 dialogue presented by the Sir Roland Wilson and present. I'm delighted to be representing the Department of Prime Minister and Cabinet and the Sir Roland Wilson Foundation tonight as a scholar. An opportunity that was only made possible because of the introduction of the HEC system and an extremely diligent and loving single mother. Without this I would not have been here today. I'm also very excited to be able to have the opportunity to conduct a PhD research into cyber security. Please note this event is being recorded and live streamed online and please wait for a microphone before asking your questions. Now I'd like you all to welcome Professor Shelley Leitch, Deputy Vice Chancellor of the ANU and a member of the Board of the Sir Roland Wilson Foundation. Thank you Melanie and welcome to all of you who've come out on this very cold Canberra winter evening. As I was driving in it was registering five degrees so I can imagine what it's going to be by the time we all depart. Thank you again to Melanie. She's one of our 2018 scholars and as she mentioned a part of the cyber security team at the Department of Prime Minister and Cabinet and her research is titled cyber deterrence a flexible framework for Australia in peace and conflict and these this is typical example of the kinds of very topical and timely projects that the Sir Roland Wilson scholars are working on. Before I introduce tonight's topic I think it's it's it's a good idea to tell you a little bit about Sir Roland Wilson and about the foundation that bears his name. The foundation itself was established with a very generous donation from his widow Joyce in honour of what we all recognise to be a truly remarkable man and it marks his contribution to national and international public policy. The Australian Government and the Australian National University also contributed significant additional funding to establish the Sir Roland Wilson PhD scholarship program. The foundation's purpose is to build the public policy capability of the Australian public service and to strengthen the ties between ANU and the APS. I think a very brief description of some of Wilson's achievements is germane to our discussion tonight and it's a reminder of a period of rapid and major policy reform here in Australia and at the international level as well. Sir Roland was born in Ulberston Tasmania and he was first in his family to finish high school. That's an interesting statement because now people talk about first in family to finish university. Back then it was first in family to finish high school. He excelled at school and at university including at sports including football, running and pole vaulting and this was despite being just 158 centimetres tall and weighing just 48 kilograms. He then won a Rhodes scholarship to undertake a doctorate in economics at Oxford but before he could complete this he also won what was the predecessor to the Harkness Fellowship and completed a further PhD in economics at Chicago University. So by the age of 26 Sir Roland had two PhDs in economics from two of the world's great universities and he was regarded by his professors as one of the great minds of his generation. He then joined the public sector after a short stint in academia and he rose rapidly to become the chief statistician by the age of 32. At 36 during the Second World War he established and became the first secretary of the Department of Labor and National Service and went on to become the youngest ever secretary of the Treasury at the age of 47 until that record was beaten by Bernie Fraser. He then held that position for 16 years, a record which does remain unbroken. Sir Roland played a pivotal role in reforming domestic and international public policy in one of the most difficult economic, social and geopolitical areas that the Western world has ever experienced. His role as a Mandarin encompassed the period of the Great Depression, the Second World War and the post-war Reconstruction, a truly daunting landscape for governments and public servants. He was a brilliant econometrician but Sir Roland also had a passionate interest in the role of the government in society and the economy. He argued for a reversal of short-sighted economic policies and the abolition of arbitrary and ill-conceived restraints, a call that would not sound out of place in today's environment. So, turning to the topic for this evening, is real policy reform still possible? What is it about the hawk-keeting years and perhaps during Wilson's day that allowed the introduction of really significant policy agendas? Why does it seem so difficult to introduce policy reforms now? Is it because we lack the almost heroic figures of the past? Or are the opportunities to prosecute a policy agenda somehow missing now? Or is it simply a lack of what Paul Keating once described as the fundamentals of leadership, imagination and courage? Tonight we'll get a definitive answer from our panelists to all of these questions. Each of them was involved in various ways in the hawk-keating governments. So, our first speaker will be Professor Bruce Chapman, my dear friend and the Sir Roland Wilson Professor of Economics, a shared position within the research schools of economics and the research school of finance, actual studies and statistics at ANU. Bruce worked for John Dawkins while he was the minister with responsibility for higher education. After a somewhat rocky start that they may choose to share with us tonight, or they may not, Bruce found his feet and became the architect of what we all fondly and maybe not so fondly in some cases know as HEX. The story of HEX makes a fascinating case study for our topic tonight. How is it that a Labour government came to end free, higher education and impose a user-paced system? Bruce also spent time in Prime Minister Keating's office and had some involvement in the negotiation of some accords. And, of course, Bruce is also a widely respected academic and has continued to pursue his interest in introducing income contingent loans as a vehicle for government service financing with quite an array of international governments. Our second speaker will be, of course, the Honourable John Dawkins, who was a cabinet minister during both the Hawke and Keating governments. As a cabinet insider, he was intimately involved in a list of truly remarkable policy reforms and innovations, including but by no means limited to budget reform, floating the currency, reform of industry protection, reform of industrial relations policy leading to enterprise bargaining and the introduction of the social wage, and a series of accords between government, industry and unions. The Keating's group and the reform of world trade, banking reform and the admission of foreign banks, superannuation, including the superannuation guarantee, Medicare, native title, which is an achievement that is particularly meaningful given that this is National Reconciliation Week, higher education reform, including HEX, environmental protection achieved by using the federal government's external power and enacting the World Heritage Legislation, APEC and supporting families and the introduction of the Child Support Scheme, which is an inspiring list of achievements. Our third speaker, Professor Linda Bofferel, has also enjoyed a very varied career and we were delighted that she agreed to contribute to tonight's discussion. Early in her career, Linda spent time as a public servant. She worked for two ministers in the Keating governments and for two industry peak bodies. She then decided to mix things up a bit and become an academic. After completing her PhD on the Rural Adjustment Scheme at ANU, Linda went on to become one of Australia's leading public policy academics and is published on a wide variety of topics relating to rural policy and more recently on the role of values in policy and the political process. I would now like to invite Bruce Chapman to lead off tonight's discussion and I think a good starting point would be to give us a brief insider's view of how he convinced a Labour government to abolish universal free higher education and replace it with something more like a user pays system. Thank you. Thank you, Shirley and thank you all for coming tonight. I didn't have anything, any choices actually in the introduction of this system. They already decided that fees were going to happen and my job was to write an options paper to talk about the costs and benefits of different approaches to the funding you've got. You need a student loan system. It's completely important because of market failure. So I wouldn't have convinced them to introduce tuition. In fact, when I applied for that job all those years ago, 1987, 30 years, where does it go? When I met John Dawkins after I've been appointed without meeting him, they kind of got enough dirt on me to decide it was acceptable. He said your job is to help us, the Labour government, reintroduce university fees because they had been abolished in 1974 and I thought, I wonder now that I've been here for an hour, is it too early to resign? Because I thought this would be a horrible job and I didn't think it would be engaging in any other way except with hostility and some of that was true. I want to tell you a bit of the story, but in different ways. When Shirley says we're going to give you the definitive answer as to the characteristics of that government that made it so unusual, made it so engaged in change and change that in