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.

A government-sponsored bank won’t help social housing

Michael Potter

28 April 2017 | Ideas@TheCentre

MP social public housing sirius building

Just over 400,000 Australian households live in social housing, comprised mainly of public and community housing. Tenants pay on average $9,444 per year below market rents: the main reason for the lengthy queue to get into social housing — at least 10 years wait for most of Sydney.

My latest research report, Reforming Social Housing: financing and tenant autonomy, states many other issues face the sector including poor maintenance, mediocre tenant satisfaction, and many dwellings inappropriate for tenant needs. The sector is arguably financially unsustainable; gives tenants almost no choice over accommodation; and is beset with substantial inequities and poor incentives.

These problems won’t be fixed by the latest proposal for a government-backed bond aggregator — effectively a government bank for social housing. An aggregator without government sponsorship could be worthwhile, but government backing brings with it many problems; particularly discouraging necessary reform of the sector.

Any government backing for the aggregator is only worthwhile if the benefit is fully passed on to housing providers. So why not give the benefit directly to social housing instead of using a costly and non-transparent intermediary? And if government-backed lending is good for social housing, why not do it for schools, hospitals, roads, and infrastructure more broadly?

Governments should instead pursue other reforms. Funding to state governments for public housing should be replaced by funding direct to tenants, while the remaining funding should strongly encourage other state reforms.

These reforms include allowing new social housing tenants to choose accommodation; differentiating rent by dwelling quality; ensuring policies treat public and community housing similarly; and transferring public housing to the community sector.

States should also have incentives to remove restrictive planning laws that cause housing unaffordability and increased social housing costs.

Such reforms offer more value than a government-sponsored bond aggregator, by giving tenants much more autonomy over their lives, making the sector more efficient and responsive to tenant needs, and doing much more for social housing affordability.

Pressing the free trade case amid growing protectionism

Rebecca Weisser

28 April 2017 | Ideas@TheCentre

RW Donald Trump 1For a policy that has brought prosperity and choice to billions around the world, free trade has few friends at present.  In the first round of the French presidential elections, held last Sunday, around half of all voters backed anti-free trade parties led by Marine Le Pen on the nationalist right and George Melenchon on the communist-backed left.

Across the Atlantic, President Trump, who completes his first 100 days in office on Saturday, has been mercifully mellow when it comes to trade — at least compared with his campaign rhetoric — although he still managed to cap his 100 days by slapping 20% tariffs on Canadian lumber.  The tariffs are nothing new (Bush imposed tariffs of 27% on Canadian lumber in 2002) but the hyperbole doesn’t augur well for a smooth renegotiation of NAFTA, due to commence shortly.

So, it was a shot in the arm to hear Australian Trade Minister Steve Ciobo announce the first steps toward a free trade agreement with Hong Kong.  At first blush, one might wonder what there is to liberalise in Milton Friedman’s free-trade pin-up, since Hong Kong charges no tariffs on imports or exports. The goal for Australia apparently would be to lock in regulatory settings that guarantee openness for Australian exports of legal, accounting, financial and education services.

But Ciobo also needs to push forward free trade negotiations with India, which appear to be languishing.  Former prime minister Tony Abbott set a 12-month deadline to complete three North Asian FTAs.  Abbott explained “Officials can string things out forever. By setting a timeline to get it done, we showed the Chinese, Koreans and Japanese we meant it … I knew we needed to drive these negotiations from the top, otherwise they would linger on forever. Ultimately all politics is personal and I knew we needed to make the negotiations personal to conclude the deals. The 12-month deadline was a big part of that.”

With the deadline set, then trade minister Andrew Robb delivered in spades.  Now, Turnbull and Ciobo must secure an FTA with India.  Once a newly energized Britain is out of the EU, it will be a powerful competitor.  Australia must press its advantage now.

Penalties make hospitals accountable

Jessica Borbasi

28 April 2017 | Ideas@TheCentre

JB hospital 1Sooner or later the medical profession is going to have to realise that health funders are serious about no longer simply paying for medical ‘inputs’ but are serious about paying for ‘outputs’ — quality outcomes for patients.

Aided and abetted by an increasingly health literate population, with smart watches and mobile internet, both consumers and funders want to know more about the care being provided. And why shouldn’t they?

The government’s proposal to penalise hospitals for preventable mistakes which cause death or serious harm — i.e. ‘sentinel events’ such as operating on the wrong person, a newborn being sent home with the wrong family, patient suicide and fatal medication errors — will launch on July 1 of this year.

Public hospitals will not receive funding for any episodes of care that contain a sentinel event, potentially saving taxpayers millions of dollars.

The real objective, of course, is to improve safety and quality across Australia’s public hospitals — which still fail to meet benchmarks and demonstrate significant clinical variance.

State health departments maintain that half the sentinel events to attract a penalty are “not preventable” and the list should be narrowed. Nevertheless, it is anticipated the policy will be extended to include other hospital-acquired complications; a step the AMA is hoping to delay until 2020.

Other critics argue the new regime will encourage hospitals to hide mistakes: so much for open-disclosure and patient-centred care, not to mention the integrity of health professionals.

More alarmingly, some commentators have suggested that sentinel events (even if they are acknowledged) don’t reflect hospital quality. The argument that financial penalties are unlikely to significantly improve “the bottom line” on health spending misses the point about greater demands for the transparency of health outcomes.

A good way to improve outcomes — and one that has been successful in other sectors of the economy — is consumer feedback. Penalising hospitals for medical errors is just a different, and very valuable, kind of feedback. And one that holds hospitals accountable for the care they provide.