Ideas@TheCentre – The Centre for Independent Studies


Ideas@TheCentre brings you ammunition for conversations around the table.  3 short articles from CIS researchers emailed every Friday on the issues of the week.

No recession, but big policy task

Robert Carling

06 September 2019 | Ideas@TheCentre

The economic ghouls may be disappointed that this week’s real GDP read-out for the quarter came without a minus sign. There is no hint of recession. The ‘fiscal stimulus for dummies’ book can go back on the shelf.  But one doesn’t need to be a ghoul to find plenty to worry about in the national accounts details.

Although real GDP is still growing, it is not growing enough to match population growth — so real GDP per capita declined slightly in the year to the June quarter. That is another way of saying real living standards are stagnant — which is perhaps not surprising when productivity is flat or falling.

With private sector demand sluggish, the biggest boost to GDP came from consumption expenditure by the general government sector — and within that aggregate, the federal government was the biggest contributor.  (Was that an unannounced fiscal stimulus?)

What really saved the day — and produced the first quarterly balance of payments current account surplus in 44 years — was a surge in export volumes and prices, and a slump in import volumes. The surge in export prices was in effect a pay rise for the nation — manifest in the terms of trade — which pushed real net national disposable income to a boom-time growth rate of 4.4% in the 12 months.

We cannot go on hoping for more surges in commodity exports and their prices, and certainly not for another burst of growth in government consumption of what the private sector produces.

What the national accounts tell us is what we already knew — that there is no case for a short-term (temporary) fiscal stimulus, but an overwhelming case for structural (permanent) policy measures to strengthen the incentive and enabling framework for business investment and the productivity growth that comes with it.  Some of these measures will be fiscal — such as a more investment-friendly business tax system — but the list also includes such policies as industrial relations, energy, infrastructure and skills.

This is a job for state and territory governments as well as the federal government. The federal government may have to sacrifice its budget surplus to get the job done, but that would probably be justified if kept to reasonable proportions.

Liberalism’s impact on Australia

Jeremy Sammut

06 September 2019 | Ideas@TheCentre

The great Australian historian John Hirst once wrote a visiting American academic who commented that despite the Labor Party being in power for so few years since Federation, the library shelves were full of books about Labor and the labour movement. Books about liberalism and liberal parties, on the other hand, were hard to find.

David Kemp’s five-volume series on the history of Australian liberalism is therefore truly a landmark publishing event in the intellectual life of the nation,  providing the most significant and overdue setting straight of the historical record.

Kemp traces the history of Australian political, economic, and social freedom back to the influence of the Enlightenment, and explain how the enlightened liberal ideas imported from Britain, the US, and Europe shaped the development of Australian society across the following two centuries.

But, Kemp’s series aside, there has been a lack of attention paid to the impact of liberalism on Australian history — and the dearth cannot simply be blamed on the way the subject is generally taught and studied from left-wing perspectives in our universities.

It also stems from the limited and largely dismal role that has been generally assigned to liberal ideas from those on the right.

This is the idea that the chief intellectual import into the Australian colonies was the utilitarianism of Jeremy Bentham, which begot what has long been considered the defining distinctive features of Australia democracy — the trait Keith Hancock famously described in his seminal book Australia as the use of politics, the use of state, to achieve the greatest material happiness of the greatest number.

This is the view of our history upon which many a free market lament has been launched about Australian political economy – and not without good reason.

Explaining the reasons why Australians after federation settled for what Paul Kelly named the ‘Australian Settlement’ — founded on tariff protection, immigration restriction, and industrial arbitration — is part of Kemp’s narrative.

But before he gets to this story, he tells us in his first two already published volumes — The Land of Dreams and A Free Country — a far more inspiring story of how Australia from foundation to federation developed as one of the most advanced politically and socially democratic nation’s on earth.

For its post-1788 European arrivals,  Australia was literally a new world – unburdened by old world history, and by the traditional authority of the established church or ancient aristocracy.

These were the conditions in which was launched a vast social experiment with Enlightenment ideas, in quest of a rational political and social order based on respect for the individual and equality of rights and opportunities.

