Today the IPA has released a study of mine, drawn from my recently completed PhD thesis, which presents historical measurements of the size of government in Australia. The country’s best economics journalist, Adam Creighton, has profiled some of the key findings of the study here.
Incidentally, the report in The Australian includes a bonus chart, that I chose not to fit into the final paper, comparing defence, law and order against social (education, health, social security, housing, cultural) spending, as a share of GDP, since the mid‑nineteenth century. The chart, used by Adam, nicely summarises the general evolution of the Smithian (protective) and Bismarckian (redistributive) state in Australia.
In this post, I pull out a chart from the paper, which was the product of many months of hard, manual work to compile: the (gross) number of pages of primary legislation passed or assented in a given calendar year by commonwealth and state/territory governments. This flow measure is commonly used as a proxy (albeit an imperfect one) for regulatory burden.
While not denigrating the usefulness of fiscal measures of the size of government in any way (because they are important), it is essential that indicators be presented, and refined if necessary, to account for changes to the regulatory burden (alternative methodologies to estimate regulatory burden can be found here and here). As economic historian Robert Higgs points out:
high levels of governmental taxing, spending, and employment derive from but are not themselves the essence of Big Government; the essence is a wide scope of effective authority over economic decision‑making. Authority comes first: no authority, then no taxing, spending, or employment. Authority arises from executive orders, statutes, court decisions, and the directives of regulatory agencies.
The study refers, in passing, to the broad outlines of the policy underpinnings of the new regulatory state, during the supposed post‑1980s ‘neo‑liberal’ era of permanently reduced government. Environmental and social regulations, including those enacted for the purpose of adhering to international treaties, had become prominent during the 1980s and beyond, whilst during the 1990s economic edicts to, for example, implement national competition policies, effect changes to labour market regulatory arrangements, and to place pricing regulation clamps on privatised utilities, also informed the growth in regulation. During the 2000s, and particularly since late 2007, items of legislation of great length were enacted to enforce policy harmonisation across jurisdictions, in areas such as OH&S standards, health care, child care and education services, and environmental amenity.
Now, to be fair to Higgs, the chart does not incorporate all elements of ‘black’ or ‘grey’ letter edicts imposed and enforced by governments, and nor does the chart reflect the alternative methodologies that could be used to provide for more refined regulatory burden measures.
Nonetheless, the chart (and I hope that many other items in the latest IPA study) does serve to fill some of the gaps in our understanding of the evolution of Australian public sector activity, and provide confirmation that there is a great element of truth in protestations by individuals and businesses that governmental regulatory impositions are increasing over time, at a seemingly escalating rate.