Whither Australia?

BY SUKRIT SABHLOK

The political class in India is largely populated by criminals. If in doubt, simply look at Transparency International’s rating of India, which ranks the country as even more corrupt than China.

Elections come and go. But corruption is a constant; it never seems to go anywhere. Some have suggested, however, that a way to eliminate corruption is to boost public sector salaries. Supposedly, making government officials richer will make them less tempted to take bribes. But in reality, there is really no logical limit to how far this argument could be pushed. At what point do we draw the line? $100,000? $200,000?

To take an example of Singapore, ministers receive about $1 million a year. Sure, Singapore is a low-corruption society, but wealthy politicians are not the reason why.

There is nothing stopping government employees from taking money, regardless of how wealthy they may be. All we can be confident of is that individuals will pursue their self-interest as they perceive it, and if the probability of detection is low, political corruption will continue.

Consider what happened in Indonesia when judicial salaries were raised. Although the Supreme Court’s budget went from 79.5 billion Rupiah in 2002 to 153 billion Rupiah in 2004, 1.2 trillion in 2005, 2.2 trillion in 2006 and finally 3 trillion in 2007, academics Simon Butt and Tim Lindsey observe that “increased salaries, even combined with strong new corruption laws, have apparently failed to reduce corruption.” The judiciary still remains the most corrupt institution in Indonesia.

Increasing salaries just ends up being a reward for bad behaviour. Even if some officials take bribes because their low salaries ‘force’ them to do so, relying on them to stop taking bribes because their salaries have been increased is hardly a foolproof policy. Rather than looting taxpayers to arbitrarily enrich government agents in the mere hope of reducing corruption, what we need is a policy that is guaranteed to get the job done.

And that policy can be summed up in one word: freedom. This means moving towards the free market, rather than socialism and corporatism. It means eliminating reams of paperwork and unnecessary complexity in the legal system. The ultimate aim is to do away with the need for citizens to supplicate in front of government agents just to set up

An example will help illustrate the point. Suppose you intend starting a business, but came up against a babu who demands Rs 1000 more as the price for granting you a license. “All right,” you think, “I’ll pay him because I really need the income from my business.”

The problem here wasn’t the bribe per se, it was the onerous licensing system that allowed the bureaucrat to exercise power over the small businessman. As David Henderson of the Mises Institute explains, “A necessary condition for corruption is that someone has power to make decisions for others, decisions that those others can’t perfectly monitor. The reason so much corruption occurs in government is that government officials hand out so much in the form of subsidies, tax breaks, permits and regulatory exceptions”. Therefore, the way to reduce corruption is to start removing discretionary powers that facilitate extraction of bribes.

Now we are in a position to understand why countries such as Hong Kong, Singapore and Australia have achieved such success in stamping out corruption: they invariably tend to prioritize the market economy, at least in comparison to India.

The other argument often used in favour of raising salaries goes as follows: we should pay public sector employees more, because this will attract the best and brightest into politics. This is an equally nonsensical argument. Why would we want to encourage India’s smartest men and women to enter politics? Far better to have them go into private sector jobs where they actually create something of value. Bill Gates has done more to improve the standard of living for the common man through his work in Microsoft than all the prime ministers of India combined.

It should be remembered that politicians in a democracy are inevitably thinking about their short-term careers, rather than what is best for the country in the long-term. As Hans-Hermann Hoppe argues in his book Democracy: The God that Failed, politicians are essentially caretakers who think from one electoral cycle to the next. Thus, it is in their interests to extract the maximum benefits they can from taxpayers before they are voted out at the next election. It is emphatically not in their interests to put in place long-term reforms that will improve the overall health of the nation.

The great philosopher Cicero reminds us that “The more laws, the less justice”. We should heed his words.

BY NOEL G DE SOUZA

The Julia Gillard ascendancy gives Australia its first female Prime Minister who also happens to be foreign born. India’s first female Prime Minister Indira Gandhi took office way back in 1966 and Sri Lanka, Pakistan and Bangladesh have also had either female Prime Ministers or Presidents.

Australians like moderate policies. Both main political parties subscribe to “middleof-the-road” centric policies and reject extreme policies. Thus when the Goods and Services Tax (the GST) was introduced, income tax concessions were offered simultaneously as compensation. The terms “left” and “right” in Australia do not have the same connotations as do elsewhere, making it difficult to equate Australian parties with Indian political parties. There is a degree of class division in Australia, broadly equating into workers and bosses. Generally, but not always, workers vote for Labor whilst the privileged vote for the Liberals. This results in some safe seats for each of these parties, but no hard-andfast lines can be drawn. Even the safest seats have only margins of some 10 percent or less. Indians are distributed over all types of metropolitan voting areas, Some Indians are members of the main Australian political parties.

The country areas where farming predominates are in a class of their own, being for the most part, the preserve of the National party.

Voting in Australia is very different to that in India. In India, language, caste and creed are often considerations, though these were not that much in evidence in the last national elections. Australia has just three-year terms at the federal level which is considered as insufficient for effecting meaningful change. Thus in just one-and-half year of governing, a new government has to start thinking of the next election. In India five-year terms give a new government more time for implementing its programmes.

The Australian Senate can override bills passed by the House of Representatives. In the Senate, every state however small in size or population like Tasmania has got equal representation compared to the large and more popular states such as New South Wales and Victoria.

Except for the last term of the Howard government when Liberals gained control of both the lower and upper houses of Parliament, Australian governments of all persuasions have had to wrestle with getting their legislation through the Senate. The current Labor government found the Senate to be obstructionist, leading to the ultimate downfall of Kevin Rudd as Prime Minister. This inability to get government legislation through has led to the question: whither Australia?

In India, in contrast, the upper house (Rajya Sabha) is a house of review which is not directly elected. State and territorial legislatures choose its members whilst several are nominated by the President. The upper house cannot block budgets. In case of bills being held up, a joint sitting with the much more numerous lower house can ensure the passing of a bill.

The Australian Senate is an ongoing sore point for Labor politicians who espouse a one-vote-one-value system. Each state (however populous like New South Wales or with very few inhabitants like Tasmania) selects the same number of members. This situation is only changeable through a Referendum but Referendums have a poor record of success in Australia.

In Australia, most people vote on the basis of issues which directly affect them Perhaps the most important one is that of jobs. Job security comes ahead of such considerations as interest rates because, even though interest rates may cause pain for mortgage holders, the loss of jobs can be devastating.

Ethnic considerations do not have the same importance as they do in some other countries. Australia does not have ethnic issues on which elections are fought.

Migration on racial lines is also not currently an issue. Issues on which the media has focussed are economic management, climate change and health.

The proposed mining super profits tax, which contributed to the undoing of Kevin Rudd as Prime Minister, is apparently getting defused.

Migrant groups including Indians, are in the same boat as other Australians and, therefore, have no particular issues of their own which have a bearing on how they are going to vote. Some improvement of Australia’s relations with India can be hoped for, given Gillard’s performance during her brief visit to India.

There have been no charismatic leaders in Australia in recent times, though Gillard’s sudden ascendancy and media welcome has been endowed with charisma. The last leader considered as charismatic was Bob Hawke.

The Australian electorate is quite mature and voting is based on factors like economic management, fair taxation, social service needs (like for the disadvantaged, retirees and the aged) and protection of the environment. In country areas, water management is become an important issue. How leaders handle these issues is what the voters will watch.