Moving the Needle

Below, you can watch, hear, and read Michael Brennan on banning non-competes, Brendan Coates on reforming skilled migration, and Katie Roberts-Hull on getting a phonics mandate for schools. Their brief speeches are followed by a Q&A session moderated by Myriam Robin.

It's a great thrill to be here tonight at the official launch of Inflection Points, a very significant new initiative. It is also a great honour to have been approached and asked to pen an essay for the inaugural issue, in relation to the relatively newly announced policy of the federal government regarding the banning of non-compete clauses in employment contracts in Australia. 

That's a policy reform that we are particularly proud of at the e61 Institute because of the instrumental role we feel we played in paving the way for that reform, helping to build the evidence base, but also to ease the passage of it. So, as a result, I thought I would tell you a little bit about the story. I know you've all read the essay, and you've read it several times. Still, I’d like to talk a little bit about the story, take some of the key themes from it and then make a couple of high level observations about the role of Inflection Points and what's needed in the Australian policy debate to make reform happen.

Michael Brennan at the Moving the Needle event.

Credit:

Savannah van der Niet for Inflection Points

Non-compete clauses, for those who don't know, are a part of a broader category of provisions—we think of them as post-employment restrictions that basically restrict what a worker can do when they leave a job. The most conventional case would be the clause that prohibits working for another firm in a similar industry or within a specified geographic radius. 

But there are other things too. There are non-disclosure agreements. There are also restrictions on poaching. So a non-poaching clause in respect of a firm's client or your former colleagues at a firm. These have been a significant issue overseas, both for regulators and for academics. There's a burgeoning literature on these things, but it hadn't been a significant issue in Australia until a couple of years ago.

The first obvious policy question that you'd pose is: well, these things, maybe they're restrictive, that sounds bad, but what do we know about them? Are they ultimately good or bad? You can come up with reasons why you might think that allowing a degree of restriction might be a good thing. There is a kind of general presumption in favour of the sanctity of a contract. If a contract is consensual between two parties, somebody has agreed to be bound, and it's not impossible to imagine circumstances where I might quite rationally agree that I'm prepared to sign up to a non-compete element, maybe in return for more money, particularly if I'm operating in a highly competitive industry or with high-end talent. For example, the Channel 7 newsreader might quite rationally agree that they're not going to go and work for Channel 9 and they'll accept more money in return. It could be that it's fundamental to the survival of firms in particular industries and, therefore, overall not a bad thing.

On the other hand, it could have, potentially, some downsides. It could limit labour mobility across firms. And one of the channels by which productivity growth happens or by which new ideas are spread across the economy is the movement of workers. And so high levels of labour mobility generally are a good thing. Perhaps more saliently, it could be that it limits outside options for workers, particularly low-paid workers, and thereby stacks the odds or builds up the market power of employers and suppresses earnings, particularly for low-income workers. But these are all conceptual cases, and we could sit in a room and argue the toss interminably about those. But are they true or are they not? And more to the point, if each of them is a little bit true, what are the trade-offs between them and to what extent are they true?

And this is a broader point I'll come back to at the end, but reflecting the fact that policy is never really a slam dunk. It's very rare in public policy to have a reform, or even an existing policy setting, that is just unambiguously a “good thing” and there's no downside. It's all about trade-offs. It's all about judgment, and what we would say is, therefore, it's often about the empirical content. What is the empirical reality? How much do we actually know about the prevalence of these things and their effects? Now, as I said, in Australia, non-compete agreements hadn't been talked about a lot. And then they suddenly burst onto the scene. And they really burst onto the scene via a single champion who was the newly minted Minister for Competition, Andrew Leigh, with the election of the new government in 2022.

In the essay we wrote about the fact that Minister Leigh very early on voiced a concern about the use of non-compete agreements, but he kind of lamented the fact that there was no data in the Australian context. He said he talked to lawyers, and anecdotally, he was hearing that these things were quite prevalent. That they were used not just for high-skilled, high-paid workers, but for workers such as childcare workers or hairdressers. A number of people who, potentially, could have their earnings suppressed by the diminution of competitive pressure. But there was no data. And as a data-driven decision-maker, that was going to be a problem for him.

