Herewith, a few days late, is my column in Ross Gittins’ place from last weekend. There are a couple of things I would have liked to have covered in the column but didn’t for lack of time. The first is that I suspect the biggest payoff in the area of law is not liberalisation of the profession, though there’s a strong case for that, but more sensible legal procedure – which is so stupendously wasteful it’s hard to even begin. I decided mentioning that was really introducing another topic (which doesn’t have a clear counterpart in other professions and so would have also confused the reader). The other thing that should be acknowledged – but which ended up not getting space to go in – is that in the scheme of things – relative to other similar organisations and given its budget – VCEC seems in my relatively limited experience to be a good organisation. As readers will know, I have lots of problems with the limitations of our current way of doing regulation review, and I have those same concerns with VCEC, but judged amongst its peers (and that includes around the world), it seems to me to do as good a job as anyone. Anyway, on with the column:
Late last year I attended lengthy meetings with economic agencies that were looking at the broad sweep of economic reform – the Victorian Competition and Efficiency Commission (VCEC) and a visiting OECD delegation.
We’ve come a long way, with few sectors remaining untouched by reform. But somehow I was struck by what reformers left out of their vision as much as what they left in.
Both bodies were exercised about labour market flexibility. That’s as it should be. It’s a major issue. If we want to improve our lives by maximising our productivity, we should sweep away arbitrary restrictions on the way we work. And collective bargaining industry by industry – or ”pattern bargaining” – imposes the kind of economic rigidities that helped produce three crippling recessions in a decade-and-a-half from the mid-’70s on.
But neither the Organisation for Economic Co-operation and Development nor VCEC had anything to say about other crucial rigidities and absurdities of our labour market. You see, gentle reader, unions of blue collar and clerical workers aren’t the only ones seeking to prey upon consumers and the community by monopolising their labour and imposing arbitrary restrictions on what people can and cannot be asked to do. Ask the Royal College of Surgeons or the Law Society.
Imagine the Maritime Union of Australia – the wharfies union – deciding who was ”qualified” to work on the docks. Yet that has been the model by which we have regulated professional labour in the highest status professions – particularly medicine and law – since they first ”professionalised” in the 19th century. After a generation of reform, a little has changed, but it is precious little.
Lawyers used to enjoy a monopoly over property conveyancing. This entitled them to impose their own (hefty) profit margins on the cost of the clerical assistants doing the work. Today, despite the past objections and dire predictions of law societies, you can choose between a lawyer and a specialist conveyancing firm charging about half the price.
That is pretty much where liberalisation stopped with the law. Yet the formula we followed with conveyancers could be adopted much more widely. Why shouldn’t an experienced social worker be able to qualify as a family lawyer by completing a special family law diploma and articles in a family law practice? Or, to take an example Lindsay Tanner suggested to me, why not let a retired policeman with the inclination undergo a similar transition and then defend and mentor juveniles accused of wrongdoing?
There’s more than a whiff of class snobbery in this. The kind of career path I have suggested is essentially how economic reform has restructured training for tradespeople and some less well paid, lower status professions. Thus Certificates I, II, III and IV break down the ”competencies” required to become a fully qualified tradesperson and so let people work their way up towards full, generalised qualifications – for instance a carpenter or electrician – by learning and demonstrating their mastery of the various competencies and practising them on the job.
And in the caring professions such as nursing and early childcare a similar structure lets people qualify to assist in activities such as cancer, wound care, palliative care, etc. as one works one’s way to higher, more general qualifications. We’re making some – though limited – progress in teaching with Teach for Australia reconfiguring teacher training to encourage the best and brightest university graduates to spend a few years teaching.
But while we anathematise arbitrary demarcation of jobs on the shop floor and waterfront and put huge effort into making training more flexible and competency-based, we leave those at the top of the most prestigious professions to largely regulate themselves and determine who is qualified to compete with them. After all, they’re sound chaps.
And the result? Exactly what you would expect. There is next to no innovation. They just cannot see the urgency. The training they had never did them any harm. And so, just as women complain about the glass ceiling, so there is a platinum ceiling keeping out the riff raff, and preventing flexible career transitions to the top of the high-status professions. A palliative care nurse will not get much credit for their learning and experience if they want to become a palliative care doctor.
Of course an economist like me is supposed to be attracted to the way more felicitous training paths can cut costs and increase efficiency. Avoiding the need to teach advanced company law to a family lawyer would ”free up resources for more highly valued uses” (as we say in the trade). But that’s not really what excites me about these proposals. A policeman with a policing perspective and desire to help young offenders, or a social worker keen to practise family law would be more use to their clients than a lawyer wondering if corporate law might net them another grand or two a day. Those practitioners would be happier people as well if the new pathway let them follow their passion.
Once economic reform involved simply sweeping away the detritus of a century’s economic populism and ad hoc political favouritism. So we removed restrictions on shopping hours and entry into industries and we tore down our tariff walls, doing our economy the world of good. But apart from some smaller fry – such as taxis and pharmacies where we still restrict entry for no sensible reason – that kind of stroke of the pen reform is largely behind us.
If we are to keep up the momentum on reform it will be by extending our gaze towards those parts of our economy and society we have imagined to be given – and above it all. And beyond stroke of the pen reform, successful policy will not just lower costs. It will improve the quality of our lives by making our social and economic institutions more fit for their purpose. More and more economic reform will not just be about making us richer, but also about directly improving our lives.