Australia: the biggest loser in future viability

bertelsmann-sgiDaniel Schraad-Tischler, Senior Expert at Bertelsmann Stiftung where he heads the Sustainable Governance Indicators (SGI) project, and Christof Schiller, project manager for the SGI project and associated Fellow at the Potsdam Center for Policy and Management.

In the past two years, Australia’s viability for the future has dramatically decreased and its need for reform with regards to economic, social and ecological sustainability has increased enormously.

This of one of our findings in this year’s Sustainable Governance Indicators (SGI) by the German Bertelsmann Stiftung. It’s an international monitoring tool which sheds light on the future viability of all 41 countries of the OECD and European Union. On the basis of 136 indicators we assess government actions and reforms. More than 100 international experts are involved in our study.

In comparison with the other developed industrialized nations, Australia is now ranked just 25th in future viability, dropping ten places in comparison with our 2014 survey. It is now 13 places behind neighboring New Zealand and on a similar level to Poland. Thus with regards to the need for reform in important economic, social, and ecological policy fields, Australia is one of the biggest losers in our study this year.

We found major reform needs in many policy areas, including research and development, social inclusion, and environmental policy. Australia must improve considerably here if it wants to secure its future viability in the long term.

However, when assessing the steering and reform capacity of the political system Australia receives above-average scores in our study, ranking 11th out of 41 nations.

Overall, the Scandinavian countries achieved the best results, with Sweden ranking first, followed by Switzerland and Germany. Of the largest national economies, only two G7 nations (Germany and the United Kingdom) are among the top ten. The U.S. moved up one rank, but is still below average. Greece continues to come in last in the comparison among countries.

With the end of the commodity boom, a growing need for reform

In our Policy Performance Index, sharp contrasts were revealed between excellent scores for integration policy and massive deficits in the areas of research and development, social inclusion, and the environment.

One reason Australia scored so well in integration policy is that job opportunities for immigrants are approximately as good as those for native-born Australians. No other OECD country – with the exception of Hungary – does so well in this regard. Our study praises the effectiveness of Australian integration policy, but we also found weaknesses and challenges, including the country’s uncompromising treatment of asylum seekers who try to reach the country by boat from Southeast Asia.

Australia’s increasing need for reform is mainly due to the end of the commodity boom, which has led to stagnation in living standards and a rise in unemployment rates since 2011. We found that with the end of the boom, Australia must develop new growth industries. Manufacturing, tourism, and education services appear unable to fill the gap.

In research and development, Australia ranks just 26th out of 41 countries in our study. Although it provides significant public financial support for research and development, the results are quite disappointing. For example, Australia registers just 77 patents per million inhabitants per year, compared with 335 in top-ranked Japan.

Australia is generally in need of significant public investment to bring its infrastructure to a level comparable to other advanced economies. The price for Australia’s low level of public debt has been inadequate roads, ports, and railroads. Yet the structural fiscal deficit impedes large new spending programs for infrastructure.

Lagging in social inclusion and environmental protection

In social inclusion, too, Australia ranks no higher than the lower mid-table range. The poverty level in the population is 13.8 percent. By contrast, in the Czech Republic or Finland just 5 percent of the population have to manage on less than 50 percent of the median income.

We found that the situation for indigenous Australians in particular continues to be the most serious social failure of the country’s policymakers. There have been numerous policy initiatives over recent decades seeking to address the appalling outcomes experienced by indigenous people, but there is little evidence of substantive progress. Remedying this must remain a priority over the coming years.

Australia also has a lot of catching up to do when it comes to its environmental policy. In the past, the country has addressed environmental challenges haphazardly. Considering the country’s climate, there is much room for the development of sustainable policies on energy and the environment. Transport could be made much greener, for instance by using higher excise duties on fuel to improve too often inadequate public transport systems.

With regard to the governmental system’s general reform and steering capacity, however, our study comes to a positive conclusion: Australia achieves 11th place in our Governance Index. Only the Nordic countries plus New Zealand, Luxembourg, the U.S., the United Kingdom, Canada, and Germany rank higher.

Among the strengths of the Australian governmental system, we found the efficient coordination between ministries as well as the parliament’s role in helping to shape policy and its supervisory competence.

Thus, there are reasons to be confident that Australia will be able to overcome the challenges outlined above. But the country’s performance in our international assessment of policy-making and governance should be a wake-up call.

Useful links

OECD Society at a Glance 2016: How does Australia compare?

OECD environmental tax profile for Australia

OECD Australia economic forecast survey

Home made but global: ANDI will measure the future Australians want

BLIToday’s post is from Mike Salvaris, Director, Australian National Development Index (ANDI) Ltd

The Australian National Development Index (ANDI) could fairly be described as ambitious. It’s a five year national project to engage half a million citizens and a large team of university researchers in developing a new set of national progress measures. ANDI has evolved organically over time, and its present form reflects both its local origins and Australia’s participation in the larger global movement to develop societal progress measures “beyond GDP”.