Now, a couple of things about e61: we're a relatively new research institute on the block, and in many ways bring together a fusion of academic-type work and academic thinkers with a public policy lens. So we're really trying to harness frontier research and often the sort of quantitative rigour that might come with academia, but for public policy ends. We try to bring a degree of global linkage because one of our founders, Greg Kaplan, is an overseas academic, and Dan Andrews, who was instrumental in this policy reform, worked at the OECD. The 61 in e61 refers to the telephone code for Australia. So it was a symbol of this sort of expat mindset about how we could bring the world or bring the best of the global frontier back to Australia. And a third key thing is a strong focus on empirics and quantitative techniques.

So one of the key elements of the story with non-compete agreements was the way we built up from the ground a bit of data where none had previously existed. There was no ABS data on the use of non-compete agreements or anything like that. We wanted to cooperate with the Bureau of Statistics to try and get some insight into this. But the first step was that we actually piggybacked on an opinion poll that our primary funder, the McKinnon Foundation, runs to just insert a question in there for individuals: Do you believe that you are covered by a non-compete agreement in your employment contract?

Of course, this is a highly imperfect gauge because most people who are probably covered are not aware. And so we restricted this sample to those people who had recently changed jobs, figuring they may be a little bit more aware, to try and address that potential bias. But the result that we found in that initial process was that around one in five Australian workers said that they were covered by a non-compete agreement.

The great thing about doing that voluntary effort with an existing poll, but sort of outside the official statistical family, was that it created a bit of a template and a momentum for us to go to the ABS and say: we've got this worker side estimate here, it would be really good if we could complement it with a firm side estimate (if you were able to insert some questions in your regular, one of your regular business surveys). One of the great stories about this reform is the very facilitative attitude taken by the ABS, and they were prepared to work with us to insert some questions, to devise some questions and put them in there. For the first time, as a result of that, we got an indication about the prevalence from the business side.

Reassuringly, it told a fairly similar story. Once we had adjusted for firm size and sector, we got the sense that about one in five workers were covered by a non-compete agreement. But it also gave us a sense that the incidence of non-competes was increasing because more firms were reporting that they were either increasing the use of them or likely to increase the use of them, rather than the opposite. 

A third thing that it yielded was the insight that the non-competes tended to be rolled out in a fairly indiscriminate blanket form. So firms were kind of using them for all of their workers. It wasn't as though they were reserving them for the CEO or the latest high-end hire.

It also gave us a bit of a sense of the sectors in which they were particularly prevalent. And perhaps unsurprisingly, it tended to be in those service sectors, areas like real estate, areas like professional services, all those areas where when you think about what is the “firm”, it doesn't really coalesce around a particular bit of physical capital. It's not generally a piece of unbelievable IP or a secret sauce. The thing that creates the firm or makes the firm stick in those industries tends to be the client list and the people who work in that firm. And so, for perfectly rational and understandable reasons, they were the places where the non-competes were particularly prevalent. 

Once that survey data got integrated into the broader ABS data environment, it was effectively linked with individual and firm tax data. That gave us a really rich set of insights about potentially what the effects of a non-compete clause are. So it gave us the ability for the first time to look at firms that have said that they are either using non-compete or increasing the use of non-compete. What's the effect on worker turnover? What's the effect on worker wages?

And we found basically that there was an impact on turnover, that the firms that had increased the use of non-competes after five years saw a reduction in firm turnover relative to firms that were otherwise similar, controlling for a range of variables, but weren't either using or increasing the use of non-competes.

We saw a similar story with earnings. There wasn't an observable big up-front uptick in individual wages in firms that were using non-compete. So it sort of undermined the claim that this was a consensual arrangement that was being compensated for. But over time, the level of earnings growth or wages growth within the firm tended to be suppressed in those firms that were making greater use of non-compete. 

So for the first time we had some indicators, albeit imperfect and difficult empirically to really properly estimate, that all was not well with the use of the non-compete, that maybe there are some positive arguments for them, but it looked as though the downsides sort of predominated.

As we said in the essay, when we look back, there were a handful of lessons or reflections or themes that stood out. Individual policies and individual reforms are to some extent bespoke or sui generis, but we have to believe in prototypes to some extent. There have to be some generalisable lessons that are worth potentially applying to other areas. So here goes.

Lesson one was it was really important that there was a contextual problem that was well-accepted that you could link this to. So the contextual problem here was slow productivity growth in the Australian economy and a hypothesis that that was in part either driven by, or associated, with a fall in labour market dynamism, reduction in people moving firms, and thereby spreading good ideas around the economy and getting better labour matches. The big picture mattered. 

