Compassion’s fine but ignoring fiscal reality won’t pay the bills

Illustration: Eric Lobbecke

Few things are more certain to cause lunchtime indigestion than a shadow minister delivering another “bold vision for the future”.

Kate Ellis’s National Press Club address last week was no exception, particularly when she arrived at what she called “the nitty gritty”.

“I don’t think that Australian early education and care should be cheap,” she mused, “but I think it should be affordable.”

Expensive but affordable. It is difficult to pair those opposing adjectives unless one believes in magic, as Labor apparently does. Like Samantha in Bewitched, a ­future Labor finance minister will twitch her nose and sprinkle ­affordability dust across Ellis’s portfolio.

The prospect of the member for Adelaide becoming childcare minister is not the only thing that triggers anxiety at the thought of Bill Shorten moving into The Lodge, but her speech made a not inconsiderable contribution to the growing apprehension that Labor is not keeping up with the plot.

In the real world, the shortfall between what childcare services cost and what parents can afford must be topped up with taxes. In the real world, we’re staring at almost half a trillion worth of government debt with no conceivable way to repay it. In la-la land, on the other hand, it’s about fairness, equity and social justice, the touchy-feely drivers of public policy that got us in this mess in the first place.

No policy speech these day that fails to mention the words budget, debt and deficit deserves serious attention, yet the indifference to fiscal reality on Labor’s frontbench suggests the question of how you’re supposed to pay for stuff is not a matter of great concern.

Nor, incidentally, is the question of whether the policies will ever deliver what they promise. Inputs, not outputs, are increasingly Labor’s measure of good policy. It’s not what comes out that matters but the amount of compassion one invests in it. How can it be wrong when it feels so right?

The infiltration of this moral narcissism into mainstream politics is a disturbing development in a fiscally challenged era when hard-headed policy thinking is needed more than ever before.

Many on the progressive Left are dumbfounded when asked to justify the expenditure of public funds on their latest plan to edge us closer to their imagined utopia.

Victoria’s Education Minister James Merlino is so convinced that lecturing schoolkids about male privilege is “the right thing to do” that he was astonished that his $21 million program was being questioned.

“It’s astounding that anyone could think teaching our kids about respect for other people is a bad thing,” he told The Australian’s Rebecca Urban last week.

Few public policy areas are as prone to the tyranny of good intentions as childcare.

Evidence that early childhood learning is a “good thing” is used to justify ever growing subsidies on an area that, until quite recently, was not regarded as the business of the state.

The last Labor government’s attempts to make childcare ­affordable were a spectacular failure. The cost of childcare has risen by an average of more than 7 per cent a year for the past 10 years, exceeding the growth in both healthcare and education prices by a not inconsiderable extent.

The Productivity Commission calculates that Julia Gillard’s high-minded goal of better educated staff in the sector has added $50 a week to the cost of childcare.

Ellis’s plan to tackle rising costs floated at the press club is the kind of barmy, socialist, centrally planned scheme that should have disappeared in 1949 with the fall of Ben Chifley’s government.

Ellis proposes that the government should buy up childcare places in bulk from private operators and negotiate down the cost.

Bureaucrats will be required to calculate the number of kids requiring childcare in each suburb and ensure that the right number of places be made available. Ellis’s explanation that she has not yet had time to get the experts to look over the scheme is simply no excuse.

You don’t have to be Milton Friedman to know that organising the childcare market in the manner the Soviet Union used to manage the production of shoes is nuts.

Labor in its present state of mind would never accept that parents, not the state, are best placed to decide what constitutes quality care.

The notion that a bureaucrat should decide is unlikely to go down well. Like the last Labor government’s centrally planned super GP centres, it has the smell of disaster about it. Most things are better left to the market.

Ellis was somewhat dismissive of the Productivity Commission’s extensive report on the childcare system published last year. Understandably so, for it blows many of Labor’s assumptions out of the water.

Childcare provision has relatively little influence on the number of women in the workforce, for example.

Lower fertility rates, changes to workplace relations laws, changes in the structure of the economy such as the decline in manufacturing and the increase in services, technological change and the increase in higher education for women have had more direct influence.

And there is little evidence that subsidised childcare has made any significant contribution to the number of women in the workforce.

Lowering effective marginal tax rates and family-friendly work hours would achieve more.

The public policy justification for spending more on childcare is weak and the evidence that it will reduce costs or produce better care is even weaker.

Yet one senses that Labor will brook no argument on this one since in its socially orientated world, it’s simply the right thing to do.

“If your intentions are good, if they conform to the general received values of what a person of your class and social milieu is supposed to think, everything is fine,” writes Roger L. Simon in I Know Best, an insightful critique of the politics of good intentions.

“It doesn’t matter that they misfire completely, cause terror attacks, illness, death, riots in the inner city, or national bankruptcy … you are that good person. You can do anything your wish.”

Nick Cater is executive director of the Menzies Research Centre.