Review by Alastair Pope Policy Economist, Pizarro Associates, Auckland.

Past Wrongs, Future Rights
by Michael Warby
Tasman Institute, Melbourne, 1997, 167pp, $20.00
ISBN 1-875-56411-X

This study of anti-discrimination, Native Title and Aboriginal and Torres Strait Islander Policy is well laid out and introduces a comprehensive history of constitutional relations between the Commonwealth and Aboriginal people in the period 1973-1997. Intertwined in the discussion is an analysis of the pitfalls of viewing native title in terms of communal, inalienable and partial title. This book is a useful addition to the all too scant literature that critically questions the assumptions of indigenous policy in Australia.

The central thesis of Michael Warby’s book is that the major failing of native title, as communal, inalienable and partial title, is that it does not represent a sound instrument for significantly improving the conditions and prospects of Aboriginal and Torres Strait Islander Australians. The costs involved to the Australian community are not balanced by commensurate benefits to indigenous Australians.

Indigenous legal interests in land should be in forms that give indigenous title holders the full range of options in making decisions, not ‘frozen’ in forms that greatly restrict their ability to use their legal interests in land for their own benefit. Continuing to treat indigenous Australians as a collective special case runs the risk of retarding the process of adaptation that is vital if indigenous people are to prosper. On a more general level, the whole emphasis on a collective special case deflects attention from the kinds of developments that may be necessary to overcome the legacy of the past discrimination against indigenous people. These include such things as a well developed sense of individual responsibility, self discipline and the development mechanisms that foster trust and collaboration with people outside the extended family.

Warby goes about his task by examining in detail the historical background of constitutional relations between indigenous and non-indigenous Australians through various Acts of State, Territory and Federal Parliaments and through the ratification of various international human rights initiatives during the 1975-1997 period. The thrust of his argument is that the welfare approach to indigenous policy, which characterized this period, detracts from or even frustrates cultural adaptation. He suggests that focusing on discrimination and allegations of racism
emphasises attitudes to a biologically trivial and scientifically irrelevant distinction, rather than achieving the necessary improvements within indigenous communities. In effect, he is rejecting the idea that ‘race’ has a role to play in public policy. Public policy should be ‘colour blind,’ with specialist programs used only if they assist in the development of the personal skills, knowledge, and informal and formal institutions that will generate and sustain social outcomes commensurate with those of mainstream Australian society. If there is to be a criticism of the book it would be that this section is far too comprehensive, leaving the author little time to investigate the more conceptual aspects of indigenous policy.

The other major thread of Warby’s book concerns the jurisprudence of native title. The development of mass prosperity in countries like New Zealand and Australia has been based on the evolution of institutions which lowered the costs of exchange, particularly through providing increased certainty, simplicity and clarity in property rights. The system of property rights that developed had a pervasive effect on the incentives for individuals to use resources optimally. Warby argues that native title has created considerable uncertainty about property rights in Australia. The resulting regime has significantly raised the cost of land use with damaging consequences for investment and prosperity. He suggests it is a retrograde step in Australian law.

The core of Warby’s argument here is that because native title is communal and inalienable and confers limited usage rights, it will provide little or no economic benefit to indigenous Australians. Allied to this, the diversity of Aboriginal cultures means that the local content of native title rights is likely to be diverse, increasing problems of uncertainty and raising transaction costs. Codification of native title will either be expensive and complex, or else represent an exercise of such simplifying abstraction as to largely empty it of any cultural
authenticity.

Warby suggests that for Aboriginal Australians to forge their place in society, indigenous title needs to be tradable; land owned under indigen-
ous title should be capable of easy conversion to alienable freehold. As part of this process of conversion of title to full freehold, pastoral lessees should also have the option of purchasing freehold title, including the ability to ‘buy out’ native title holders on the payment of a mutually agreed fee. A ‘layered’ approach to indigenous interest in land should be available so that:

The effect of this would be to allow indigenous Australians the full range of ownership options so they can truly make their own choices. Warby concludes by emphasising the need for Aboriginal and Torres Strait Islander people to generate institutions to deal with these issues themselves rather than falling back on imposed structures.

Critics may argue that Warby has over-emphasized the importance of accepted thinking on property rights issues, and that although Native Title is potentially inefficient because of its collective emphasis, the framework it provides is better than no title at all. It is a form of title where one formerly did not exist. However this objection represents the type of compromise on conceptual issues that continues the cycle of disadvantage for indigenous people. As Warby argues, the more uncertain property rights are, either in their extent or in their security, the less incentive there is to find better uses for them, particularly over the long term. The larger the number of players that have to be dealt with, regardless of whether they contribute to the exchange, the higher the costs of transacting and the fewer exchanges will take place. As a result, Native Title will not allow Aboriginal people to adapt to modern society and develop the personal status, knowledge, and formal and informal institutions that will enable them to take their place as equal members of Australian society.