structural terms has lasted for the whole time, basically, my definitive answer is I don't know. I don't know. But I can tell you some things I do think I can identify. And that is, there are some characteristics that were held in common about two institutional and policy changes that I understand. A bit of one is HEX and the other is the Accord process. And I'll talk about what they are in just a second. But just to remind those of you who don't remember the 80s, either because you were too young then or you're too old now, let me just describe some of the things that happened in that period. There was a radical change in the protectionism. There was the introduction of a wealth tax. There was reintroduction of universal health care. I think one of the most important was the restructuring of industrial relations away from a centralized system to enterprise bargaining, superannuation, capital gains tax, the HEX system, the child support agency. These are extraordinary changes. Paul Keating used to talk about the rust bucket economy that they had inherited in 1983. And I think it was kind of accurate. And not kind of accurate, it was accurate. There was extraordinary power with unions that wasn't actually captured in any socially proper way because there was no way of diminishing the externalities, the spill overs associated with radical union activity. And that had led to state inflation. And I'll talk about that in a minute. The two things I want to bring up that I can be a bit specific about, and I've identified with respect to both the HEX and the Accord, is that both of these were responses to crises. The Accord very clearly, I'll explain that, but underneath the HEX system, there was a crisis going on. And I'll talk about that as well. And the second point, generic point I'll make, but specifically with respect to both policies, is that there was an extraordinary consistency between good economics and good politics. And that is very rarely the case. And there was an understanding in that cabinet and a student which was quite amazing, I thought, and I thought much since after that. But at the time, I was kind of surprised. But I think that juxtaposition, a very informed, clever, courageous even, economics, fitting with the politics was something we haven't seen before and after, not enough time to get to that extent. So I don't have the capacity to turn those brief, those kind of micro points into a broad theory. And I think you need to be one of two things. An insider like John, or an informed, more or less outsider like Linda. So I said to Linda, I haven't got a big picture story to tell. She said, that's fine, I'll do that. And I thought, I've worked with Linda for 15 years, and she always kind of picks up the pieces. And so thank you, Linda. And the definitive answer will be here in 26 minutes. Hex, the crisis. He was the crisis. By the way, this concept of hex, I don't know what you think it means, but to me it means two things. It means the introduction of tuition, or the reintroduction of tuition, that's the point number one, that always got the most attention. That's the big story in the media. And it's not really that interesting. Most countries around the world have university tuition, not in parts of Western Europe, but just about everywhere else. What to me is much more interesting is the nature of the collection of the debt. This is an insurance mechanism. It's unlike student loans or any loans actually, anywhere else, because if you don't have the money, you don't pay. And what that means is that there is no prospect of default. Not formal default at least. Not with people being labelled as defaulters and then shut out of credit markets because of reputational damage to their credit reputation. And moreover, because you don't pay unless you earn above a certain level, you're protected from repayment hardship. This is not true with student loans around the world, apart from the systems that now have income contingent loans. So what was the problem for John Dawkins in terms of the crisis? He was the problem. He became the minister in 1987. There was a huge increase in school retention rates from 1980 to then. They roughly doubled. And this was a government that did not want to increase university places at taxpayer expense. And I will explain why they wanted to be seen different to the Labor government of 7275. And they're all public sector universities, so this was a big issue. So they weren't increasing outlays and the queues were getting longer and longer. We're not sure how big they were. They were at least 13,000. They could have been 30,000. And these were people in previous years who would have been completely well qualified to attend weren't getting in. That was a big problem. That was a crisis. It was a crisis that they weren't prepared to spend the money. What was the economics of all this? The first point is, which is kind of a strange point then, but I don't think it's a strange point now, not charging for universities is regressive. But that's because at that time 10% of the population was getting into the university system as paid for by 100% of the taxpayers. The people who were getting into the system and John used these data all the time in the debate were much more likely to come from advantage backgrounds. Many did not, but they were much more likely. And the private rate of return, that is the lifetime earnings advantage, was substantial. Even Karl Marx knew that this was regressive, and he said in the critique of the Goethe programme that having a so-called free system, and he used the word, put the word free in inverted commas, free means taking the money from the proletariat and giving it to the bourgeoisie. I wish many of my so-so-called socialist mates would read more Marx. The other part of the economics is, I've already mentioned it. It's the insurance aspects of contingent debt. Nowhere do I see this canvas in the popular media. You get shock horror stories, unpaid debt, 60 billion. But the stock of the debt I think is completely uninteresting if it's going to get paid. What is interesting is that if you have this debt, you don't have to worry about it. And I read a wonderful article from Alex McKinnon writing in Quartz Media last year. Alex McKinnon's got a Hex Debt. He did an R's degree at the University of Sydney, but he dropped out. He went to live in the United States and he said all his friends spent all their time being anxious and worried about their student loans because they had to pay them no matter what. And Alex said, well, I'll never worry about this Hex Debt. I never think about it at all because it's all automatic and it's got insurance. They're the critical points about the economics. The politics was writ large and it's still writ large. And the basic politics was quite complex. And I'm kind of a boffin. I never get politics, but I could see some of the things happening around me were quite extraordinary, particularly what John Dawkins was doing. The cabinet was no issue. Gareth Evans said to me, it took us three seconds to get this. We knew that the economics was right. The students, they could live with the students complaining it was expected. I actually couldn't live that easy with the students complaining when the heat got on. The parliament and the senate was not a majority by the government. That was a big issue which I think John will mention, and there was a conflicted union movement. But by far the biggest issue of all was the affection for Gough Whitlam from the party in general and in particular from the left part of the left wing. That was his big issue. They had to change the party platform. He had to convince the left that this was a reasonable thing. When Gough Whitlam died, I watched the memorial service and I was a great fan of Gough Whitlam's. And Kate Blanchett said, the finest thing that the Whitlam government did was to abolish tertiary fees. And there was a standing ovation. I felt very weird watching this. Very, very weird. And I thought, is that really can you make a big case for this? What about the ending of conscription? How about taking the troops out of Vietnam? How about Medi Bank, universal health insurance, recognition of China, universal coverage of sewage in Sydney? The thing that was never understood and still was not understood by Kate Blanchett then and for many other people now is that it didn't matter. And there were two reasons it didn't matter. Reason number one, almost nobody paid fees. If you're enrolled at university then, remember or ask somebody who was, did you pay fees? 80 to 85% of people had Commonwealth or teachers, college scholarships. They didn't have them. They didn't have to pay fees. And the other point was if you wanted to solve the poverty problem, the access issue, you don't start at the university. You've got to kind of start when people are born or before. The situation that you're in, the most important, as we say, the most important choice of your life is who your parents are. This is what determines access to university far beyond the financing issues at the end of that game. The poor people had dropped out. The school retention rates were tiny. The 14 and 15 year olds from the university, they were the ones who would not be affected by fee abolition. And indeed they weren't. And nothing actually happened to the social economic mix with fee abolition. The big issue was the conjunction between the economics and I'm sorry about that. I don't