Targeting greater political diversity

Our governments need to draw from a broader pool of electoral candidates if they are to meet their goals, writes John H C Colvin.

Our system of government is suffering from a narrowing of the political “gene pool”.

The current governance arrangements relating to political office, including the way in which political candidates, party leaders and cabinet members are chosen for all sides of government, is producing politicians with limited diversity in terms of their backgrounds and experience, both in business and more widely. Many ministers who are appointed have little or no experience outside the narrow world of politics. Further compounding this, they are more often than not advised by political staff with similarly limited experience. Our politicians do not represent a deep enough pool of diverse experience to carry out the functions of government to the level required if we, as a nation, wish to improve our standard of living, compete internationally and manage the policy and functioning of government in a better way.

Our governments and the officials who advise them, as well as political oppositions, have a crucial role to play in driving reform. It is they, after all, who make the policy decisions that impact on business and the economy. An analysis of federally elected representatives recently undertaken by the Australian Institute of Company Directors has found that very few possess the level of experience within the business sector needed to shape policy effectively in these areas. This has sometimes led to a fundamental disconnect between government and business and often simple misunderstandings. It has contributed to a situation where laws and regulations passed by the state and federal governments are stifling the ability of business to flourish and create the prosperity, job opportunities and the taxation revenue which pays for our hospitals, schools and other social infrastructure. This has important implications for economic growth, our international competitiveness and the welfare of all Australians.

In the 1960s and earlier, it was common for a career in Australian politics to be pursued by people with diverse backgrounds and considerable experience outside of politics. However, over the past 50 years or so, a fundamental shift has occurred.

Nowadays, elected representatives – from all sides – are much more likely to come through the ranks of what is known as the “political class”. They join a party early in their careers, and work their way up in the political sphere (or in unions) as staffers, advisers or in other positions, eventually gaining pre-selection and entry into Parliament. From there, some go into the ministerial ranks and then into cabinet — the centre of policy formation and decision-making.   

Having politicians with a solid background in politics, and who have a strong understanding of how policy is developed, how laws are made, “the art of the possible” and the role of the executive in relation to the Parliament, is essential. However, the dominance of the “political class” that we now have in Parliament has gone too far. There is a real need to improve the inherent lack of diversity and ensure our policymakers better reflect the background, cultures, gender and experience of the communities on which our policies impact. In particular, the business community needs to be better represented and involved.

The “political class”
Research conducted by Company Directors into the backgrounds of federal politicians now in office (as at 1 July 2014) reveals an alarming lack of diversity of experience among our current parliamentarians, whether part of government, the opposition or otherwise. It shows very few parliamentarians have experience in senior executive or board roles at major commercial enterprises:

• Only two out of the 226 (0.9 per cent) federal parliamentarians had 10 years or more senior executive or board experience in major commercial enterprises: only one out of the 150 (0.7 per cent) members of the House of Representatives and one out of 76 (1.3 per cent) senators. (A decade or more is the length of senior business experience we believe is required to gain full insight and have an in-depth understanding of business and commercial operations.)
• Only 15 out of 226 (6.6 per cent) had some senior executive or board experience in major commercial organisations: 12 out of 150 (8 per cent) members of the House of Representatives and three out of 76 (3.9 per cent) senators.

The position under the previous government (as at 1 July 2013, prior to the 2013 election) was very similar:

• Only three out of the 226 (1.3 per cent) federal parliamentarians had 10 years or more senior executive or board experience in major commercial enterprises and only one out of the 150 (0.7 per cent) members of the House of Representatives and two out of 76 (2.6 per cent) senators.
• Only 14 out of 226 (6.2 per cent) had some senior executive or board experience in major commercial organisations: 10 out of 150 (6.7 per cent) members of the House of Representatives and four out of 76 (5.3 per cent) senators.