The general difficulties Warby outlines in his book regarding treating indigenous people as a special collective case are mirrored to a certain extent in New Zealand in the government’s dealing with indigenous Maori people. Maori claim reparation for past injustices suffered at the hands of the Crown or Crown agencies. Many of these claims are indisputable. However the framework the Crown has opted for emphasises ‘tribal’ identity; if one does not ‘belong’ or identify with a tribe one is not eligible for Crown compensation for past injustice. Again we have an example of treating indigenous people as a collective case that runs the risk of constraining indigenous people themselves, undermining attempts to improve their disadvantaged position and threatening their individual liberties. In New Zealand the collectivist approach typically benefits the traditional rural leadership while impoverishing and excluding the urban
majority; the cycle of government dependency continues!

Review by Tony Dimmitt Electorate Officer for Hon. Tony Abbott MP.

Keeping the Bastards Honest: The Australian Democrats’ First Twenty Years
edited by John Warhurst
Allen & Unwin, Sydney, 1997, 314pp, $29·95
ISBN 1-86448-420-9

If ‘power tends to corrupt, and absolute power corrupts absolutely,’ then the balance of power can corrupt even the best and most noble intentions, to the point of power without responsibility. Contrast this with the reality of the major parties in government: no matter what their ideological vantage point or platforms in opposition, the implementation of public policy is constrained by the bureaucracy, by public opinion, and by the rights and duties of governing ‘for all Australians.’

Our system of proportional representation and almost equal powers for the Senate has resulted since 1980 in the Australian Democrats holding the balance of power. Either alone or with others, they have had the ability to amend legislation without having to wear the consequences of this power in government. This situation has been mirrored to a lesser extent at various times in New South Wales, South Australia and Western Australia.

In the beginning, Don Chipp, the party’s founder, said in his resignation speech from the Liberal Party (House of Reps. Hansard 104:557):

From these humble beginnings, the slogan with which the Democrats are most closely identified is ‘Keep the Bastards Honest’ – hence the title of the book. The phrase was resurrected by Cheryl Kernot in 1996 as the party’s campaign slogan, with a relatively high level of success. However, the chapter by Ian Ward, ‘Party Organisation and Membership Participation,’ concludes that ‘for all the good intentions of its founders … for all the party’s participatory rhetoric, and despite a novel constitutional structure which fixes power to decide policy and to elect the party leader in the hands of the rank-and-file, the Australian Democrats have not succeeded in breaking the mould of party politics.’

For example, the motion of no confidence in Janet Powell by the parliamentary party effectively decided the leadership result before the party ballot in 1992. Ward says that it is only because the party’s senators ‘provide a solid core and national presence, that the party as a whole has survived periods of internal feuding and dissension which have seen various state divisions torn apart and deserted by members.’

This book provides a wide range of views and critiques of the Democrats by a number of authors, including Clive Bean (author of The Greening of Australian Politics), economist Tim Battin, media commentator Nick Economou, and John Warhurst, author of the 1996 study Politicians and Citizens. Together they have produced an in-depth and exciting book which will attract political animals who are interested in the events and effects of the Australian Democrats since their inception in 1977.

Hiroya Suigita, in ‘Ideology, Internal Politics and Policy Formation,’ points out that rather than strict adherence to the left-right political spectrum, with the Democrats in the centre, different ‘tendencies’ have emerged in the Democrats within what he calls ‘their social liberal and postmaterialist ideological framework.’ He identifies a ‘Green tendency,’ embracing those who consider the environment to be the most significant issue, as distinct from those who give more priority to the ‘old politics’ issues such as economic
management.

I would suggest, however, that in a more holistic market-oriented perspective the two cannot really be separated; it is like splitting the two sides of a coin. The economy and the environment are intricately interwoven – as the recent Kyoto summit has shown. The Democrats’ position makes it easy for them to stand ‘holier than thou’ on the environment, and at the same time gives them the power to block government legislation in disregard of the fiscal policy and budget constraints on government. The move by the Democrats toward government intervention with less reliance on market forces may have more to do with a lack of power and a desire to control people in the market place than with a genuine desire to increase wealth – even though the market may allow a more even distribution of the gains from an efficient utilisation of resources.

