Australia should measure up

Hello, how are you?”

Reply: “Not so good. The balance in the mortgage offset account has gone down to near zero because of rising interest rates. I got the house insurance bill this week. It was horrendous. The super balance isn’t too bad, but that doesn’t help much because I can’t get at it. The tax cut and cost-of-living bonus barely made a dint.” And so on.

How unrealistic was that. If someone gave you that reply, you would think they were a robot obsessed with money.

But that is how we behave as a nation. Every month and every quarter, the question, “How are we doing?” is asked by the Australian Bureau of Statistics. And the answers come back in similar vein: “The national accounts went up 0.4 per cent. Inflation was 5.6 per cent annualised. National debt went up 0.5 per cent.” And so on.

The individual’s answer in real life would be something like: “Not too bad. But the knee is playing up. Sometimes I can’t walk more than half a K. Family is visiting next week. They’ll eat us out of house and home, but it’ll be great to see them. Did a shift a Vinnies yesterday. Some of the crap they put in bins these days! Anyway. Can’t complain. And I got a toothache yesterday. It’s gone away, but it better not come back because who can afford a dentist these days? But, hey, I got Wordle out in two this morning.”

As a nation report we do not report like that, or only in a limited way. However, things are looking up a bit.

Last week, Assistant Minister for Treasury  Andrew Leigh told us that the ABS was beefing up its reporting on well-being by making the General Social Survey an annual event.

It follows the release by the Government this time last year of the Measuring What Matters framework. Its themes are health, security, sustainability, cohesiveness, and prosperity. Treasury and the ABS will draw on about 50 indicators.

It is not entirely new. During the Rudd-Gillard-Rudd Government, the ABS began Measuring Australia’s Progress. As it happens, I was one of the selected volunteers to help work out what should be measured.

The ABS people’s message was to tell them WHAT we thought should be measured and not to worry about HOW it could be measured: that was their job.

After the change of government in 2013, though, the ABS was directed (through funding cuts) to end the program. The Coalition did not see the point in measuring anything but money.

But measuring well-being and following up with actions to improve well-being is surely the quintessential task of government.

When John Stuart Mill, the great Victorian philosopher, opined that the aim of government should be the greatest good for the greatest number he was not talking about a measure of increasing total monetary wealth.

Assistant Treasurer Leigh has been a thoughtful proponent of two fundamental elements of good government. Both are about measurement. The one mentioned above is measuring well-being through the experience of all parts of society as distinct from measuring society’s total economic wealth and growth irrespective of the distribution of that wealth.

There is little point having an economy growing at, say, 3 per cent if all the extra money goes to people who are already wealthy and therefore get no extra well-being from it – especially if it comes at great unmeasured environmental cost.

The other measurement he is keen on is the effectiveness of government policies. It is all very well governments citing extra real dollars spent on roads, hospitals or whatever. But that means little if the money is being tipped into ineffective or poorly targeted programs.

Leigh is keen on testing the effectiveness of programs through comparing a randomised sample against a placebo (or dong nothing). It is the gold standard for testing the effectiveness of drugs and other medical interventions.

Leigh suggests testing as many policies as possible in that same way. For it may be that, without the testing, vast amounts of government money are being spent on achieving very little. Conversely, small amounts of money could be having profound effects and should be made universal.

True, not all policies can be tested this way, but many can be and at present are not.

A fair amount of haphazard evidence suggests that well-being has plummeted in Australia since the mid-1990s. If we measure it more precisely, governments might be shamed into doing more about it or they might become worried about voter back-lash.

Essentially, since the mid-1990s a vast amount of public money has been poured into private health and education at the cost of public health and education. As a result, people have to pay more for public services, or not afford access, or wait longer for access. Well, choice is fine, but not at the expense of everyone else.

If you want the private choice you should have to pay for it in full. Private health insurance should not be tax-deductible nor be an excuse for not having to pay the high-income Medicare surcharge. And the GST should apply to school fees.

The money could be poured into public health and education which would become so good that no-one would need or want private cover.

The argument that private health and private education relieve the public system is rubbish. No-one suggests that private cars relieve the public transport system and so should be subsidised. To the contrary, private cars are taxed to discourage their use.

And the tax system and immigration should be changed to relieve the housing crisis.

Health, education, housing, and a reversal of growing inequality are essential to better well-being and the reduction of stress and mental illness. We should measure well-being at least twice a year. We should do something about its decline and monitor what we do about it to ensure it is effective.

It does not even do the well-off much good to have more money and growing inequality. We could shave more from people with high incomes and high wealth and they would not notice any change in their well-being. But the difference better services would make to those on very low incomes and no wealth would be profound.

And the wealth and income of those on the high end did not come purely for their own efforts. Without police, defence, transport and communications infrastructure and the public health and education systems for their employees and contractors their wealth and income generation would not have been possible.

Crispin Hull

This article first appeared in The Canberra Times and other social media on 16 July 2024.