Lesson two, which I mentioned at the outset in respect to the Minister, is that here it didn't feel as though there was a big trade-off between equity and efficiency. Now, often there is. You're not always going to get that alignment in respect of a policy. But in this particular case, it was the sort of thing that a new incoming Labor government could really embrace because it had an element of competition reform, but it didn't really undermine, in fact, quite the opposite, any egalitarian spirit. 

Lesson three was the importance of getting good data where no data had previously existed. And then in the quantitative assessment of that just trying to be as honest as possible, not overselling the case, pointing out all of the challenges and we talk about them a bit in the essay, the problem of reverse causality, you know, how do you know that a non-compete is causing lower turnover? It could be that high turnover is causing the existence of a non-compete, so it's a very difficult thing to estimate. You can't run away from that, but you can't avoid the challenge altogether. You just have to be honest about the limitations of the empirical work.

Lesson four: the international connections were very important. One of the observations I would make, having seen both the academic and the policy side, is that the academic world is global. Our policy communities tend to be a little bit more siloed and national. So bringing a bit of the global policy thinking and the global academic thinking into the Australian context was really important. And then just the extent of collaboration, the idea of a think tank partnering with its main funder, run a poll but partnering with the Bureau of Statistics, the Treasury, who ran this process, the Minister and the Minister's office. 

Lesson five: the final point there, which I think is fundamentally important which goes to the heart of why Inflection Points is a great new initiative, is that this was ultimately a very public process. In a way, it was like a synthetic version of a Productivity Commission inquiry. This was research being put out into the public domain, data being put out into the public domain, Treasury running with it and having an issues paper. All of the steps are kind of observable and honest and multiple voices are coming in, including opponents of the reform being able to make their case. To finish off, you know, this was a kind of an interesting demonstration of all of those things. I think, hopefully, a fitting case study or prototype to put in there for the initial issue of Inflection Points, and perhaps I'll come to some of my broader observations in the Q&A panel session. So thank you.

The audience at the Moving the Needle event.

Credit:

Savannah van der Niet for Inflection Points

What I'm going to talk about today is some of the experiences we had of trying to reform skilled migration policy in Australia. And skilled migration, I think, was one of those issues that sort of flew under the radar a bit despite being in plain sight. So I think we all think of migration, as this big system, lots of people coming in, with all the national conversations about the numbers. And what was really missing from that conversation was a story around who was coming, and particularly, who was staying, and the fact that when we're choosing—because we are—who comes to our country and who gets granted a permanent visa, that different people were succeeding in different ways and having different impacts on the Australian community. 

And so what I'm going to start with is how we pick our battles at Grattan because we're a little bit different from e61, which probably tends to focus a little bit more on the data, although I think the stuff on non-competes is a clear exception to that.

We think about, well, OK, what are we going to do? We're going to pick something that's big. It has to be big enough for us to decide this is the thing we should do compared to all the other things we might like to do. So, Grattan has six programs, each has three staff. I could imagine a world where there are five Grattans, or Grattan equivalents, and you would still not run out of problems to try to solve. And I think what's really exciting about the Australian public policy or think tank landscape is we now have more competitors and competition is good, even if sometimes uncomfortable.

So what's big? Then we also think about whether someone else has already done this? Is it already on track to being solved? And in which case do we really need to bother if they're going to do it anyway? Now Grattan is an institute that tries to focus on things where the data and evidence will help you define the problem and lead you towards the solution. We try to stay away from value-based propositions, which you know there are always values in public policy, but we try to stay away from things where the answer hinges upon your values, because then I'm no longer just a researcher, I'm just some guy with a view about how the world should work. 

And then finally, we focus on things which ideally the policy window is open. And when we think of migration, migration's really big and in a way that I think people don't quite appreciate. 

Today one in four people who are in their 20s and 30s are a current migrant or a very recent migrant. They're either here on a temporary visa or recently, they were here on a permanent visa and are still here today. And so the big thing is that permanent migrants stay. Who we grant a permanent visa to affects the shape of our workforce for 40 years. And I think that's actually the most important insight that we found about how you should think about your migration program: it's actually a way of selecting the skills that you have for the long term, the shape of the economy that you have, rather than say trying to tackle short-term skills shortages, which is where there's a sort of common media debate. 

