Government intervention and deregulation (previously Re: Howard dumps privacy proposal)

[Ian Johnston]

> From: Bernard Robertson-Dunn <brd@netinfo.com.au>
> To: link@charlotte.anu.edu.au
> Subject: Re: Howard dumps privacy proposal
> Date: Thursday, 27 March 1997 4:44
> 
> In an earlier post I asked a question about government's aims for
> de-regulation. <cut> Nobody seems to have responded with any
> answers.

One answer follows:

At a macro level, a central issue for Australian governments for many years has
been whether the general framework (including regulatory framework) within
which the nation's markets operate is conducive to their development so as to
best serve national economic, social and other goals.

Successive federal governments have pursued various goals, notably economic
growth, controlling inflation and reducing unemployment.  Other goals included
improving international competitiveness, reducing budget and external account
deficits, improving the efficiency of the economy and its markets and so on. 
These goals are far from separable in practice.

Many forms of government intervention (including regulation/deregulation) in
markets are designed to achieve more than one of these goals. Others, while
specifically designed to meet one goal, will have implications - possibly
unintended - for other goals.  Three major forms of government intervention are
regulation, protection and subsidisation.

Deregulation is just one of a number of processes or strategies adopted by
government in pursuit of its goals.  Others include competition,
contestability, structural reform, government business enterprise
reform, outsourcing, best practice, bench-marking and privatisation.

At a micro level, government intervention is, by definition, coercive.  It is
attempting to persuade or compel people to act in a manner which would
otherwise not be perceived by them to be in their best interests.  The
imposition of costs (or penalties), through coercion, is a necessary element of
government intervention.

Deregulation can reduce costs, provide greater choice and new services.  Whilst
many perceive deregulation as a threat, others see it as an opportunity. These
points are well illustrated by George Michaelson in his email of 27 March - Re:
SMH: Internet and data calls to be timed.  

> Is it ideology driven, or do they have a well thought through, balanced goal
> complete with measures of success/failure and co-ordinated across programs
> and policy areas?  Nobody seems to have responded with any answers.

Ideology is a factor, but economic and fiscal imperatives have been
significant factors in driving deregulation and other reforms.  Generally
speaking, I think ideology has been more about how, rather than what, reform
is conducted.  Ideology can hasten or slow the pace and extent of
reform/regulation/deregulation.
 
Most of the major federal reforms over the last two decades have been proceeded
by fairly lengthy processes and cycles of public inquiry, reporting,
consultation and evaluation, eg. telecommunications and financial systems.  In
that sense, deregulation has had well thought through, balanced goals with
measures of success/failure.  Success/failure tends to drive the timing of
the next cycle. 

All major federal programs have specified outcomes, objectives, strategies and
performance measures.  There is scope for improvement in performance monitoring
and accountability, particularly in budget-funded programs.  With regard to new
policy proposals/funding considered in the tight timeframe of a Budget planning
process, these proposals could be better thought through.  The proposed
Financial Management and Accountability Act provides a better legislative
framework for, as the name of the Act says, financial management and
accountability.

Coordination across programs and policy areas has improved in recent years, but
there is still scope for continuous improvement.  Much work has been done over
the last four years on better coordination of social security and welfare
programs (DSS) and employment, education, training and youth affairs programs
(DEET/DEETYA).  I mention these because they involve massive government outlays
(around $63,000,000,000) and interconnectedness of these programs.

> It would appear that the government's strategy is the usual short term 
> political extremist view - if the market place is too regulated - deregulate
> without limit.

Generally speaking, short-term political extremist views, of whatever political
persuasion,  don't drive government strategy.   Nor should they.  It may be a
short term political extremist view that prevails at the time, but the fact is
that change, including regulatory change, can and does take a long, long time.

For example,  deregulatory and other reforms of the financial and
telecommunications systems have happened progressively over twenty years.  The
real benefits of these changes are now being realised by the bulk of consumers
of telecommunications and banking services.  Ironically, for internet users,
the real benefits of telecommunications reform now appear under threat by, and
lost to, government.

Federal Governments have not adopted - and I would be surprised if the current
government adopted - a BIG BANG approach to deregulation.  Deregulation has
occurred progressively.  There are, indeed, limits to deregulation. 

> From: Bernard Robertson-Dunn <brd@netinfo.com.au>
> To: link@charlotte.anu.edu.au; pubsec@das.gov.au
> Subject: Re: Howard dumps privacy proposal
> Date: Monday, 24 March 1997 5:28

> Question:-
> 
> Has the current government defined what the optimum balance is, or is it
> pursuing a goal of reduced regulation because of "best practice" or other
> ideologies?
> 
> If is has not determined what the optimum balance is, how does it know that
> we currently do not have enough regulation? How will it know when it has
> de-regulated enough?

The optimum balance is achieved by Government when there is enough regulation
an/or deregulation to achieve its goals.  That stage is usually reached after
several iterations in the policy development process, then the legislative
development process, and finally the Parliamentary process.

Even after legislation is in place (eg the Telecommunications Act), there is
still scope for more or less regulation - through sub-ordinate legislation
(regulations), ministerial directions and administrative "regulation"
(government policy) not inconsistent with the legislation.  Legislation will be
administered by regulatory bodies and interpreted by the courts.  If
legislation should prove inadequate, further changes may be subsequently
introduced in miscellaneous amending legislation.  There are no definitive
limits to regulation/deregulation.


Ian Johnston
_____________________________

ijohnsto@pcug.org.au
Canberra, Australia's National Capital
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