know who will save the world. Linda is going to save the world. I just flicked this. Mechanically Sir Olan Wilson and I are kind of done that. And he would have driven tonight in a car he built himself. The platform of the ALP said education should be free. I don't know who wrote that but it sure wasn't a very good economist because there is no free. Someone's got to pay. And the critical point about the politics and conjunction with the economics is that Hex was such a soft little pussycat. Hex at the time was 25% of payment of income. And only when you're over average income in current dollars 76,000. This was so soft. The charge was 25%. And to get the platform changed which they did, the words education should be free were changed to education should be free at the point of entry. The only way you can do that is with the universal and contingent loan and I think that that was the conjunction that was fundamental to the evolution as Hex in political and policy terms. The accord what was the crisis? This was a big crisis. In 1983 the economy faced some of the worst problems we'd ever seen particularly when they were all put together. Wage inflation was around 15% per annum. There was excessive real labour cost changes. The profit share was the lowest that it had been seen. Unemployment was over 10%. Strike activity was through the roof. This place was in trouble in structural economics terms. The accord was a corporatist agreement. The accord was an attempt to basically have a wage cut through income tax cuts and to allow and to have a wage cut as a condition of social wage arrangements that meant that take-home pay and take-home welfare would not be affected by the wage cut. This is an extraordinary thing for a labour government to do with the unions to say we actually are prepared to take a real wage cut because that helps get rid of the inflation and it helps sort out the unemployment. The politics of this matter comes back again but quite differently in my view to what was going on in 72 to 75. This government, this 1980s government was acutely aware of the need to be seen as good economic managers. It drove them. They wanted to decrease taxes as a result. They wanted to decrease expenditure as a result and they wanted to do all sorts of very unusual things like engineer real wage cuts because of the inflationary consequences. The comparison in data terms in 73 to 75, if you have a look at the data, the strike experience is kind of unbelievable. Wage inflation, maybe you remember this, I do, wage inflation was 25%. The profit share was extremely low. I think the idea that that government was a poor economic managers is strongly overstated but there were things that would lead any subsequent government to look very, very differently. What was the conjunction here between the economics and the politics? Cooperation with the union movement basically suited the politics of consensus, of peace, of harmony, to stop the conflicts about the wage and profit share, that political aspect of it all, that arrangement, that corporatist arrangement fitted beautifully with the economics needs at the time. I'm going to end here. I don't have an overall theme. I just wanted to make a few points which I think are shared, the existence of the crisis in both cases, they were completely real and the fact that this cabinet understood good economics, probably even before many of the academics understood good economics, that's certainly true with the corporatist model which they'd worked out in opposition. I'll hand over to John now to talk about what this experience was like on the inside and then later Linda will sort it all out. Thank you very much. Thank you very much, Bruce. I'm not sure whether I'm too old to remember or can just remember but I have tried to refresh my mind about some of those exciting days but I'm conscious of the fact that there are a few people here who were there as well, Ken Henry being one and Steve Sedgwick being another. So if I get things a bit wrong I hope they'll correct me. Bruce talked about Hex and the Accord and I'll come back to say a few things about those later but he also indicated that he was happy to talk about what happened and he thought that I should talk about why it happened. Well I think the most important thing about what he said was his reference to a crisis because you'll be well aware that there have been many politicians who have said never waste a good crisis it's a crisis which allows you to do things which you otherwise may not be able to do. Apparently Churchill was the first to have used the expression but many others including Hillary Clinton have used it subsequently. So I think the first thing that gave us I should just tell you one little story and that was the day after the federal election or at least the day I got to Canberra from the House I was 36 I think I went skipping up the stairs of the old Parliament House to find Fred Cheney who I knew quite well and who before the election had been Minister for Social Security he came skipping down the stairs with a great big smile on his face and I said what are you so happy about Fred and he said you'll find out the the important thing about reform is to have the appropriate political authority because you can have all the great ideas all the great public policy solutions but unless you've got the political authority to implement them or at least to explain them then it's almost impossible there'll always be losers through the process of reform and you've got to be able to convince the people that whatever pain is involved is worth is worth having. Now the greatest kickstart we got really was when John Stone as Secretary of the Treasury handed the Prime Minister Bob Hawke a letter saying that the forthcoming budget deficit was about 10 billion dollars something which had never been contemplated before something which had been kept secret leading up to the election because there was no release of documents or release of data about the state of the budget in the lead up to the budget but we all knew that Fraser and Howard at least must have known what was in that letter or what was in front of us in terms or in front of them if they had been re-elected but they decided not to say anything about it so Hawke then used that as evidence of the first and a huge crisis confronting us he used it as an opportunity to dump a lot of the promises that we had made in the lead up to the election saying well this changes everything and he then convened the economic summit which happened very quickly thereafter I think it was in April and also said that we would need to have an economic statement in advance of any budget to start the process of what's now referred to as budget repair so by using the evidence from Stone and the fact that it wasn't Hawke making it up but rather it came from an authority of source was I think a very important point for us in terms of establishing our political authority but more importantly perhaps it devastated the political authority of those who had just been vanquished because everybody knew that they knew what was in that letter or would be in that letter and they had decided to keep it a secret from the people during the course of the election so the budget crisis was the first but as Bruce has mentioned the situation in the labour market was terrible unemployment was high wages were going through the roof and there was a huge level of industrial disputation thousands of days lost in those days these days it encountered in a couple of hundred and what Hawke was able to do in the economic summit was not only establish a mechanism between the government and the unions in terms of not only wage restraint but a mechanism for a reduction in real wages compensated for by the social wage but he was able to incorporate business and the community sector in that process as well so that was a great enhancement to our political authority that we had based in relation to the Accord and the Accord became synonymous with practically everything we did there after for instance one of the contributions of the social wage was the introduction of Medicare now the Liberal and National Parties had fought against Medibank when it was first bought in you'll remember it was only brought in because of a double dissolution election right into a joint sitting of the parliament can you really believe that something like Medicare, something as benign something as useful something as helpful to all the people in the country would be fought tooth and nail right through a double dissolution election right into a joint sitting of the parliament in order for a government to legislate for the introduction then of Medibank and then following the Government the Fraser Government spent years and years trying to get rid of Medibank right up until almost the end of their term of office and they were still opposed to the idea of the our re-fashioning of Medibank into Medicare but Medicare was an important outcome of the accord process an important part of the economic statement that we introduced in May so there what we then discovered and I don't think we had been aware of this we were aware of obviously of the budget crisis we were aware of the problems in the labour market but I think it was only a bit later that we realised that we were confronted with a series of rolling crises we didn't really realise until later that the economy that we had inherited was as ramshackle as it actually was