The other part of it is that in migration, who you choose for those limited number of skilled visas that you offer each year. We're very explicit and don't say what the optimal migration intake is. We don't say how big it should be. Because trying to weigh the costs and benefits of that approach is something that—at least we believe—has been beyond our own capability up until now. 

So instead we're focusing on: for how many visas we offer each year, how could the federal government make sure it's selecting those people, all of whom have the same broad legitimate right to be here, to make sure that we get those that are most likely to succeed in Australia. And by definition then offer benefits to Australians long-term. And what we see is that when you think about how migrants affect the Australian community, the literature is very clear that they don't really affect people's wages. A migrant is not stealing your job, and they're not really giving you a pay cut. What we tend to find is that the big benefits are twofold. 

Migrants are skilled, and they tend to, on average, and they tend to pay far more in taxes than they draw in services over their lifetime. And as a result, there's this enormous fiscal dividend that we benefit from. The chart above shows you that for some classes of skilled visas, the benefit is up to $560,000 per visa holder. That's like someone showing up in Australia and handing over a cheque on the day they arrive for more than $500k to the federal and state governments. 

It is an incredibly good deal, for which, we are lucky we have people who want to come here. If you sum up those 130,000 or so skilled visas we tend to offer each year, they're offering a $34 billion dividend. So each year this group of people are collectively handing over the equivalent of $34 billion to us, then the next year there's another 130,000 and they hand over the equivalent of $34 billion—it's just that we get it over their lifetimes, not all at once. 

And so the other thing you’ll notice here is that there are some parts of the program where we do really well, and people earn high incomes. And then there are other parts where we don't do so well. I think that was the insight from our work, is that not all parts of the visa program are the same. Not all migrants are the same. They come in all different shapes and sizes.

In fact, there were parts of our migration program that were working terribly. While on average migrants were doing really well and were granted permanent visas, there were particular classes of programs that we were offering visas to where people were often really old. They didn't participate much in the Australian workforce. They didn't earn very much. They had poor English language skills. And this is in a world where we are choosing between people, all of whom could make a legitimate claim to say: "I'd like to come". So we have to choose. That's the nature of having a limited number of visas each year.

When you think of that program (the BIIP), you think of people with five million dollars coming as a significant investor. That's what's in the press. But in fact, most of them were coming through what's called the innovation stream, which is the one in the bottom left, where you basically just had to buy a business that had an annual turnover of $750,000. It was like showing up in Silicon Valley, and instead of talking to a bunch of venture capitalists, we offered visas to people who are offering opening fish and chip shops and burrito stores on the streets of San Fran.

And as a result, those visa holders didn't earn very much money. They didn't do as well as the typical skilled visa holder. Half of all those business investment visa holders earned less than $25,000. And the foregone benefit to Australia, just in terms of that budgetary impact over a 30-year period, we estimated it was $120 billion. So that's bigger than if we halved the capital gains tax discount. And that benefit is basically just coming from picking the best people who want to come to Australia, and making sure that they can succeed.

But the other part of the story I want to talk about is the fact that most of those people who get permanent visas, are already here on temporary visas. About two-thirds of skilled visas go to people already here, and about half of those are coming through the family stream, so coming through as partners of Australians. And so when we're thinking about our skilled migration program, both our permanent program and our temporary one, we want a world where we're actually choosing people who raise the bar for who we select for permanent visas and also increase the pool of those skilled people who are then going to become permanent visa holders. That's the deal. That's the benefit we get. 

And I haven't talked about the fact that in addition to that budgetary long-term fiscal dividend, you know, this is one of the best ways we can raise productivity, bringing people with innovation and ideas and knowledge from abroad and picking those who are the most skilled are most likely to be able to do that. 

Our work was really redefining what skilled migration is about. It was saying that for permanent visas you should try to give those to the people who have lots of human capital, who are the best people in the world that we can attract to come to Australia, because their payoff is going to be measured over the course of 40 years, because they're here for the rest of their lives in the workforce. 

We shouldn't worry so much about the fact that they may or may not feel a skill shortage in year one or two, because frankly who cares compared to that long-term benefit. So to shift away from that long-term benefit has enormous costs, because by selecting the best possible people we get this huge payoff over 40 years. For those where we pick someone who doesn't do as well, that's an opportunity cost that we're wearing for 40 years as well. 