Kemp’s account shows that that it wasn’t luck that gave Australians our ‘fair go’ culture and almost unrivalled democratic rights and freedoms. The profoundly egalitarian notions we take for granted today have deep intellectual and historical roots in the distinctive Australian brand of colonial liberalism of the nineteenth century.

Kemp also presents our history as a grand drama to rival perpetual American concern with the fate of the experiment in republican government. For the issue Australian liberals worked out through our political institutions was whether a free and democratic society could be stable, could be virtuous and could be moral.

One of the few — but otherwise obscure — Australian history books  that hitherto took the role of liberalism and Enlightenment thought seriously was Michael Roe’s The Quest for Authority in Eastern Australia, which argued:

that Australia’s history is most significant as a test of the new faith. Here lies proof that a nation can draw strength from this teaching, and therein find authority, sufficient yet not oppressive… Most who see the poet as their kindred spirit will believe that here men have created a society which possesses true and distinct qualities.

Through Kemp’s work, this perspective on our history is will be obscure no more.

The reader of these volumes is left in no doubt that Australian history is most significant as a test of a new faith – a test and experiment that created the distinctive features of Australian social and political life with which we are familiar; from our democratic franchise to our egalitarian social manners.

This is an edited version of Dr Jeremy Sammut’s introductory remarks for a talk by Dr David Kemp on ‘Australia as an Enlightenment Project’ at the CIS’s annual Consilium conference at Byron Bay. 


How many international students are too many?

Salvatore Babones

06 September 2019 | Ideas@TheCentre

The CIS report ‘The China Student Boom and the Risks It Poses to Australian Universities’ presented the most complete picture to date of the number of Chinese university students in Australia (roughly 140,000) and the contributions they make to Australian university budgets (up to 23% of total revenue at the University of Sydney).

No one knows the exact numbers of students or the revenue they generate, because the universities and their regulators don’t tell us. That alone suggests that they may see a problem lurking in their dependence on China, though you won’t find any trace of an admission in their annual reports.

Or in the pronouncements of their trade body, Universities Australia. Addressing the National Press Club earlier this year in her role as chair of Universities Australia, Monash University vice-chancellor Margaret Gardner boasted that Australian universities have been ‘incredibly successful’ competitors in the international education marketplace.

Responding to reporters’ questions about the risks inherent in Australian universities relying on international students for such a large proportion of their revenues, she asked rhetorically whether ‘We should be wringing our hands and tearing our hair out?’ and answered ‘No, we should be celebrating that success’.

That success has led to an international student population of 876,000, of which approximately 270,000 are onshore universities students (the others are either taught by Australian universities offshore, or are enrolled in vocational, English language, or non-award programs. Even K-12 schools get a piece of the action, enrolling some 27,000 international students.

Australia ranks third in the world in the number of international higher education students, trailing only the United States and the United Kingdom. Australia has more than twice as many as Canada, which has a population 50% larger than Australia’s.

Measured on a per capita basis, Australia now hosts more international students than any other major country in the world. They make up 3.6% of Australia’s total population, with international higher education students alone accounting for 1.5% of Australia’s population.

At most of Australia’s universities, international students now account for more than 20% of total enrollment. At Sydney, Melbourne, and ANU the figure is more than one-third. At the Sydney and Melbourne business schools, it’s more than two-thirds, with data not published for ANU.

No public university in the entire United States even comes close to these concentrations of international students. Only one, the University of California at San Diego, has more than half of the international students concentrations of Sydney, Melbourne, and ANU. If Australian public universities were included in an international student league table alongside American public universities, the Australians would fill all 20 slots at the top of the table and 31 of the top 33.

Which all raises the question: how much is too much? It’s one thing to recruit international students to add diversity and expose Australian students to their peers from around the world. It’s quite another for public universities to be running offshore education centers where international students have trouble mastering English because they rarely interact with local Australians.

If the most successful American public universities are any guide, when it comes to international students, 10% adds diversity to the student body, 15% is the maximum reasonable level, and 20% represents internationalisation gone wild. In Australia, the average level of international students across the entire university system is 26.7%. By any reasonable standard, that’s too high.