In this episode of the Australia Together Podcast on Substack, I read Parts 1 to 4 of Chapter 6 of my latest book, The Public Interest Economy: the path to wellbeing, security and sustainable consumption in a democratised Australian economy.
Chapter 6 sets out a program of democratic institutional reform that will enable Australians to maximise their chances of building an economy in the public interest.
The program is built on a foundation of six pillars of reform:
Pillar 1 involves centring macroeconomic policy and governance in the federal Treasury (as opposed to the reserve bank) so as to integrate the operation of fiscal and monetary policy by use of effective functional finance.
Pillar 2 is to revise the National Competition Policy so as to reverse the damage wrought by neoliberalism on services essential for the wellbeing of all Australians.
Pillar 3 is to strike a National Accord on Wealth, Welfare and Wellbeing – an agreement between the people of Australia and their governments on the principles of fairness in economic decision making.
Pillar 4 is to establish an Independent Commission for National Democratic Engagement and Integrated Planning to give all Australians a forum in which they can:
exercise their voices as equals in democracy; and
collaborate to build a coherent long term plan to safely secure everyone’s wellbeing and that of the planet.
Pillar 5 is to establish a National Economic Transitions Commission to enable Australians to safely shift from unsustainable to sustainable economic compositions as needed.
Pillar 6 is to establish a National Public Interest Collaboration – a democratic process by which Australians and their governments can collaborate to build an economy in the public interest, starting by establishing a social new deal in which Australians and governments agree to introduce a fair universal basic income matched with fair tax reform, and in the process, secure affordable access for all to the services that are essential for their health and wellbeing, including most notably fee-free tertiary education.
In this episode
In this episode I cover the first two pillars of the reform program and place the program in the context of the challenges we are facing in a resource constrained world. This integrated program of reform is vital if we are to withstand the coming impacts of climate change and global economic disruption.
Institutional reform is essential and urgent
Australia needs a democratised economy if we are to escape the ravages of neoliberalism. This means that we need institutional reforms which allow Australians to increase their influence in their democracy as political equals.
A democratised economy is essential if we are to bring neoliberalism to heel and to stop it from consuming what there is left of the natural world on which all our lives depend.
Neoliberalism is a pernicious, corporately driven, immoral, colonising and violent force in the economy which must be overcome if the public interest is to be protected. Inasmuch as neoliberalism is a project whose objective is inequality, it must be repudiated and replaced with a new policy and institutional framework oriented towards political equality.
A democratised economy founded on the basis of an agreement between electors and the elected about the principles of fair decision making – a National Accord on Wealth, Welfare and Wellbeing – is central to this necessary reorientation.
Pillar 1 – Macroeconomic policy and governance centred in the Treasury
If Australians are to democratise their economy, the Treasury will need to accept responsibility for economic management. We need to abandon the system that splits macroeconomic management between the Treasury and the Reserve Bank. That split is a failure as shown by the decline in wellbeing recorded in The State of Australia 2025.
Treasury staff will need to learn how to use the rules of functional finance and to commit themselves to effective use of those rules by interacting with the Australian community to develop long term national financial plans that direct spending and taxing in the interests of the public. They will also need to develop skill in using these plans to drive the annual federal budget setting processes. If Treasury officials can do that, then they will open up the entire national economy, including state and local government spending, to secure wellbeing for all without adverse inflationary or employment consequences.
The governance arrangements for Australia’s economy in 2025, which split responsibility for macroeconomic management will not prevent inflation; they will not deliver full employment; they will not secure essential services for wellbeing; they will not eliminate poverty; they will not distribute the benefit and burden of taxation fairly; and they will not enable the human and natural resource renewal necessary for a sustainable economy.
Only an integration of monetary and fiscal policy by use of functional finance, combined with a collaborative, democratic approach to long term national planning, can overcome the losses of economic benefit suffered by Australians under the split system of macroeconomic management that has prevailed since the mid 1990s.
Pillar 2 – A revised National Competition Policy
Privatisation of public services and assets under the National Competition Policy has wreaked havoc on Australia’s economy and the accessibility of services essential for our wellbeing.
The National Competition Policy is probably the single biggest cause of the harms wrought by neoliberalism on the wealth, welfare and wellbeing of Australians. It is the midwife of inequality, especially inequality of access to essential services. If left unamended it will cause a growth in inequality so large that it will encourage those missing out towards the destabilising politics of the far-right or fascism.
