Grains Research and Development

Date: 01.01.2001

Wobble In The Playing Field Competition Policy Revisited

Cartoon concerned with how 'level' the playing field really is for farmers, as a farmer drags a till up hill.

Book review — Land of Discontent: The Dynamics of Change in Rural and Regional Australia, edited by Bill Pritchard and Phil McManus, published by UNSW Press

by Richard Denniss*

Who wouldn't want to play on a level playing field? Probably people who are used to having the field sloped in their favour. But there are also good reasons why fair-minded people with an interest in economic efficiency as well as equity may prefer a bit of a slope on the pitch.

Horse races are handicapped all the time, boxing matches take place only between people of similar size, and the winner of the Sydney to Hobart isn't known till well after the first boat crosses the line. The fact is that what is considered 'fair' is not nearly as clear-cut as what is considered 'even'.

In most competitions it is hoped both that everyone will get something out of participating, and that everyone has some chance of winning. When it comes to international trade the objective should be the same.

Much is made these days of 'win-win' outcomes and the implementation of policies in the 'national interest', but if the benefits are all so clear, why is there ever any resistance? The answer is simple, trade disputes between countries are not always win-win, and even within the countries that score a 'win' over another country, there may be individuals or groups who lose out. Australia is full of recent examples.

A new book, edited by Bill Pritchard and Phil McManus, entitled Land of Discontent: The Dynamics of Change in Rural and Regional Australia deals with exactly these issues.

Over the last 15 years the pursuit of free trade policies has been of benefit to some in the agricultural sector while others in the formerly protected manufacturing sector have lost out. In order for Australian governments to achieve open markets for our commodities, it had to reduce its own protection of Australian industries.

Even if Australia is significantly better off from having adopted such an approach, there is no doubt that some Australians were made worse off.

More recently the deregulation of the dairy industry has highlighted the tension between national interest and self-interest. All of a sudden, free trade and agriculture were no longer synonymous as farmers from different states perceived interstate trade as either a threat or an opportunity.

The point is that while national gains are desirable, the distribution of those gains is also important, particularly when they are based on the generation of losses for others.

The importance of how the costs and benefits of policy reform are distributed is discussed in a chapter by Bill Pritchard, a lecturer in economic geography at Sydney University. Pritchard examines why it is that many economists choose to distance themselves from questions about distribution, focusing entirely on the issue of maximising production.

But when the mechanisms they advocate require substantial redistributions in employment and income, it is impossible to distinguish between their support for the mechanisms and support for the new distribution of income that those mechanisms will deliver.

Economists not a united front

Economists not a united front Followers of economic policy who get most of their information from newspapers may be surprised to learn of the extent to which economists disagree about the desirability of National Competition Policy, free trade and the need to provide assistance to regions suffering economic decline.

So much of what is said by the government is presented as though the economics of particular approaches was uncontested, with only some well-meaning, though ill-informed opponents concerned with equity and the environment. Land of Discontent provides a timely antidote for such views.

Different contributors from different backgrounds analyse a wide range of issues affecting rural and regional Australia. While most chapters deal explicitly with the process of economic change that has had such a dominant impact on non-metropolitan Australia, others are concerned with the impacts of that change on issues ranging from the environment to rural identity.

Readers will find much food for thought in the studies on impacts of social and economic change in rural and regional Australia. They will find a coherent analysis of both the reasons underpinning the support for populist policy solutions, such as those advocated by One Nation, and the inherent problems associated with such an approach.

Unlike many critiques of 'Hansonism', the starting point in this book is often that fundamental problems exist in the current policy approach. That is, rather than simply deriding protectionist policies, the authors often start with an analysis of why the status quo isn't working so well.

Politicians around the country have been saying for some time now that they are 'listening' to what people in rural and regional Australia are saying. The real test, however, will be whether they are actually hearing, and whether what they hear has an impact on their subsequent decisions.

Land of Discontent will be of interest to anyone wishing to understand more fully the reasons behind the concerns and frustrations often expressed by rural and regional Australia. While the book does not provide 'the answers' regarding what is 'fair' and what is 'efficient', it does equip the reader with a much greater understanding of just how subjective those notions can be.

* Richard Denniss is a Research Fellow at The Australia Institute, an independent Canberra-based think-tank which conducts policy research aimed at achieving a just, sustainable and peaceful society. Web site: www.tai.org.au

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