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Grattan Institute’s Orange Book also finds a crisis of trust in politicians, risking undermining representative democracy

A new report by the Grattan Institute sets policy reform priorities for the next government, which will be lead by either Scott Morrison or Bill Shorten.

A new report by the Grattan Institute sets policy reform priorities for the next government, which will be lead by either Scott Morrison or Bill Shorten.
Photograph: Mick Tsikas/Lukas Coch/AAP

Compared with similar countries Australia is performing poorly when it comes to tackling homelessness and keeping cost of living down, and its electricity supply is more polluting, less reliable and more expensive.

These are some of the findings from the Grattan Institute’s Orange Book published on Tuesday night, which sets policy reform priorities for the next government and rates Australia’s performance in areas such as health, housing, education, and energy.

There is also a crisis of trust in politicians, the report says, which over time risked undermining representative democracy.

“Australian cynicism is now at an all time high … Widespread loss of trust can make legislating policy change more complex, because it is harder for governments without political capital to enact ‘difficult but necessary’ reforms,” the report says.

“While there are many causes of falling trust and exasperation with the political establishment, one is the growing sense that people in government look after their own interests, or those of powerful groups, rather than the public interest.”

Grattan chief executive and lead author of the report John Daly said there were some positives, with retirement incomes generally sufficient [except for renters], and affordable health and education. But on many social issues, Australia rated poorly.

“These are evidence-based policy recommendations designed to serve the interests of all Australians rather than sectional interests,” Daly said.

Economic development

The report says the next federal government should focus on tax reform, with some current tax arrangements “a big drag on economic growth”.

Income tax should be reduced, while welfare and childcare means tests should be modified to remove barriers and increase incentives for women and older people to participate in the workforce.

The report says that to pay for these changes and avoid other tax increases, the capital gains tax discount should be cut from 50% to 25%, while negative gearing should be wound back through quarantining wage and salary income so that passive investment losses can only be written off against other investment income. The GST should also be increased or broadened.

To increase workforce participation of older Australians, the report suggests investigating the costs and benefits of raising the pension age to 70.


Despite a push from various politicians for people to look beyond major cities and move to regional and rural areas, the Grattan Institute says the federal government should instead be lobbying the states to change planning laws to allow more medium-density housing in established suburbs.

“It is not that people will not move to the regions: they did so in large numbers when the mining investment boom presented attractive job opportunities. However, it seems that the living and employment conditions currently on offer in some regional areas are not attractive enough to Australians to induce more internal or overseas migrants.”

Carolyn Whitzman. a professor of urban planning at the university of Melbourne, said people would always prefer to live where jobs and opportunities were.

“The strong preference is always going to be for the central city and there is a certain lock-the-gate aspect, with lots of people moving into the cities and then saying ‘there’s no more room’.

“This issue isn’t a failure of immigration policy; it’s a failure of planning.”


The Orange Book calls for a universal dental care scheme, and a comprehensive review of the private health sector, including private health insurance.

It says rates of complications and questionable care in hospitals should be made public, a move also being called for by the Consumers Health Forum.

The report said pharmacists should be able to provide repeat prescriptions with the agreement of doctors and patients, and work with doctors to help patients manage chronic conditions. But it said overall, the health system was affordable and resulting in Australians living longer.

A health policy analyst with the Centre for Policy Development, Jennifer Doggett, said the Grattan report needed to be stronger on health equity.

“Yes, our health system performs well overall but the gap between those of us who get the best outcomes and those who miss out is huge. The gap between the life expectancy of Aboriginal and Torres Strait Islanders and non-Indigenous people means that Indigenous Australians have a life expectancy less than that of people in North Korea,” she said.

“This is not just a health system problem but part of the solution needs to involve an explicit focus within the health system on addressing inequity.”

She said though the health system worked well “on paper” this was partly due to the uncounted time and resources that consumers and their carers were forced to contribute to coordinating and managing their care.

Doggett welcomed the call for powerful lobby groups to be held to account but said that would involve the government of the day taking on these groups. “It is not clear that either side of politics is prepared to do this,” she said.


The government must “finish the job” on school funding by reintroducing the demand-driven higher education system, and control costs by increasing repayment of HELP debt.

It also says entry into teaching should be made more prestigious, partly by pushing for prospective teachers to have an Atar (Australian tertiary admission rank) of about 80 or above. Prospective students should also be given more information about their chances of course completion, the report says. “Dis-enrol students who are not engaged with their studies so they don’t incur HELP debt.”

The deputy opposition leader Tanya Plibersek has said if universities did not move to lift standards, a Labor government would move to make Atar caps mandatory.

New school reform initiatives should be avoided unless evidence shows they are a good idea, and any government intervention should help and not hinder, the report said.

A co-author of the Grattan report, Dr Peter Goss, said over the course of decades the academic backgrounds of teachers had weakened.

“As a result of feminism women had more career choices so bright women were no longer pushed into teaching, which is great, but not good for schools,” Goss said.

“We’re concerned less about how do you cut off the lowest-ranked teachers, and much more concerned about how to send a signal to young people that education is a course for high achievers and career opportunities.”

Government accountability and integrity

The report calls for a code of conduct to be introduced for all parliamentarians on conflicts of interest. A Commonwealth Integrity Commission should be established to investigate corrupt and high-risk misconduct in the public sector, and investigate tip-offs.

“Cap expenditure on political advertising during election campaigns, and lower the donations disclosure threshold to $5,000,” the report says. “Require political parties to aggregate donations below the threshold, and introduce ‘real time’ disclosure of donations. Publish ministerial diaries.”

All lobbyists who enter parliament house should be subject to the Lobbying Code of Conduct, which should be enforced by criminal penalties, the report says.

Climate and energy

The report urges the incoming government to develop a credible climate change policy.

“Our political leaders must be honest with voters: Australia needs to move to a low-emissions economy, and that transition will cost money,” the report says. “A raft of reforms to electricity generation, distribution and retailing are also required to push down energy costs.”

While economy-wide carbon price would be the best way to reduce emissions, in the absence of the political consensus needed to implement the best policy, “we should work with what we have,” it says.

“The work of the past two years means the incoming federal government, whether Coalition or Labor, will have the content and should have the political opportunity to introduce a stable and credible emissions reduction policy for the electricity sector. Reverting to subsidies and direct government funding would almost certainly be less effective and less efficient.”

The report did not examine Indigenous affairs, foreign affairs and trade, most immigration issues, defence and security, law and order, industrial relations, communications, agriculture, many welfare payments, or human services because they have not been part of Grattan’s research.