Cabinet is arguably where a reasonable understanding of how business works is needed most, so that when decisions are being made on issues which impact on the private sector, that perspective is at least put forward, analysed and argued. Also, cabinet must have sufficient knowledge to be able to test and question the advice and decide on issues that are put before it. However, only one of the 19 politicians comprising federal cabinet as at 1 January 2014 had 10 years or more senior executive or board experience in a major commercial enterprise. The position was even worse under the previous government, with none of the 20 cabinet ministers having a decade or more senior executive or board experience in a major commercial enterprise. A comparison of our current federal cabinet and shadow cabinet with past federal cabinets shows there has been a clear trend over the last few decades towards a uniformity of backgrounds and experiences amongst our cabinet ministers. 

An examination of the backgrounds of those individuals holding senior positions at the various Commonwealth departments shows a similar lack of diversity:

• None of the eighteen Commonwealth department secretaries (as at 1 July 2014) had 10 years or more senior executive or board experience in major commercial enterprises.
• Only one department secretary had experience of three years or more in major commercial enterprises at the senior executive or board level.
• No members of the senior executive team of either the Department of Treasury or Department of Finance and Deregulation had any senior executive or board experience in major commercial enterprises (all individuals had worked predominantly in the public service or academia).

This is largely the same as under the previous government, with the exception that two department secretaries had experience of three years or more in major commercial enterprises at the senior executive or board level as at 1 July 2013.

The figures also show that a large and increasing number of those in Parliament come from the “political class”. As at 1 July 2014, a majority of the parliamentarians had a background as an adviser in a political office, or as a party or union official:

• 113 out of 226 (50 per cent) parliamentarians were previously employed as a political staffer or a party or union official prior to entering Parliament: 71 out of 150 (47.3 per cent) members of the House of Representatives and 42 out of 76 (55.3 per cent) senators. 
• Of these 113 parliamentarians, 91 (82.1 per cent) were staffers or party officials prior to entering Parliament: 62 out of 150 (41.3 per cent) members of the House of Representatives and 29 out of 76 (38.2 per cent) senators.
• Of the 19 cabinet members, 8 (42.1 per cent) were employed as a staffer, party official or union official before entering Parliament.

The position under the previous government was that, as at 1 July 2013:

• 121 out of 226 (53.5 per cent) parliamentarians were previously employed as a staffer, party official or a union official prior to entering Parliament: 77 out of 150 (51.3 per cent) members of the House of Representatives and 44 out of 76 (57.9 per cent) senators. 
• Of these 121 parliamentarians, 88 (72.7 per cent) were staffers or party officials prior to entering Parliament: 60 out of 150 (40.0 per cent) members of the House of Representatives and 28 out of 76 (36.8 per cent) senators.
• Of the 20 cabinet members, 19 (95 per cent) were employed as a staffer, party or union official before entering Parliament.

We have ended up where we are today, in part, because in recent years there has been a marked trend towards a greater incidence of “career politicians”, with an associated narrowing of background and experience of those being elected. It is now more commonplace for young people wanting careers in politics to join parties early in their careers and work their way up within the political sphere – for example by serving as staffers, advisers or other positions within the political process. Many, as our figures show, go on to become ministers.

The narrowing of the available pool of candidates for political office is understandable in some respects, given the demands of public life, the nature of politics, the constant and unrelenting media cycle, and the remuneration arrangements currently in place. All of these tend to create biases with respect to where new political candidates are sourced.

However, if this pattern continues – and there is every prospect of it continuing for the foreseeable future unless countervailing measures are taken – the questions must be asked: is such a closed system sustainable and is it the best Australia can do?

Why change is required
One major consequence of this “closed” system of political appointments, and the associated narrowing of collective backgrounds, is that there is a greater likelihood that our politicians will lack an understanding of the needs of various stakeholders, including those such as the business sector, impacted by the policies and laws that they make.

The business sector is important to society and should be supported by policymakers wherever possible and appropriate.A vibrant and growing economy is necessary not only to directly meet the needs of citizens, in terms of employment, investment opportunities, and the provision of goods and services, but also to ensure the taxation revenue base that allows governments to fund basic requirements such as health, education, defence and civil order. The world we now live in is a highly complex and interrelated global economy, requiring far more sophisticated knowledge than ever before. From the government’s perspective, this encompasses the need to have a much deeper understanding of the private sector, including its drivers, issues and needs. There is no escaping the fact that those economies that tend to do well in terms of living standards are those that exhibit a symbiotic relationship between business and government.