Marian Sawyer, in ‘Where women, children and the environment come first,’ concludes that the Democrats ‘have not succumbed to ... economic rationalism,’ and as a result ‘can be proud of their record as custodians of ... social liberal values.’ But what is socially justifiable in an inefficient microeconomic framework where people are out of work due to out of date policies? A market oriented approach does not preclude ‘social justice’ policies, but they have to be pursued concurrently with the economic principles of greater flexibility and open markets. They should proceed by adjusting the income that people receive, not by inhibiting the process of creating wealth in the first place: social justice in the end, not the beginning.

It is ironic that the defection of Cheryl Kernot to the Labor Party has provided an ongoing debate about who keeps honest the bastards who keep the bastards honest. Is it that politicians, including Democrats, are prone to the attractions of power and vested interests like the rest of us? They can be trusted in the end to not be entirely trustworthy (just ask Kernot’s former staff members). Power can indeed corrupt even the righteous, because power involves responsibility and being answerable to competing interests. There will always be an element of subjective choice on the distribution of limited resources, and that entails winners and losers. Kernot considered the Australian Democrats to be powerless, so she decided the best way to ‘keep the bastards honest’ was to join them. Physician, heal thyself!

Review by Andrew Norton

Not Just for the Money: An Economic Theory of Personal Motivation
by Bruno S. Frey
Edward Elgar Publishing, Cheltenham (UK), 1997, 156 pp, £45·00.
ISBN 1 85898 509 9

This book can act as a case study of its argument. According to standard economic theory, people are responsive to external incentives, principally money. On this account of human motivation Not Just for the Money will have few takers. £45 for 156 pages is very expensive. However, people also have ‘intrinsic motivations’; they do things because they gain pleasure from the activity itself, or because they feel they should, or because they believe it is expressive of themselves. As some people like reading, think they ought to keep up with the literature on economics and psychology, and regard themselves as intellectuals unconfined by traditional academic boundaries, they will buy this book.

That money is not the only motivator is too obvious to be of interest, but Frey’s book operates in much more intriguing territory – the interaction between external incentives and intrinsic motivation. His major concern is with how external incentives can crowd out intrinsic
motivation.

Frey begins with the everyday, describing the faux pas of paying a friend for a meal. The cook would interpret the payment as putting the relationship on a commercial, arms-length basis; which is inconsistent with friendship. Believing that there is no friendship, he would be less motivated to cook for this person again. The friendship motive would be crowded out, and the offering of money will reduce the supply of meals, contrary to standard economic theory which assumes that higher prices enhance supply.

As this example indicates, it is important to know why people do things before assuming that money will increase supply. Volunteers often see volunteering as an act of altruism toward a cause or community. Paying them undermines their motive to volunteer, since they can no longer express their altruism.

Frey points out that one reason for not trying to overcome NIMBYism by offering people money is that it can crowd out a concern for the common good. He recounts a Swiss example in which people became less likely to accept a nuclear power plant in their area when compensation was offered.

Frey reports on psychologists’ finding that people like a sense of control over what they are doing. Offering money can move the ‘locus of control’ from the person carrying out the activity to the person with the money, and so reduce an intrinsic motivation for working.

Managers who want to get more from their workers are well-advised to consider ways of enhancing intrinsic motivation to work; if nothing else this is a cheaper way of getting the desired result. Giving workers a sense that they have some say in how the enterprise is run helps. Personal relationships between employers and employees are also important.

Frey warns of spillover effects. He tells the story of a boy paid to do the lawn mowing. This may reduce his intrinsic motivation to mow, and also, if he reasons that all work around the home is analogous, his motive to do anything else without payment. There is a danger of spillovers when activities are similar or when the same people are involved.

Not Just for the Money could also have been called Not Just because of the Law. Frey discusses the ways in which regulation can also crowd out intrinsic motivation. People who have to do something clearly have their locus of control shifted elsewhere. They have no opportunity to express altruism if money is forcibly taken from them through taxation. Excessive regulation and monitoring sends a message of distrust, and so creates an atmosphere not conducive to voluntary good conduct.

Frey is careful not to overstate his case. There are numerous cases in which money is a good motivator. He aims to offer guidance as to how we can use a more nuanced understanding of human behaviour in economics, and in this he succeeds.

Review by Andrew Wade NSW Treasury.

