If it’s broke, nationalise it? Sadly, that’s broken thinking

Good news. Government is now running so efficiently that it is ideally positioned to take on more responsibilities. Just this week it has been recommended for two further promotions: owner and manager of all childcare centres, as well as all universities.

A decade ago – so long ago now that the Institute for Public Affairs was in its libertarian era – I used to poke fun at libertarians for having an answer to everything that was clear, simple, and wrong. Every social ill, these trusting souls claimed, could be solved if only “the government would get out of the way”.

Illustration: Michael Mucci Credit: Fairfax Media

Well, the pendulum has swung in the other direction with the momentum of a wrecking ball. Now it’s the nationalisers who are on a spree. There is, according to them, no problem so thorny that putting it under the purview of the bureaucracy wouldn’t magically solve it.

Clear, simple, and wrong. Just like the libertarians of yore, what the nationalisers lack is imagination. They own a silver bullet and the possession of that weapon allows them to avoid a deeper analysis of the reasons a service or institution isn’t working.

To touch briefly on childcare, which I wrote about last week, since the sexual and physical abuse in centre-based care came to light, nationalisers have argued the government should take over. That would, they say, “remove the profit motive” from childcare, which they reckon would somehow fix it.

But it wouldn’t change the fact that childcare is often a grudge purchase – parents putting their precious children in care would often prefer a more personalised arrangement. And you can’t nationalise away the fact that care by strangers is not ideal for babies between the ages of zero and two years old. These considerations are invisible to nationalisers bedazzled by the sparkle of their armoury.

In its first term, the Albanese government revived the nationalisation craze when it started making TAFE places free. The reason it had to do that is because businesses preferred sending students to private colleges which provided more flexible training. It is hard to do the same for TAFE, which doesn’t always offer the most up-to-date skills or provide weekend classes (even though the tradies they teach often work weekends).

Given the current enthusiasm for nationalisation, I wasn’t surprised to stumble across another candidate this week – universities. Universities in Australia receive a range of direct and indirect government supports. They increase their income by taking on international students, whose fees are not subsidised by the government, and running private courses.

That’s turned out to be quite lucrative, and it’s influenced the way they behave. Many universities have, as Jenna Price wrote in these pages this week, become “places of chaotic cost-cutting and cruel managers whose sole interest is the bottom line”.

Cue again the nationalisers. Price quotes academic Graeme Turner: “If the government wants to have a higher education system, it is going to have to face the fact that it will have to pay for it. It’s the same problem they face with aged care and childcare. You can’t prioritise essential services and turn them over to a market and assume it’s going to work.”

But the government didn’t just turn universities over to the market and assume it was going to work. First it thoroughly buggered them up. Not this particular government, but previous ones, which wanted to see more people from more diverse backgrounds going to university.

Scholarships didn’t get as many people to university as the government would have liked – because the causes of disadvantage are intertwined and pernicious. In the end, it was easier to lower academic standards than to raise disadvantaged children up to a university level. And so that’s what policymakers did.

Eventually, they even ended the separation of technical colleges – which used to teach vocational professions – from universities. Now many universities have more or less become technical colleges, or at least run courses which mimic them. And because more and more people are going to “university”, businesses have come to expect that qualification as a proof of competency. (Let me tell you, as an employer: it is not.)

Universities worked out that they could sell these easily accessible billets for a profit, and that’s degraded the student experience. But nationalising this mess won’t change the fact that the government messed up. Credential inflation is a government-induced problem that nationalisation won’t fix.

And the nationalisers are not just fixated on education. At the last election, Labor also promised to renationalise lenders’ mortgage insurance by going guarantor on first home buyer loans. The great irony of this is that LMI was originally government-owned before the government got out of the game because the market provided. It’s not a popular cost, but it’s been working ever since just exactly as it should.

In such an environment, you can guess what the immediate response was when Bendigo Bank announced last week that it would close branches in some regions. Yet again, nationalisation. It’s as unlikely that the simple solution proposed by the nationalisers will be any more effective than the one beloved of libertarians.

We can leave the explanation for that to the founder of the Institute for Public Affairs, economist Charles Denton Kemp, writing in 1947, well before the IPA went through its libertarian phase: “The industries most suited for state ownership are those where the service provided is of a more or less impersonal nature. This is in keeping with the intrinsic character of the state itself. Water is water, through whichever pipe it flows; electricity is electricity, along whichever wire it is conducted. But the position is vastly different … where the relationship between the provider and user of the service is essentially personal.”

In other words, step away from the silver bullets. Reform the system, where reform is needed. Don’t just nationalise the symptoms.

Parnell Palme McGuinness is managing director at campaigns firm Agenda C. She has done work for the Liberal Party and the German Greens.

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