Regulation overload
The main way in which Parliament seeks to effect change is through the passing of new laws. Chief complaints of leaders in the private sector often include the inappropriate, badly thought through, poorly drafted, and/or overly restrictive nature of laws being passed, as well as the growing amount of red tape. 

Laws passed by Parliament over the last decade or so, both by their nature and sheer volume, are stifling the ability of businesses to flourish. This in turn impacts adversely on our economy and society at large. It should be acknowledged that the current government has made a firm commitment to the reduction of red tape and has taken a number of steps to carry out this commitment. However, even if the right systems are put in place, better and more effective regulation will only be possible in the longer-term if the right people are making the policies and drafting the legislation that make up our regulatory landscape.Given there is a relationship between the legal and regulatory environment in which businesses operate and the long-term economic prosperity of a nation, it also brings into question whether our current approach to lawmaking and the lack of depth in the backgrounds and experiences of the politicians being elected is impacting adversely on our international competitiveness. And, if so, to what extent is this likely to impede Australia from being able to take advantage of the opportunities created by growth internationally.

Bridging the gap
Given these factors, what can be done to address the current divide between, on the one hand, the backgrounds and actions of politicians and, on the other, the needs of the private sector and all Australians?

Although this is a complex and multi-faceted issue, a few initial recommendations, set out in greater detail below, can be broadly divided into the following categories:

1. Improving consultation with stakeholders, including business.
2. Encouraging “cross-fertilisation” between business and government to enhance the direct involvement of business people in the policy process.
3. Improving diversity amongst our policymakers. This goes to issues of selection, improving the environment in which politicians serve and, potentially, constitutional change to allow participation by those other than elected parliamentarians.

Company Directors is recommending a number of  possible initiatives that would go some way to address these areas.

The role of education
One initiative that could help to address this issue would be to enhance professional development programs for current politicians and their advisers, to broaden their understanding of matters outside politics and the public service. Part of this education could include an overview of the history and fundamentals of government (including the rule of law and proper legislative drafting principles), how business and markets operate and how red tape impacts on the private sector.

Selection criteria for politicians
The selection of new parliamentary candidates has been a hot topic both within Labor and the Coalition. We encourage the review of the nomination and selection processes, such as the review that is currently being undertaken within the New South Wales Liberal party by an expert panel chaired by former Prime Minister, John Howard, and the reform proposal put forward by Senator John Faulkner recommending changes to how the Labor party selects its upper-house federal and state candidates. Attention should also be focused on the attributes of incoming politicians. In their pre-selection processes, political parties should place more emphasis on their representatives having suitable backgrounds and experience, and ensuring an appropriate talent mix and diversity among the party’s parliamentary representatives and leadership teams, as well as ministries. For example, one action political parties could take is to require that new parliamentary candidates have a requisite amount of real experience in areas outside politics or the bureaucracy.Political parties should also attempt to engender a broader set of skills and experience among political aspirants and advisers through educational support and secondments to and/or from the private sector.

Improving cabinet representation
Given that our Commonwealth Constitution provides that cabinet members must be drawn from Parliament, combined with the nature of party politics and existing pre-selection processes leading to the dominance of a “political class”, it is perhaps not surprising that we end up with a narrow talent pool for our cabinet. In these circumstances, the notion of an external appointment to hold a ministerial or senior position within government deserves contemplation. Consideration should therefore be given to making structural changes to cabinet to allow other ways of tapping into the wealth and mix of backgrounds and experience that exist outside the “political class” and particularly in the private sector.While it is necessary to bear in mind the unique circumstances of each country, an examination of approaches taken overseas, and particularly in the United States, the United Kingdom and Canada, could help inform us of possible approaches that could be used or adopted here in Australia.

Constitutional change
The time may be right to rethink the way in which cabinet members may be appointed.