The second part is that the temporary program should really be less about skill gaps, and arguably more about trying to get a high-quality pool of permanent visa holders who are going to do well in the long term.

And then finally, there's this question of sort of sovereign capability about whether you select people who are going to, you know, for example, work on the AUKUS program. What we found was that you want to design a program that actually attracts people to come to Australia. 

Brendan Coates at the Moving the Needle event.

Credit:

Savannah van der Niet for Inflection Points

Now, the benefit here when we did our work, which was really about recommending changes to reorient the program to those that do best. So: more points tested visa holders, more people who are coming via employer sponsorship and scrapping the business investment program. 

After you put the evidence on the table and then you need someone to take notice. And one of the best ways to take notice is if you can get a review up. I, if you can actually get someone else to look at the evidence afresh, because what it does is it elevates that in the public debate. And that's what we were lucky enough to have, two reviews. One was by the Productivity Commission, which was actually led by Michael Brennan at the time, and the other was the review of the migration system by Martin Parkinson. And those reviews elevated that evidence and took, you know, frankly, a set of new data that we had generated. I should say as well that a lot of this data came from administrative data sources that the ABS put together that linked wages to visas to the census. So we could tell a story about understanding how well different visa holders did in a way that was impossible up until, say, five or six years ago. 

And then we were also lucky, I should say, to have a minister who was, in this instance, a systems thinker that was bold and brave and ambitious. And while I don't agree with everything that Clare O'Neil did in that portfolio, in this space she was willing to try to do some big hard things.

So, where did we land? Well, what we landed was that the government changed the way it thought about the migration programme. It said skilled migration policy is intended to select migrants for their long-term economic contribution. That is a big change from where we were. And separately, I should say that it takes sustained effort over time to shift the dial. We wrote up reports for three years on this topic. Once you've written the report, you've actually opened the conversation. Once you've done the research, it's then sustained advocacy, the kind of advocacy I see YIMBY Melbourne doing and e61 doing as well, that I'd like to see, that you need to do if you're going to shift the dial on these kinds of reforms. 

And so where we've landed?

We did a review of points-tested visas: jury's out. We're still waiting for Minister Burke to decide. 

The business investment program, I'm glad to say, has been abolished. We think that that's saving taxpayers up to $120 billion over the course of the next 30 years that they'd otherwise have to fund. 

The global talent program, which we've not talked about, has also been closed.

And then we've got a new system of employer sponsorship where you can have people be selected by employers to come work in Australia where you don't have to necessarily rely on an occupation list, it's no longer what occupation they're in, but instead for that top tier it's just about what wage they earn and we think that's a much simpler system. So we've made a fair bit of progress, but there's still more to do. 

Today I'm going to talk about how we got the phonics mandate in Australia. So if you don't know, last year in 2024, the Victorian Minister of Education, Ben Carroll, announced that we were going to have a mandate of 25 minutes of phonics instruction in schools. That was a really big deal, and this presentation is to explain a little bit of why and how we got there. 

So, the reading wars. I'm going to explain, probably, a few decades of research on how we teach kids to read in about two minutes. But basically, we had the reading wars in the 90s. And this was not just an Australian thing. This was across most of the world, but especially in the US, the UK, and Australia. And basically, there were two sides.

“Whole language” was this kind of theory about how kids learn to read. The main idea was that kids learn to read similarly to how kids learn to speak, and that's usually through listening. So this idea that we learn to talk and to speak through kind of immersion, we're going to apply that same idea to teaching kids how to read. And so if they're kind of immersed in great literature and we have them kind of looking at books and sort of practicing reading skills all day, then that'll be a really great way to learn to read. 

Phonics, on the other hand, is the idea that we actually need to teach kids explicitly the letter sound correspondences. So we actually need to systematically go through different letter sound correspondences and teach those explicitly to kids so that they can sort of practice decoding words and they can learn to read.

I think “whole language” started around the 1920s. It's been around for decades and decades, maybe 100 years. But we really didn't have a lot of evidence on which approach was best until about the 80s and 90s. And then there became sort of an avalanche of research saying that phonics is the best approach, the best way to teach kids to read, especially kids with learning difficulties, dyslexia or kids from disadvantaged families. Phonics, actually explicitly teaching the letter sound relationships, is much better than “whole language”. 