The contention implicit in the National Competition Policy that the private sector – if it is permitted to enter markets for supply of public services on a level playing field – will always be more efficient than the public sector, has been proven to be a neoliberal myth.
Instead of delivering wellbeing cost-effectively for all, the privatisation of public services and assets that has been permitted under the National Competition Policy has saddled Australians with rising costs for essential services (especially in energy prices) as well as the above mentioned very significant decline in health and wellbeing
The decline in wellbeing has occurred because there is a fundamental problem at the heart of the National Competition Policy. Two of the seven principles underpinning the National Competition Policy – Principles 3 and 4 – need to be completely removed. They militate against the affordability of access to services essential for our health and wellbeing.
Principle 3 assumes that public monopolies can be privatised without causing harm. This is entirely false.
Principle 4 assumes that it is in the interests of consumers to “level the playing field” between government and private businesses. But to level the playing field, the policy requires governments to remove – yes, remove – all the advantages arising from public ownership of a service or asset. This does nothing more than result in price rises for consumers, or service level drops, or both.
In relation to natural monopolies, the economic and financial reality is that the private sector simply can’t compete. The government has too many advantages and if those advantages have to be “removed” to allow entry for private providers, then the government needs to change its mindset and realise the need to capitalise on its advantages instead of removing them.
And if any further proof is needed that privatisation of essential services and infrastructure is a bad deal for Australians, we need only ask ourselves whether a private business would agree to give up its net competitive advantage to help a competitor. No way would they do that – and so, nor should the government.
Principles 3 and 4 work against the public interest. They favour private profit at the expense of consumers.
Principles 3 and 4 in the National Competition Policy are the product of a neoliberal mindset that no longer makes any sense in a world of limited resources and in a country with a fiat currency. They are principles that we might reasonably decide to adopt if money is in short supply; but as we have noted above, Australian federal governments don’t have financial constraints and don’t need to make decisions about services and asset operation based on commercial competitiveness and the potential for profits.
In effect the National Competition Policy is saying that Australians can’t have a service – even an essential one – unless a private provider can benefit. No wonder Australia ended up with a housing supply backlog. In the age of fiat currencies, Principles 3 and 4 in the National Competition Policy are therefore redundant. They are very much past their use-by date (if they ever had one).
If the objective is cheaper public services for consumers, the National Competition Policy is fatally flawed. It should indicate that exposure of essential public services to “competition” is a recipe for price hikes, falls in service levels, and lower wages.
Principles 3 and 4 should be removed from the policy because public advantage cannot be reaped by disadvantaging the public, which is exactly what the National Competition Policy is designed to do. Designedly, it disadvantages the public.
Why revise the National Competition Policy?
The main reason is to facilitate the re-entry of the public sector as a big, strong, proud competitor to the private sector. The government and the public sector should be out in the open market competing hard on behalf of the public, particularly in:
provision of housing;
retail banking services; and
superannuation schemes.
To find out more about how big public sector activity in these areas can secure the welfare and wellbeing of Australians, read Chapter 6 of The Public Interest Economy.
Stay in touch for the next episodes
Next Episode: Chapter 6, Parts 5 to 7. These cover the next three pillars of the reform program:
Pillar 3 – the National Accord on Wealth, Welfare and Wellbeing;
Pillar 4 – the Independent Commission for National Democratic Engagement and Integrated Planning; and
Pillar 5 – the National Economic Transitions Commission.
In the final episode I’ll read the last part of Chapter 6 and the Epilogue to the book covering the sixth pillar of reform – the Australian Public Interest Collaboration – and show why the reforms and collaborations suggested in the book are essential and urgent.
Listen to a full reading of The Public Interest Economy
You’ll be able to listen to a complete reading of The Public Interest Economy in weekly instalments.
If you wish to keep reading, the full book has already been published and is available on Kindle here. The paperback is available for mail-order here or click on the picture below. Or visit the Australian Community Futures Planning website to purchase The Public Interest Economy at https://austcfp.com.au/publications#public-interest-economy
Useful insights into The Public Interest Economy
Click on the picture to listen to a radio interview with Bronwyn Kelly about The Public Interest Economy.