as people used to say at the time we wanted to have first world benefits based on a structure which more looked like a third world country we were so dependent on agriculture and mining we had a protected manufacturing sector and we were very very vulnerable to changes in the changes in international competition and particularly commodity prices so we then had to realise that we had more to do than just fixing up the budget although that continued to be a major obsession for us for years and years as well as the annual budgets every year we did an economic statement in order to make further progress on reducing the budget deficit and trying to rebalance expenditure and taxation you'll recall that in we may not recall but in 1984 we were only narrowly re-elected and whenever there was any talk of taxation during the campaign Bob said oh well we'll have another taxation summit the first summit he thought would have been such a great success we'll have another on taxation and Paul had already started the process of realising not only was the basis of taxation too narrow and was inherently unfair that he started to develop his ideas of a broad that he wanted the tax summit to endorse as it turns out it didn't but he then proceeded to do whatever he could short of introducing a broad based consumption tax to broaden the base of taxation so that the revenue coming to the government more matched the kind of services which people seem to be demanding that process of this dealing with these rolling crises whether it was the labour market the budget the current account deficit was fluctuating between about minus 2% of GDP and minus 6% got down to minus 8% of GDP at one point and these were things which were just unsustainable and had to be dealt with and what happened in 1983 with the floating of the dollar we actually put huge handcuffs on ourselves in terms of the amount of flexibility we would have in dealing with these things and that was done in part because we realised at the point that we couldn't keep papering over the problems that confronted the economy during the Fraser years the level of protection actually went up and his only response to what was happening with wages was to have a go at introducing a wage freeze which didn't work and would never have worked and even if it did work it would have been almost impossible to get out of so this was part of the papering over of the problems that were confronting the country not just our government they'd been confronting governments in the past but they decided to just sort of sail through for as long as they could but as soon as we floated the dollar we realised that every day we were being marked as a country in the international markets and we had to respond in a way which would if not attract their approval would not get too much of their disapproval the um and that in a way I think was probably the most important decision that we ever made in terms of trying to bring a ramshackle economy into something more like what we see today in terms of why and how this happened um there were five of us who were members of the expenditure review committee Hawke Keating Me Walsh and Willis kind of we had other people added to us from time to time in most cases not very helpfully but that nucleus of five people kind of bonded together with a kind of unspoken pact that we would either fix these problems or we'd die trying and so we laboured mightily for four weeks in the old cabinet room which at least had windows and then when we moved into the new cabinet room in new parliament house which didn't have windows this was a very exhausting process and one which involved particularly in relation to expenditure reduction having each minister come in and try and explain their pathetic cases almost always dismiss and I don't know if you've ever seen Ken Henry glouring he often does and he's just very good at it and he used to glare through these meetings at some poor minister coming in making some pathetic case about how he should either spend more or not spend less so each minister was given an opportunity and each minister had an opportunity if they didn't like the decision of the expenditure review committee but I think it was that small nucleus of people particularly led by Hawke and Keating I think a wonderful way of explaining what we were doing to the people in general and it was the unity of those five which managed to maintain a coherent and a coherent approach to public policy in fact I think you could say that from the day after the 83 election that is when public policy started to reign supreme over politics because in the sense we decided that what was more important than winning the subsequent election was setting the country up for the future and not having to explain why we didn't we were very lucky to win a couple of those elections I have to concede the 87 election we were helped by the fact that the then opposition was in total disarray we had a bit of help from J.B. Elke Peterson who decided that he was running both against Hawke and Howard and that I think helped us squeak through what would otherwise have been a very difficult election 90 wasn't much better I think in a sense winning the 90 election was probably the luckiest of all of them because although we were going into a recession the worst of it had not become obvious at the time of the election we also had the opposition still in disarray because we were then confronting Peacock again rather than Howard as we had in 87 so with those couple of explanations I think it was the fact that we were resolute determined and united the other thing I just wanted to say because there's a lot of talk about how the government these days can't get anything through the Senate we never had the numbers in the Senate never and we always had to work with whatever we had in the Senate occasionally the opposition would support us if there were policies which they agreed with and probably didn't have the guts to do themselves they would either vote for them or not vote against them and just waive them through but in those areas where they did oppose us was we then had to rely on others including the Democrats which brings me back to Hex because whilst Bruce talked a lot about the obstacles we confronted in trying to reintroduce fees and the Labour Party policy was one thing but the Parliament was another and for some strange reason the opposition decided that they would fight Hex, Tooth and Nail and it was as if they were saying to themselves if we can't have full fees which is what they wanted if we can't have full fees we'll continue to have no fees which was a rather strange position for them to adopt but that was their position so our position was that we then had to negotiate with the Democrats and there's not time for me to explain how they did it but we managed to draft a bill which was basically Senate proof because what we said was well if you agree with Hex this is the amount of money that each university, the extra money each university will get throughout the country if you don't agree with Hex this is what they'll get which was very much less so confronted with that possibility where the few little wrinkles added to the process came on side and voted for the introduction of Hex which as Bruce has explained is not the same as the introduction of fees because there was no upfront barrier to the entry into university the other thing I just wanted to say about Hex was this was the means for doing it what we were really interested in doing was expanding the size of the university system the university system had been totally constrained by the amount that the federal government could spend each year from the budget and Bruce talked about the number of people who were eligible to get into university but couldn't because there weren't enough places so the other thing we tried to do was to explain that as a result of the introduction of Hex every dollar that was raised would go back into the university system to fund its expansion we set ourselves a target of increasing the number of graduates the annual number of graduates from about 90,000 to about 125,000 in fact we reached that target well ahead of time and there are now something like about 80,000 graduates coming out of our our universities at the moment now you can't say necessarily that an increase in the number of graduates has been a great contributor to the economy but I think that given the state that we were in given the fact that we were trying to transform the economy from one which was as I said before looking more like the first world economy if we were going to transform it into the kind of economy that we wanted and that we pretty nearly have now then we were going to need people with more skills now I understand that there might have been an imbalance between graduates and those coming out of the vocational education system but having said that certainly I think the increase in the number of graduates from Australian universities is a position for the economy through the increase of skills and the diversity of those skills I think I should perhaps leave it there and wait for any questions that you might have thank you very much thank you John our last speaker for tonight is Professor Linda Botterall I'd like to ask Linda about the public policy world before becoming an academic to give us perhaps an example from her time as a public policy practitioner but also to provide us with some comments from