After a lot of that research came out, got a compromise solution, which was called “balanced literacy”. And this is really what was in most of our schools until really the last few years. That was the case in the US and the UK as well. And so “balanced literacy” was this compromise policy position where we said, OK, well, we know that phonics is important from the research, but there's a huge group of educators and people kind of in this education world that are really attached to “whole language”. So from a policy perspective, what we're going to do is create balance. So we're going to keep all the things about “whole language” that people really love, but we're going to add in a little bit of phonics. And essentially, what this looked like in many classrooms was that the practices of “whole language” were sort of the core of instruction still.

I've seen these in schools here up until even the last year in my daughter's own school, these ideas of we're going to teach kids how to kind of predict words, or guess words, based on looking at the pictures. Or we're going to give them predictable readers so that it's easier for them to kind of guess words so they don't have to spend so much time kind of sounding out the words. Or we're going to have kids, but even before they learn to read, just sort of independently “read” and sort of practice the kind of motions of reading and they'll pick it up over time. And then we're going to sprinkle in a little bit of incidental phonics. So we will teach a little bit of phonics here or there, but kind of when it comes up in the books that the kids are reading. And so that was “balanced literacy”, and it really was kind of everywhere up until very recently, and probably still is in a lot of places. 

In the early 2000s, some really major reviews of research came out to kind of look into what was going on. Why were there so many students in our schools who were still not able to read? So there were reports in the US, Australia, and the UK that really tried to be the definitive word on the kind of “balanced literacy” debate to say, actually, no, we've reviewed the research one more time, and phonics really is the best approach to teach reading. And also, we looked at a lot of the schools, and they're really not teaching phonics explicitly and systematically. They have some incidental phonics, but the best way to teach is that kind of systematic explicit phonics. And so these reports were sort of meant to be kind of the final word on this. 

But as you can see, these were about 20 years ago, and really not a lot changed immediately. And so here's one of the reasons why.

There are a lot of establishment institutions in education, as in any sector. In education, we had the kind of initial teacher education programs and faculties that were pro-balance literacy in “whole language”. The teachers' unions tended to be on the side of “balanced literacy” at the time. There were lots of professional development experts who had been kind of managing the ecosystem of what teachers learned that were there and supporting “balanced literacy”. And there were a lot of publishers as well that had a really good hold on sort of delivering the core teaching resources to schools, and most of those resources were “balanced literacy”.

These groups were all really influential with teachers and with schools. And so I think that there's been a narrative even with the kind of reforms recently that, you know, the problem with literacy teaching was that it was a choose your own adventure thing, that schools were able to choose what they could do. But I think what actually was happening was teachers were listening to the literacy experts who were put in front of them. It just happened that those literacy experts tended to be from this balanced literacy philosophy.

And it wasn't just teachers and schools, but it was also governments. So whenever government or departments would sort of pull together literacy experts, you know, let's go to the universities or let's go to the literacy experts that we've known for years, well, the people that they would pull together tended to be these same people who were very pro-balance literacy. And so the people that were creating resources for departments of education, creating the curriculum, writing even resources on department websites or hired by departments to train teachers, all tended to keep pushing these balanced literacy approaches. So it was really embedded in schools and in teacher knowledge as well. And teachers really didn't know any different, because they had never really been exposed to the real evidence on how students actually learn how to read. 

So this started to change probably about 15 years ago. So there are a few different events—and I can't go through all of them today—that start to accelerate change. For instance, there was always a little bit of a movement kind of growing in Australia since those big reports had come out. But one of the things that started to happen was we started to look at other countries. So England was starting to have some success after introducing a phonics check, and that was actually starting to improve student outcomes.

Katie Roberts-Hull at the Moving the Needle event.

Credit:

Savannah van der Niet for Inflection Points

In Australia there started to be kind of more momentum from think tanks, for example, from Centre for Independent Studies, which started the Five from Five project, which was all about the five key components of literacy teaching from five years old. And that was one of the first kind of websites where the research was interpreted for teachers and for parents, so that they had access to the evidence on how to actually teach students to read. 

There was also sort of this like growing world of bloggers and other types of experts. So this is one example, but the Snow Report from Pamela Snow, she was a speech pathologist and she had a really influential blog really pushing this idea that we are not teaching kids to read in the way that evidence says. And I think the speech pathologist, in particular, became this whole other expert group that could be called on by governments, partially because of her work. 