How ANDI developed

Australian work in this field goes back at least 20 years. In 1993, a group of researchers and community groups successfully petitioned the Australian Parliament to set up an enquiry into new measures of national well-being. A Senate report in 1996 approved the idea and recommended that the Australian Bureau of Statistics (ABS) work with researchers, policy makers and community groups on this task. Two years later, Australia saw its first national conference on measuring progress which drew together several hundred researchers, policy makers and citizens from many different fields of social progress. In 2002 the ABS became the world’s first National Statistics Organisation to develop a new statistical model for measuring national progress; rather than simply putting existing data together in a new combination, it was based firmly on the idea that to measure a society’s progress, you must first be able to describe and define clearly what social progress looks like. (Sadly this pioneering project was discontinued this year due to agency budget cuts.)

Fast forward to 2008: a newly elected Labor government decides to convene the nation’s first ‘National Ideas Summit’, seeking new projects and new thinking for Australia’s next decade. The idea of an Australian National Development Index based on extensive community engagement and research was highly rated. Two years later, ANDI became a national, not-for-profit, citizen-owned company with a Board of Directors that included a number of eminent Australians.

Mike Salvaris explains the Australian National Development Index (ANDI) in The Zone.

In the last decade, the quest for better measures of progress and well-being has truly become a “new global movement”, as the OECD described it, noting some seventy current projects around the world. And while the OECD has played a crucial leadership role in the process through the Better Life Initiative, the movement itself has built up from the convergence of many different streams over perhaps forty years. Environmentalism, the women’s movement, the local community well-being movement, the UN Development Program and the example of world leading projects like the UN Human Development Index, Bhutan’s Gross National Happiness Index and the Canadian Index of Wellbeing and the OECD’s own earlier work on social indicators in the 1980s – all of these have played a part in the journey.

Australia has been both a contributor and a major beneficiary in this worldwide movement, so vigorously championed by the OECD. Australian researchers, policy makers and community leaders have been part of most of the key OECD forums and meetings, but also kept in touch with colleagues and projects all over the world: not just those in our part of it (Thailand, Japan, Bhutan, New Zealand etc), but in Europe, Canada, USA and Latin America.

In trying to design the best national model we can for Australia, we are very conscious of learning from global ‘best practice’. Today, with so many ideas and so many different projects in this field, there is much to choose from. But perhaps we should start with the common values and the shared experience that underlies most of these various endeavours.

What have we learned?

Two years ago at the Delhi World Forum, I tried to identify what I thought were the key conclusions and agreements that have emerged from this decade of intensive global work and thought about redefining society’s progress, and I’ve listed them below. These are now largely embodied in research articles and reports (like the Stiglitz-Sen-Fitoussi commission’s) but also in broader formal declarations like the Istanbul Declaration of 2009 and the Delhi OECD World Forum Communiqué in 2012.

  • GDP may be a good measure of economic output but it is a poor measure of the quality and wellbeing of society as whole, and using it this way can distort policy outcomes in practice.
  • A new model of societal progress is needed, not just new measures. True progress is an increase in equitable and sustainable wellbeing, not just in economic production.
  • Measures of true societal progress must integrate the economic, social, cultural, environmental and governance dimensions of progress; and they must consider the subjective wellbeing of people and the qualities of the society, such as justice and sustainability, not just the material outcomes.
  • The task of developing new progress measures is one that must engage citizens, scientists and policymakers. The process can be an important new tool to strengthen democracy, reverse the growing alienation of citizens, and create new shared visions of national progress.
  • It is now time to apply these new measures and processes in practice, to planning, policy-making and government, in the media and the community.

ANDI’s innovations

ANDI has taken all these lessons very seriously. And while we want to build the best features of all these models into our Australian index (allowing for own special priorities and culture) we have chosen to give special emphasis to two features that will make us a little different from our colleagues (I would never say “competitors” in the present context, although it is a term Australians naturally favour).

The first difference will be in the scale and range of ANDI’s community programme (and thus, hopefully, in its contribution to the larger democratic process). ANDI will aim to engage 500 000 Australians from all walks of life and all corners of the nation in a conversation addressing the central question: “What kind of Australia do we want?”. The programme will be carried out over 2 years, through a wide array of platforms and programmes: surveys, focus groups, town hall and kitchen table meetings, social media and blogs, school curricula, film and video. It will be funded from philanthropic, corporate and community sources, and will fully utilise the extensive networks of ANDI’s 60 partner organisations and their two million members.

A second difference is in the index itself: ANDI will produce each year an index of overall national well-being, but also twelve separate indexes and status reports in each key component domain of progress. These domain indexes will be released in different months, in order to maximise publicity, discussion and policy relevance, and aggregated into the national well-being index. The aggregate index will be weighted according to the relative priorities accorded to each of the 12 component domains. This is similar to the weighting process that is possible with the OECD’s Better life Index but in ANDI’s case, the weighting will be based on a national survey rather than the preferences of self selected individuals. Collectively these features will make for a more sophisticated policy-diagnostic tool, with the capacity to identify the key driver of change in progress and wellbeing, not just at the level of broad domains, but within each domain.

Useful links:

OECD Better Life Index

How’s life? 2013 – Measuring well-being

Australian National Development Index (ANDI)

Commission on the Measurement of Economic Performance and Social Progress