the academic perspective please welcome Linda to the Linda Botterall when I saw the list of speakers and what I'd been asked to cover I did have to say to my friend Melanie Fisher that I felt she'd set me up a little bit I'm going to be something of a devil's advocate with the Hawken Keating Governments I have fond memories of that time I started my career as a public servant in 1984 when Parliament was still in old Parliament House and I remember that sense of excitement the first time as a graduate recruit I was asked to take papers up to the Minister's Office and as a Townsville girl walking up the front stairs of Parliament House that I'd only ever seen on the news before it was extremely exciting and in those days you could just stroll in with these fences and security and so on so I will as requested be including some examples of policy but I'm going to start by just raising a few questions about the question and the topic that we've been asked I think we have had a bit of a rosy picture I think there's a few points that need to be made that first of all some of the reforms that were introduced in that period were one-offs low-hanging fruit that were consistent with global trends in terms of policy direction it's easy with hindsight as well to look back on governments I mean some of us who at the time weren't particularly fond of Malcolm Fraser now look back at his refugee policies with slightly kinder sentiments so I think we do need to remember when we're comparing governments of 30 or years ago with governments of today that situations have changed yes as Bruce said there were clever politics in the core conceding years the accord was possible because the parties to the negotiation agreed on the means of policy change but not the policy ends and this is very consistent with what's in the political science literature about how you get agreement around contentious issues is you agree on the policy means you agree on what you're doing with policy without actually agreeing on where you're going so it's possible for the union movement to agree because they're getting something now even if they see a different end point from business it was also a triumph of practical real world policy making over some of the more textbook rational models that we've been hearing a lot of in recent years particularly in the incarnation of evidence based policy making but also in things like the Australian policy handbook that talks about policy cycles and everything being terribly orderly this was a political process this was a process of negotiation and engagement it was also incremental the accord went through I think nine iterations it didn't jump straight to enterprise bargaining it took its time step by step negotiating every step of the way and again the literature tells us that incremental policy making is actually a very sensible way to go because if you make mistakes you can correct them along the way I'd also again reflecting on my time starting in the public service like to just remind you that the context was a little bit different in which politics was operating when the Hawke Government came into power public service departments still had typing pools and things were typed up with different colours of carbon paper things were hand delivered correspondence with state officers of government departments was done by Telex even in the late 1980s when I was involved in the negotiations of the Cairns Group I was in the agriculture department at the time working on Australia's negotiating position on agriculture we had to queue up to use the limited number of word processing machines that were attached to a main frame in the basement of the Edmund Barton building our politicians weren't working with a 24-7 news cycle the media advisers in ministerial officers were true gatekeepers of access to ministers who spoke to the media generally when they had something worthwhile to say the media didn't need to be reporting 24 hours a day so as a consequence they were focusing more on the issues there wasn't this constant need I think for the gotcha moment because we've got somebody on the run said something and after reflection they've changed their mind they've done a backflip so I think things were a little bit different in terms of the reflective policy environment within which our politicians were able to operate I remember when I worked for industry associations boxing press releases going into Parliament House with a pile of pieces of paper press releases reporting them in all the pigeon boxes of the media outlets outside the press gallery this is quite different from tweeting government departments didn't tweet they didn't have Facebook pages they didn't have web pages because they barely had word processing and I think this does affect the pace at which people are prepared to consider change and the way they conduct debate to bring us to the topic today though I think implicit in the topic we've been given are two key points the first one is that somehow objective policy reforms there are objective policy reforms out there that aren't occurring and secondly that these aren't occurring as a consequence of lack of political will or poor leadership or poor process well the first thing I want to say is reform is in the eye of the beholder your reform is my policy backsliding we've heard that changes to the financial system in Australia and hex will reforms but what about work choices and offshore detention and of course the topic then begs the question what reforms are still out there that are being avoided or ignored how and by whom have they been identified and what values choices do they involve because policy problems aren't just out there waiting for the clever analysts to trip over them and discover a solution they're constructed and they're constructed based on values because at its heart politics is about values it's about juggling conflicting societal values in the process of making decisions on behalf of the community so when we make personal decisions we're balancing different values about what matters in the context of that decision governments make decisions on behalf of the whole community so they need to take into account the values that are important in the community extensive research, empirical research in social psychology tells us that there's about 10 universal human values that we all hold to some extent but which we uniquely prioritise so every one of us in this room has a pretty good idea about what's good and bad and right and wrong and a conception of the desirable but we rank those values slightly differently but research shows that we share them and this research shows that they're shared across in excess at the moment of 76 countries in which the work's been done so as individuals we uniquely prioritise these common values we may agree on a guiding set of principles for our families and our communities but we rank them differently so in policy terms if you think about the treatment of refugees well all of us to some extent value our security we don't want to be being bombed on the way home from work we value national security we think it's an important role for government to protect us from threats most of us also think that we should treat people in desperate situations decently and hold out a hand to help them but the way we balance those is slightly different so in the refugee debate there's very few people in the community who are the either bleeding heart liberal let them all in at one end or hard hearted bastards at the other we are all somewhere in the middle and government policy has to try and find a balance at that point somewhere in the middle at the moment it's decided the values balance is slightly more heavily towards the national security side and it's made the decision that from the point of view of the community these are the solutions that we're going to take so politics is about competing conceptions of the desirable the best way to organize ourselves as a community and where we will expend our finite resources and those finite resources include not only financial resources but also our cognitive capacity our research where we are going to pay attention and that's where the issue comes up with reform how do we identify which policy problems require reform it's a values choice it's a choice about looking over here and not looking over there and when we make that choice we're making it based on what is more important to the community in so doing we construct the problems in a way that helps us understand them are the unemployed in their position, their situation because of structural problems in the economy failing to deliver the jobs or are the unemployed lazy how you answer that question which is known in the literature as the social construction of target populations frames the type of policy solutions that you are going to put forward whether they're punitive for laziness or whether they're thinking in terms of job creation because you've constructed the problem as being a structural problem in the economy the more value laden the policy problem is the harder it is to resolve very very few policy questions are amenable to simple expert technical solutions all of them involve some degree of uncertainty or wickedness and as a consequence they require our political leaders to make value judgments about what matters what matters most so I want to draw from the literature I think a lovely distinction between these two types of policy