Soft power, hard decisions

My grandfather spent part of his childhood living in a tent. His older brothers were working in the mines before they were in their teens. And his sisters spent time in the local orphanage because his widowed mother was too poor to care for them.

I grew up in a nice house in a small town in East Gippsland. It was better than a tent, but very basic. The local electricity supply powered only lights, not appliances. We had an ice chest, a copper, and a wood-fired stove but no sewerage, gas, or television.

I didn’t attend preschool, because there wasn’t one. We got our first fridge when I was seven and our first television, when I was ten. As a young boy I used to accompany the local milkman on his early morning rounds on his horse and cart.

Unlike my grandfather, I didn’t come from a deprived background, my family was middle class. The modern world just arrived a little bit later in East Gippsland than other places.

To my older children, growing up in comfort in suburban Melbourne, these stories sound bizarre. They don’t realise the things they take for granted haven’t been universally available for very long.

The amazing rise in general affluence over the last century - particularly the past 30 or 40 years - has changed Australia beyond recognition. For the overwhelming majority, the rise in living standards has been astonishing.

We often ignore rising affluence because it’s incremental. Ordinary working families buy swimming pools, speed-boats, overseas holidays and four-wheel drives. We barely remember when few could afford to. More people than ever before now send their children to private schools. Government funding has played a role, but rising affluence is a critical factor.

It’s easy to overlook the impact of rising living standards and base our expectations of government on a society which no longer exists. The state’s role is changing - and our thinking needs to change too.

The size of government is no longer the big issue. What governments actually do is changing, the emphasis shifting from building to learning, from regulating to persuading, and from alleviating producer risks to moderating family income changes.

The gradual shift in emphasis from building to learning has been the most important shift. Since the 1950s, public expenditure on infrastructure relative to the total economy has fallen sharply. Greater efficiency, more private sector involvement, and a reduced need for new networks have all contributed to this.

No-one suggests government investment in infrastructure should return to the relative levels of 50 years ago. Governments’ responsibility to ensure that all Australians can develop their capabilities is now more important than their responsibility to build things.

The rapid acceleration in the need for learning over the past 50 years has pushed education to the centre of government activity. When most people did not finish school and few attended university, the burden on government was limited. The need for more skilled workers has grown rapidly since then, and changed the role of government in its wake.