And then there was also some external events like Sold a Story. If you’re interested in this topic and you don't know much about it, Sold a Story is a podcast from the US that really tells the story of how we got to balance literacy and all of the problems that have been happening in our classrooms because of it and sort of the entrenched interests that have been promoting it as well. And so I know that when that podcast came out, at least one minister of education talked about how it changed his mind on things. So all of these things were starting to really build momentum.

We started creating groups, and I think this was a really key part of the change. Parents groups started to be formed, like this Dyslexia Victoria group, which now has, I think, about 12,000 members. And they were parents who were really mad that their kids had not been taught explicitly with the evidence about systematic phonics teaching in schools. And so they became a really powerful group, parents of dyslexia or students with additional needs, who were really advocating for change in schools. 

There was Think Forward Educators, which is the group that I'm associated with, that is now 20,000 teachers and leaders across Australia who have come together in an organised way to promote evidence-based approaches to teaching. And it started with the science of reading. 

There was another one that was Science of Reading Group, which is a Facebook group that teachers created that had over 60,000 members at one point, that was just trying to curate for teachers evidence-based approaches to teaching reading so that teachers would have something that was more evidence-based and they wouldn't have to keep relying on the traditional kind of materials that they had been given on balanced literacy for a long time. 

So these groups that were being formed started change this balance. So instead of, governments, departments, teachers and schools having to rely so much on the established institutions—the experts who were all very pro-balance literacy—we started to change to be more balanced toward the phonics side. So we had lots of teachers, experts, parents, and evidence organized and activated on the side of phonics and evidence-based instruction. And this is really what started to propel the movement forward.

Obviously took many years, even decades, to get to this point, but starting in around 2018, South Australia was one of the first states to say, we're going to do a phonics check, and we're going to start changing the way that we communicate about reading instruction to schools. And then things started to really take off. So New South Wales, WA, Tasmania, and Queensland, and like I mentioned earlier, Victoria, just in the last year, have made massive changes to the way that their policies dictate sort of reading instruction for schools and for teachers, and they've started to change a lot of the professional learning that they're delivering for teachers as well. 

But these are all very recent changes, as you can see. So it's certainly not embedded in all schools, but I think that even just in Victoria, the small change of that phonics mandate has already started to have this kind of ripple effect. So even at my daughter’s own school, they have just in the last year started finally doing a systematic explicit phonics program. All the teachers are going through new professional learning, and you can really see the change in the way that they're teaching through my own children.

So just three lessons that I wanted to take away from sort of the way that this went. 

The first lesson for policymakers is to be correct, not balanced. And this isn't true in all cases. There are a lot of policy positions that are created through compromise that are good. But I think in some cases, policy really is zero-sum. And when there's evidence strongly on one side, the kind of balanced approach, such as the balanced literacy approach, really doesn't lead to good outcomes and can be quite negative in terms of its impact, in this case, on children and student learning. 

The second lesson is that research is not enough—it has to be activated. The research part is obviously really important to have that research there in the first place, but it took decades to activate this research in schools. That activation process came a little bit from think tanks. It came a lot from sort of just bloggers and people starting to sort of share ideas, and then it became really activated through the creation of new groups. 

The third lesson is to create new groups. You can't really convince people who've been having one point of view for so long to start changing their minds. But you can create new groups, and you can start to try to create new institutions that can be involved in the vocal part of advocacy as well. And so when you know departments and ministers are going to people going to experts and saying: “who can I pull around the table to think about this idea?” You want your group and your experts to be part of that conversation, and that's a lot easier than trying to sort of change the minds of existing groups sometimes. It's really helpful to have many different types of groups that have different stakeholders, but that all share similar goals. So, you know, when the media is trying to pick up stories, having a parent group and a teacher group is really helpful. Or having researchers and academics in the speech pathology side of initial teacher education is really helpful as well. Creating those new groups and those new experts was a really important part of this. 

Katie Roberts-Hull at the Moving the Needle event.

Credit:

Savannah van der Niet for Inflection Points

And so those are the three messages that I thought we could take away. The phonics change is very new. It's still happening. There's a lot more that has to happen, and it's only one of many different changes that need to happen in schools. But I think that this kind of approach could hopefully be used for more change in the future. 