very technical one where you can just bring a technical solution and the value laden policy and it's from the work of Roger Pilke who wrote a lovely little book called The Honest Broker of Policy Alternatives and Roger Pilke writes about tornado politics and abortion politics so I'm just going to summarise my understanding of his distinction to capture this idea about the problems of value laden policymaking so we'll start with tornado politics imagine that you are at a community meeting there is a tornado alley in the Midwest of the United States and there's a tornado warning and you have to decide whether you are going to go down to the communal tornado shelter in the building in which your meeting is being held or whether you're going to get in your car and drive home to your tornado shelter to sit out the tornado with your family fortunately for you at this meeting there is an expert meteorologist in the room who has his laptop connected to the internet and he is able to live track and decide exactly how long it's going to take to get there and he can advise you that if you are 10 minutes or 15 minutes from home you will be home in time but if it's going to take you longer than that we suggest you go down to the communal tornado bunker now there's a shared value here everybody wants to survive the tornado and there's a secondary value that they would prefer to do it with their family there's an expert on hand that has given them some advice and you can make a decision and you can make a decision that's a technical tornado question abortion politics is a completely different issue abortion politics is a value laden it's value laden because it's a moral issue and people are not going to be persuaded by the evidence one way or the other you cannot persuade somebody who has a deeply value based position either on one or the other side of the abortion debate that they are wrong in the basis of the evidence so the more value laden an issue is the less likely that technical expertise and evidence is to swing it one way or the other and unfortunately very few public policy questions are technical questions that can be answered by an expert giving the answer so any issue that engages fundamentally opposed values will be more difficult to resolve so if we're talking about resolving policy problems around a more efficient economy most people generally agree that a more efficient economy is a good thing but when you've got farmers and environmentalists arguing over water allocation in the Murray-Darling Basin finding common ground and agreement on the policy is going to be much much harder as the Murray-Darling Basin authority discovered to its cost when it did its first round of consultations in 2010 and prioritised environmental values over all others and we had that rather interesting vision of Australians burning copies of policy documents in the streets of rural Australia in my view that was because the policy process had focused entirely on one value and ignored other important values to the affected communities so these characteristics of policy making that their value laden and that if there's a lot of values conflict they're going to be hard to resolve means that major policy change is actually quite difficult to achieve and that the most effective change is likely to come about incrementally as people can agree on small steps and they've got room for corrections if they make mistakes and the reforms that were highlighted in the flyer for this event could be actually seen to have been incremental work choices built on the accord. Changes to the financial system followed on from an inquiry that was held under the Fraser government before the change of government. The accord as I said before went through I think it was nine iterations before it got to the point of enterprise bargaining. All the change didn't occur at once and it was interesting that there were two points one raised by Bruce and the other by John that fit quite nicely together and one was that there were two points and the other was well so what is good politics and I think John provided the answer and that was that the court government was very good at explaining what they were doing they were very good at convincing and I think that one of the problems that we've had as a consequence of the evidence-based policy push is we've lost the art of political rhetoric. We have forgotten that when we're talking to people bring them along with us and persuade them when governments are trying to convince the community that they've got the values juggling exercise right and that they've got it roughly right on refugees they do that through skillful persuasion and I think a lot of that persuasion is missing from contemporary debate. I think we're too quick to fall back and says the evidence tells us this and I've got some examples from my research which I can go into later where people have been actually quite rude about people on the opposite side of the debate because they've got science on their side so they've lost the art of sweet persuasion. So on that note I would just like to throw this back to my fellow panel members and ask them what are the reforms they think are out there waiting to be done that are facing roadblocks. Thank you. Thank you Linda and we will start with that question to the panel before throwing it open to the audience. When you post your questions can you please just wait for a microphone to be handed to you because we are recording the event. So first of all are your microphones live? Are they live? Yes. Yes they are. Sounds live. Okay would you mind repeating your question for your fellow panelists? What reforms are out there begging to be dealt with and what are the roadblocks in the way? There's some wonderful work by Linda Botterall and Bruce Chapman which takes the hex model of pay when you can and applies it to drought relief. So what we have had for you may not know much about this Linda so I'll give you some background. For a very long time governments gave hundreds of millions of dollars to farmers in grants this is fairly regressive stuff because while they come poor particularly in a drought they are not asset poor and the idea that was modeled there was that farmers would pay back but only depending on their future revenue. We actually had it thoroughly looked at institutionally we spent a few days talking to a rural accountant about every possible trick that a farmer could use to avoid repaying in this way and he spent his entire life doing that anyway and I'm completely we are completely confident that it would be much fairer and I'll just make the point broader contingent debt arrangements that came out through hex can be applied to many other areas not just drought but to for example extensions of paid parental leave do you think 18 weeks is enough time to look after an infant? I doubt that many people would say that's just all we want how do you finance the extension for another six months you can do it through household contingent debt with Tim Higgins did a wonderful PhD covering this topic it's all being costed it would work fine it would save you can actually make it revenue neutral there are many other applications of contingent debt criminal fines criminal activity 50% of the fines don't get paid they get fined again they don't pay they go on community service they don't pay in some states they lose their licence they could go to prison a few years ago two Indigenous young women died in Western Australian prisons they were in there because of non-payment of fines we could organise we could organise payment through different arrangements and different parameters of income contingent debt to address a whole lot of issues that we currently don't or we do in a regressive or socially deleterious ways what's the problem I ask you Linda why is it that every time we got some attention on drought relief every politician in the world would stick up their hands and say we would never do that to the farmers we wouldn't do that to the farmers give them debt even though we had 300 farmers saying to us we think that's okay handouts and we certainly don't want the unfairness of the exceptional circumstances situation so what's your view on that one Linda well actually I'm going to give you an answer that's values based farmers are a very special group in our community they're an important part of our national identity and as the consequences and research I've done over recent years we've actually gone out into the Australian community and measured the extent and nature of agrarian sentiment in Australia now agrarianism is a fascinating value set it dates back to Aristotle and it's evident in the writings of Thomas Jefferson J.S. Mill variety of thinkers who all see something special about farmers and farming and it goes back to some very foundationalist ideas about without agriculture we would still be hunter-gatherers we wouldn't have settled without settlement without specialisation we wouldn't have become civilised it's also at the heart of farmers deliver our food and fibre so what they deliver is seen as very basic on top of that there's a lot of sentiment around people working the land being close to nature and it being a great place to raise kids this is a very very strong value set in the Australian community and even labour governments are nervous about upsetting the farmers the ministers I worked for both ministers for primary industries and energy and I do remember