Private Prisons and Public Accountability
Richard Harding,
Open University Press, Buckingham (UK),1997, 184pp.
ISBN: 033519849X (paperback), 0335198503 (hardback)

One cannot help but feel squeamish when discussing the concept of prisons being managed by the private sector. Though the previous decade has seen widespread acceptance of privatisation, contracting out, and purchaser-provider splits in the provision of public services, the use of private prisons, whereby the state pays a private company for the provision of prison services, still raises a few eyebrows.

Richard Harding throws all caution to the wind in this book, when considering the reservations the critics of private prisons have. Harding takes the approach that private prisons are a reality here to stay, so there is little point in discussing whether or not it is morally acceptable that they are used at all. Looking at the number of private prisons in the United States, the United Kingdom and Australia, one is compelled to agree with this assessment.

Harding does not hesitate to turn the critics of private prisons on their heads, dismissing the proponents of a solely public prison system by revealing the poor performance of these prisons. After considering the number of bashings and deaths, the poor prisoner health, or the rate of recidivism in public prisons, this is understandable. Accordingly, Harding explores how private prisons can be used to improve the performance, for lack of a better word, of all prisons, both private and public. It is important to note that Harding does not see the prime motivation for using private prisons as being to reduce prison costs. However, the evidence suggests that this may be a welcome side effect.

But how can performance be improved by using private prisons, with the associated requirement for the provider to maintain a profit margin, without substantial increases in the cost to taxpayers? Harding reveals a tendancy for public prisons to be overmanned, with well-paid staff and generous working conditions due to strong union representation. At the very least, many public prisons possess a poor architectural design that ensures operational costs are destined to be high compared to a well designed, technology intensive, new (though not necessarily private) prison. The scope for efficiencies in public prisons is often revealed when they are required to tender against private operators to provide prison services, regardless of whether they win or lose the contract.

Though private prisons have been utilised extensively throughout the world, Harding does not believe that they have been used to maximum public benefit. Rather, they have often been used to fill a short-term gap in prison capacity, or as a misguided attempt at reducing prison cost that has been guided more by ideology than good policy. In most cases, the purchaser of prison services from the private sector is also the monopoly public sector provider! In addition to that, private providers are often required to meet rigorous performance requirements that are not required of the public provider. This anomalous situation means that while private prisons are directly accountable to the public provider, the public provider is accountable to the people only via the convoluted means of the legislature, and public officials such as the
Ombudsman.

Harding believes that the rigorous application of the buzzword in contemporary public administration theory, accountability, will avoid conflicts of interest and other administrative failures. A model is presented whereby there is a proper purchaser-provider split in prison services, with a separate body created that is
responsible for purchasing prison services from the public and private sector, and the subsequent monitoring of the providers. Rigorous monitoring of the provider is a major part of the reforms proposed by Harding, with this achieved by placing a monitor in every prison, responsible for overseeing prison management and day-to-day operations, as well as ensuring the prison contract is complied with. This monitor would periodically report back to headquarters on prison performance and contract compliance.

Harding also explores how the purchaser of prison services will be able to use both private and public prisons as a catalyst for systematic improvements in prison performance. In particular, he seizes upon the notion of cross fertilisation, whereby the purchaser is able to transfer knowledge between providers, informing them of the prison practices that have been found to work, and not work, in other prisons. The fact that many private prison providers, at least in Australia, are subsidiaries of foreign companies adds to the potential of this concept. It is this aspect of the model which I find most appealing, as it is the least confrontational; it shows a way in which the purchaser is able to act constructively with the providers to improve performance across the system.

Though I am cautiously optimistic about the ability of Harding’s reform model to work in practice, I do have some reservations. I have no argument with the need to improve prison performance by whatever means possible. However, I am concerned that administrative law is being looked upon as a solution to the inability to trust the prison provider. If the provider cannot be trusted to comply with its contract without being constantly watched over, surely that is of major concern. It is like saying to the provider, ‘we are happy to let you provide us with prison services, but such is our level of trust in you that we will be watching over you constantly.’

Accordingly, though I believe the purchaser-provider split presented by Harding is a step in the right direction to improve prison performance, I feel that the degree of constant oversight proposed could be reduced to regular oversight, by means of periodic visits. Also, prior to the full-scale implementation of this model, it should perhaps be trialed amongst a handful of prisons for a number of years.

Overall, this book has comprehensively addressed the issues surrounding the use of private prisons, and should be an interesting read for anyone interested in the topic of the role of the state in society. In addition, for the scholar, Harding did a substantial amount of research in Australia, the United States and the United Kingdom, so there is a very comprehensive bibliography.

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