One possible solution worthy of further consideration and debate is whether the Australian Constitution should be amended to remove the current restriction that federal cabinet positions be held only by individuals holding a seat in Parliament, at least for a portion of existing positions. For example, the Prime Minister of the day could select up to a maximum of five cabinet posts for the life of a particular government from outside Parliament.  

It is also important to note in regard to state and territory governments that the constitutions of New South Wales, Queensland and Western Australia do not expressly require ministers to be members of Parliament and that, therefore, external ministerial appointments would be possible without constitutional amendment or other legal change.

Appointment of external advisers
One of the more innovative examples of tapping into the experience of individuals from outside of politics occurred in 2005 when the South Australian Premier Mike Rann experimented by bringing leading businessman Robert Champion de Crespigny and Catholic vicar-general David Cappo into the executive committee of cabinet that had charge of implementing that government’s strategic plan. These appointments occurred notwithstanding a restriction in the South Australian Constitution that cabinet ministers be drawn from Parliament.

We have also seen attempts by government to interact better with the business sector through consultative groups. One example is the Prime Minister’s Business Advisory Council. Another good example has been the Corporations and Markets Advisory Committee (CAMAC).

Secondments
A further possible initiative is to try to break down silos that currently exist between the public and private sectors by encouraging two-way secondments, internships and the like. Over time, this should result not only in greater cross-fertilisation between the two sectors but may also, if handled properly, serve to engender an interest in public affairs for tomorrow’s leaders. 

A good model worthy of consideration in this context is the prestigious White House Fellows program in the United States, which offers exceptional young men and women an opportunity to work for one year as a full-time, paid fellow to senior White House staff, cabinet secretaries and other top-ranking government officials. Another example is provided by the Singapore government which targets individuals from a young age through a wide variety of scholarships to undergraduates as well as ministerial opportunities and continues to nurture their development through their careers, including in the private sector, with the idea of appointing the very best to government positions.

Improving the environment
Making entering into politics in Australia a more attractive career option may go some way to increase the available pool from which politicians are drawn. To this end we could look at reconsidering the appropriateness of remuneration packages afforded to politicians, in terms of quantum, components and timing, and also other circumstances that may currently make the prospect of going into politics an unpalatable proposition for many of Australia’s talented individuals. 

While we are lucky to live in a great democracy, those who do choose to go into politics often have to put up with a lot of difficult circumstances including unfriendly hours, working away from home for long periods of time, constant “gotcha” media commentary and scrutiny of their family and personal lives that have no impact on policy. There is little doubt that the incessant spotlight within politics is a strong deterrent for highly talented individuals considering a career in politics.

In this context, it could be argued that the media needs to have some sensible codes of behaviour, enforced by their editors and their boards, to address this current negative aspect of going into politics. Not only have the media blurred the lines between news and gossip, but their constant focus on scandal and personal issues has severely stifled the debate on more critical issues affecting the economy, Australian business and the community more generally.

In conjunction with the altered focus of media, there has been an evolution in the nature of reporting with the advent of the 24/7 news cycle. This has created the need to respond to many often complex issues immediately in order to meet public demands. The explosion of social media and the persistent focus upon opinion polls have influenced the policy process by shortening timeframes for policy development and implementation. The significant reduction in response time within the policy cycle has contributed to the increased tendency for governments to enact damaging reactionary laws and regulations that in many cases have little alignment with longer-term economic or societal interests.

Closing comments
This article has only scratched the surface of an important issue for all Australians – the way in which our country is governed and the background and experience of those individuals governing it. It is hoped that it will generate further discussion and debate.

We all need to remain mindful that there is a direct linkage between a healthy private sector and a prosperous economy and society. Further, it is important that there is sufficient experience, including from within the private sector, among those in government and Parliament to help ensure that there is an alignment between laws and regulations being promulgated and the needs of society. This is not an area in which Australia can afford to be complacent. Failure to take action to address the continuing narrowing of the political gene pool and allowing only the “political class” into politics, in addition to the current dearth of senior business experience among our politicians, is likely to perpetuate existing silos and additional laws that are harmful to the private sector and represent a drag on both our economy and society.