stories of them coming back from cabinet of course I would never say what was said in cabinet but the implication being that well we can't upset the farmers and part of the reason we can't upset the farmers is because this agrarian sentiment that we've measured in Australia extends right across demographics and right across voting intentions so the voters in the western suburbs of Sydney have strong agrarian sentiment why do we not have a television program called a plumber wants a wife farmers are special and that I think is at the heart of the fact that yes Bruce and I spent a very large number of years trying to pull together an income contingent loan for drought but until it's seen as a way of helping and supporting farmers rather than being an impost on them we are going to come up knock up against that very strong agrarian sentiment not just amongst farmers but amongst the broader community as well who are very quick to jump to their defence and as part of that I think when we had the big scandal around the Murray-Darling Basin plan one and there was the television pictures of very angry farmers and not very happy public servants who'd gone out into the bush to talk at these public meetings public sentiment was with the farmers even though people say that they want to see improvement in the health of the Murray-Darling Basin when it was the farmers versus Canberra based public servants it's the farmers that get the sympathy across the country so that's the answer to your question Bruce Well I'll use three quick examples there used to be a time when there was a bipartisan approach to immigration and refugees that was blown apart for a politically expedient reason with Tampa and children overboard and what happened with that is that it terrified the Labor Party basically wasn't that hard to terrify and which meant that the Labor Party continued the bipartisan approach but from a very much more from a very much more nasty point of view from which we have really not emerged there were other ways of dealing with Tampa than the way in which the government decided to do so that is an example where we did have a bipartisan policy we could have together worked through what is obviously a highly emotive issue but we keep forgetting that the number of people involved is really quite small in terms of the size of our immigration program and it wouldn't have been that difficult to have absorbed more than those that we have the second one I think is energy and climate change we got within about five minutes of having a bipartisan approach to that whole issue how it had agreed Turnbull had agreed that there should be a price on carbon if we were going to deal with climate change that got blown up to smithereens by the change of leadership in the Liberal Party and we have never got back to anything like a bipartisan approach to one which to an issue which some people think is one of the most serious confronting not only us but the entire globe and the third one which has sort of had a bit more currency recently is the whole question of superannuation we've thought that something as critical as retirement incomes at a time when we've got an ageing population when we simply when the ratio of these people in the workforce to those in retirement is getting worse and worse from the point of view of the cost of it to the budget you would have thought we could have got to a position where we would agree on some form of contributory superannuation arrangement and yet it continues to be dogged by ideology and a refusal to accept that the example that we've had the example of superannuation that we've had for 30 years has actually been quite successful. The Productivity Commission's recent report from what I've been able to briefly glean is that they have honed in on a few issues which could actually be quite easily resolved. One is multiple accounts that if anybody wants to fix it can be fixed quite easily. The other is the question of there being too many funds that could be pretty easily fixed too. APRA could fix that tomorrow it could just sort of get rid of the smaller funds they would merge with bigger funds and the tends to be the smaller ones who are the coming funds or some of them anyway but the Productivity Commission has decided to have a go at the whole system it seems or at least that's the way in which it's been portrayed in the media. Now that's something which I would have thought was an area where sensible people could come to a position without having to, without outraging whatever might be their ideological stance. Thank you. Now we have our first question on the front here. Do you want to raise your hand? No down here. Richard Reid from ANU School of Politics. Thank you very much for your presentations. I wanted to pick up on a question, a sort of point that John made about using a crisis and not letting a good crisis go to waste. I wonder if we could get the panel's reflections on whether there's 24 hour news cycle that you mentioned Linda creates a constant sense of crisis which means that we don't get the crisis we need to get a reform through. Every day is a new crisis so how can it be a crisis that breaks the ground so maybe just reflect on a little bit on how crisis has changed and whether that's blocking some of these reforms. I think that's a really interesting point and I think an interesting parallel is watching the outrage on Twitter about the daily antics of the current president of the United States I think it's got to the point that you can't continue to be horrified because otherwise you'd be horrified all the time and I think it is a problem and I think I don't want to blame the media but I do think that there has been a bit of a trend away from more detailed reporting and I think it's because they're under such pressure to constantly be producing new stories and getting scoops and getting headlines and so on so I do think it's made it difficult for sensible policy discussion but I'd be interested to know John's view on that in the 80s maybe I've misread it. Well happily we didn't have Twitter as you pointed out before I think the social media has made it very much more difficult because everyone's an expert and everyone's got an opinion and not only have they got an opinion but they can blitz everyone else with it and there's sorting out the right and wrong or even the moral weight of that is very difficult but I think that I still think that I think your point about the fact that this you know relying entirely on so-called evidence-based policy is a mistake because it does take some of the theatre out of politics and it's the theatre it's the explanation it's the convincing which seems to as you have said disappeared and that's somehow what we've got to get back and it's partly because you know if you don't have if you have a divided party which is fighting internally all the time it's very difficult for the leader of that party to take a strong and convincing point to be cut off by the Nees by one of his own fellows. I think too related to the crisis is the way we frame these things going back to the tornado and abortion politics. I think with your climate change example I think one of the biggest mistakes that's been made in climate change politics in Australia in recent years was Kevin Rudd declaring it to be a moral challenge because all of the research and political psychology says that people when issues are moral people are much less likely to arrive at agreement they're much less likely to shift their position if they believe that it's a moral issue. So people don't they don't change their minds about moral issues and talking about something as a moral issue gives people the right to believe or not believe but if you don't define something as a moral issue and in a lot of ways there's no reason why climate change needed to be seen as a moral issue yes it's a wicked problem and the way we should be discussing it I think and again this goes to rhetoric and persuasion I think one of the areas that we're falling down is that we're putting so much emphasis still on the existence of the problem we keep hearing more and more science is telling us the problem is telling us it's a problem but we're not really thinking about well what are the equity considerations associated with addressing climate change what are our policy options which address some of the other values as well as the environmental values that we're going down to first of all it's moral that gives me the right to disagree or disbelieve and then when we have we just keep focusing on shouting a little bit louder about how bad the problem is but without actually taking that extra step and I'd like to put in a plea here and I see a few of my colleagues from the Academy of Social Sciences here that I think we need more social science engaged with development of solutions for dealing with climate change now we've got another question Tom Worthington from the Research School of Computer Science at ANU if we need a crisis to have a reform do we have enough of a crisis in vocational education to have a reform I'm appearing before the Senate Future of Work Inquiry on Monday and I'm just wondering what I'll tell them come to the right place I think it's been extremely unfortunate for 29 years that there has not been a universal income contingent loan that can include all TAFE and all vocational education and training there is nothing special about being a university undergraduate in terms of