du jour.
Well put.
Absolutely agree.
All governments have become risk adverse, it is safer for them to outsource all facets of industry including the regulation and oversight. They then feint alarm when these thieves are exposed.
Government should never be allowed the “Plausible deniability” defense to be considered an excuse for they’re failure of oversight, the finance minister / treasurer present and past should be accountable for much of the Banking RC rorts uncovered. Perhaps then governments and ministers might be little more careful assessing the risks in allowing ‘free market’ forces to dictate terms.
Citizens deserve governance that is for their protection and benefit, there is very little of value that governments actually do for citizens anymore without $$$.
Yes the pattern is simple – Too many regulations require too many -tick the boxes approach- Has any one ever added up the number of Commissions and commissioners in state and Federal sphere? – unelected unaccountable for their decisions. Regulations come with compliance framework – for instance, Aged care problem of compliance is such that staff do not have time to take care of the people -taking care of the paper work is more important as that is what the government regulations require.One doesn’t need a Royal Commission to diagnose the regulatory problems created by the bureaucrats and approved by the rubber stamps [the politicians- who haven’t a clue beyond re-election tactics].
Hi Desmond,
I don’t follow – are you saying that as industries are deregulated, they have to devote more resources to compliance?
Cheers,
Michael
Good point Desmond. In the era of deregulation lots of fields are drowning in regulatory compliance and associated bureaucratic process. Teaching, nursing, aged care are just for starters. But somehow the big money spinners and especially public policy runs on the fly.
It’s not that aged care staff don’t have time to look after the people. Rather, it’s because the system that Bernard Keane talks about has allowed big corporations to take control of the industry and in the name of profit (read: greed), they under-staff their facilities to where often there is one registered nurse on duty to take care of up to 80-100 patients with perhaps two or three (usually poorly trained and motivated) AINs to assist. Your argument supports Keane’s.
Self regulation means, NO REGULATION.
“Voters will be told of the virtues of competition and getting out of the way of business.”
Don’t blame the voters – it’s always unpopular to privatise. We just get ignored, the opposition party may make some noise but never undoes the sale/deregulation, and the press just fawn over it (and themselves) for being more intune with the way the economy works than ‘the punters’.