capital market failure so if you want to go to TAFE there are some TAFE courses now $5,000, $8,000 upfront fee no loan system not even a nasty loan system which is time based rather than a gentle one which is income contingent I think that's been a terrible non extension of this system it's almost as if the people who are interested in the public policy just focused on the universities maybe that's where they went maybe they don't get it I've heard lots of excuses about this for example TAFE is a states and territories jurisdiction it doesn't actually matter at all the states and the territories can make any rules they want they can set any tuition charge that they want they can do any curricular arrangements or scholarships that they want you only need the federal government because of the tax system because of the income tax system so if there's one thing that has gone away in tertiary education there's been that lack of extension it can still be done I'll just make a comment about the tax again Tim Higgins work done a little bit with me there's been a lot of debate about bringing that first threshold down and what it means in terms of equity or does it disrupt or threaten the essence of HEX not that much still income contingent and the thing about bringing the first threshold down from where it is now at about 56 you pay 4% of your income of 56,000 you do a first payment at about 45,000 and cut the rate to one so you don't face this big cliff wall which you do at the moment with the HEX design you'll get a lot of people from the TAFE system or VET generally because a lot of them when they graduate are sitting on 45, 46 and the subsidies can be very big and basically I think it's a point that's been ignored but one of the great pluses that you don't go too low I wouldn't go below about 45,000 is that you can have university of a HEX system which you never could with very high first three payment thresholds because of the low income I think it's been a terrible example of Australian public policy that hasn't been done Thank you Now with another question on the front here It's a question to John and Bruce and it's sort of a memory question in terms of clarifying what happened with the policy process at the time that HEX was introduced it was introduced at quite a low level and I've sort of got the understanding that that was necessary to the politics that if it had been proposed at a much higher level it would have been much more difficult to get through say the conference and through the politics at the time there were people arguing that although it was introduced at a low level and in future it would go up from the perspective I'm sort of interested in what your perspective was at the time did you expect and believe that once it was introduced future governments would increase it or did you believe that in a sense did you believe that though people in the student movement arguing that were in fact right or did you actually believe that once it was set at a low level that it would stay that way and so have you been surprised by the way HEX has developed in practice through Australian history that it has increased up the level that it has increased well I think you're right in saying we we chose a percentage of the costs or we set a dollar amount as a matter of fact we set a dollar amount or you'll have to explain that but let's let's I mean yes I knew and I knew that once it was established there would be the opportunity for future governments to put it up the interesting thing is that as they have done it it hasn't actually affected demand much so I mean people have been apparently happy or prepared to take on a higher level of debt which is what you know because it wasn't imposed at the point of entry it was a little bit invisible to new students I think it was the pity that they got rid of the discount for paying up front I think that was a good idea and I think it should have been maintained I think there should be a discount quicker too there was a big argument about whether or not there should be a real interest rate or not but in fact I always thought that was a bit of a red herring because if you thought the amount wasn't enough you could put it up a bit if you didn't want to play around with real interest rates so of course there were going to be all these opportunities for the amount to go up or the proportion of fees cost to go up the repayment level to be accelerated and so on but it seems that there hasn't been much of a protest when that's been done so therefore I'm not quite sure how damaging it's been to either opportunity or to the economy the figure chosen at the time first of all there is no right figure or there is no economically efficient figure it's a matter of judgment about what the social spillovers are from the investment process all we know is that on average the private rate of return to higher education is very healthy so the case for a charge is very strong so long as you don't stop people coming so long as you've got a student loan system which works okay but between the figure 20 and 80 just pick one that suits you because there's no data to give you the right figure so the politics will win this and it did at the time so the 20% chosen at the time it was a universal, it was the same charge across the board that got changed in 1997 the 20% was roughly what was being charged in liberal arts colleges in the United States and roughly what was being charged for those small proportion of people who were paying fees before they were abolished in 1974 just on the behavioural side no there is no evidence at all that changing these parameters affects behaviour and I think there are two things going on here even if you increase the price by a lot it doesn't really matter too much in terms of the finances of it so if you add $10,000 to a hex debt a 20 year old then will know will work out or expect that that means they'll pay two or three more years starting when they're 36 basically so you just discount that at any normal kind of discount rate it whittles itself away close to nothing that's the first point, the second point is the government's got a monopoly if you want to be an undergraduate you want to get a bachelor's degree in Australia you've got to go through the hex system so you decide that even with a higher debt even say 10,000 more a retail sales person or you can't go overseas because they'll charge you up front very large amounts and I think there's two aspects the monopoly elements and the time issues to do with the repayment of a contingent debt which are not true of normal debts explain that we don't get any behaviour and that's why I think that if the pine budget motivation for pushing of price discretion to go on ahead there would have been two consequences prices would have been extremely high quite quickly and the reason is that all the risk is borne by the taxpayer not by the university they just get the money so they were taking as many people as they want so long as the price elasticity of demand is low and we know it is extremely low and that's the first point about that the prices would have gone up hugely and the government's next time around next budget's thought well we're saved a lot of money there let's do it again and then the end point would have been I think no subsidies at all and the economic case for that is is pretty weak and I also think that there would have been no behavioural consequences and we have great data on this that's exactly what they did in the UK the UK's got a HEX system 2001 they trebled the price £9,000 per full-time student year that's a 300% increase the decrease in applications was 10% for one year only and afterwards it didn't matter and these reasons of the time discounting is being completely critical in juxtaposition with the monopoly power of a single supplier in a world where the students don't have a choice on that note I'd like to invite Paul Hubbard forward to close this thank you very much Shirley there are some people in the the room who are too young to grasp and digest long-form speeches although you didn't like tweets I've got three tweets to summarise the whole evening at Bruce Chapman Marx was right Kate Blanchett was wrong education should be free at the point of entry and parenting and drought and crime that's your tweet etc 144 characters Bruce John Dawkins because I grew up in Ken Henry's Treasury I like this one because it's the story of how a resolute determined and united expenditure of view committee of cabinet fixes a ramshackle economy or die is trying and finally a sort of plaintive call from Professor Botrill Hungry for low-hanging fruit confounded by the 24-hour news cycle bogged down in agrarian sentiment rediscover the art of sweet persuasion here for those of you who are too old to remember what just happened here and who want to rediscover that art of sweet persuasion that we heard the session is available on the podcast on the Sir Roland Wilson Foundation website for those of you for whom this is now all sort of trivial and best left as an exercise to the reader the next big question who will save the world on the 27th of June in a joint Sir Roland Wilson Churchill Foundation panel details are on the Future Shapers website registration is essential so thank you very much all of you for coming out unreliably informed us now 4 degrees outside so move quickly thank you especially to the panelists and to Professor Shirley Leitch for the insights tonight