Myrim Robin: You've all been different types of public servants, I think. Does the fact that you all work at think tanks that have found such gaps or such ability to add to the public debate, I mean, does that mean that the very expensive public service bureaucracy we all pay for isn't doing its job? Why can you guys be so helpful, I guess?

Brendan Coates: Look, I'll start so that Michael, who is the most senior public servant amongst us, doesn't have to take that one first up. No, I think one is that the public service is administering government as well as designing policy. And administering government is 90% of the job: making sure pension checks get paid, making sure the visa system works, and making sure schools run and open every day is actually most of the job. And there's not much time to do the policy thinking piece. So what we do is we're filling that gap.

Brendan Coates on the Moving the Needle panel.

Credit:

Savannah van der Niet for Inflection Points

Now one could argue that more of that could be done inside government. It's become harder over time to probably publish the kind of sort of rigorous research that might be a bit awkward. Particularly at the federal government level, very few public servants speak publicly, very little of that work is done. There's not many of the sort of research institutes that used to exist. Public servants used to publish more of that. It's probably shifted more to think tanks because we're less encumbered. 

But you know, I'd say e61 and Grattan are the two think tanks in Australia that spend more time, at least in the field that we work in, speaking with government and public services. It's actually a key channel of influence because  we're non-partisan. Whereas other think tanks that might be on the left or the right probably work more through elected representatives and the political parties.

Michael Brennan: Yeah, I agree with that. Yeah, I worry a little about the trope that says, you know, either the public service is no good or that it was great and it's deteriorated over time and the capabilities are rated. It's a totally self-serving defence, I might add. But in my experience—admittedly I've worked in central agencies, I've worked in the Treasury, I've worked in the Productivity Commission—there's seriously smart people in those areas, And, you but I think there's a lot to what Brendan says. There's a lot that goes on, maybe, you know, that level of capability and intelligence is kind of overtaxed in administrative or busy work or day-to-day stuff, not enough stepping back, looking at the big picture.

I think when people within the APS are liberated to step back and look at the bigger picture, I think they do it really well. But I think there is a role for the think tanks. And I think, as Brendan says, that the ability to put thoughts out there in the in a contested public space, I think that is fundamentally very important.

Katie Roberts-Hull: I've never been a public servant and I've never worked at a think tank, but I do think, you know, working with different departments, I think that they, there's a lot of people in departments who are smart and have great ideas. But they sometimes do need that kind of political support from the outside to move things forward. And so, you know, even with phonics, there were a lot of people who knew that they were doing the wrong thing, but they couldn't kind of get it up and past, you know, different sorts of levels and external groups and past the minister and so the more that they can have kind of external people also pushing towards kind of evidence-based approaches, I think that also helps them do their jobs.

Michael Brennan, Brendan Coates, Katie Roberts-Hull, and Myriam Robin on the Moving the Needle panel.

Credit:

Savannah van der Niet for Inflection Points

Myrim Robin: With this productivity roundtable that's coming up, we sort of had Ken Henry, the former Treasury Secretary, come out and almost relive the greatest hits from his review a long time ago. The fact is not a lot of them got implemented at the time and I think there's a lot of really great policy work done like that where things get proposed or they get studied, but they don't actually end up getting in. I'm sure that's the last thing you guys want for you to put a lot of work into something and just have it go nowhere. Do you have any tips for how to make your reform work actually go somewhere?

Katie Roberts-Hull: Well, I just did the Independent Review into Administrative and Compliance Activities in Government Schools for Victoria. And so that's all about making recommendations to reduce the administration and compliance workload for teachers. And I think a big part, hopefully, what will help make that review successful is we really wanted to get into the groups during the review. So to make sure that, you know, after the reviews finish, like your work is done, and so you don't have that much influence. So making that the groups that would have influence, you know, the unions and the professional associations and anybody else were really involved in the review and felt like they had ownership of a lot of the recommendations, so that they could be sort of primed to kind of advocate for those after the review was finished. So hopefully that'll help make a difference. But yeah, I think that like knowing who the groups are, making sure they're involved, but also sort of priming them with like what they will be most useful for actually getting it done, I think is helpful.

Brendan Coates: I'd say to add to that, we're all making bets about what policy windows are open at any one time. So you pick an area and you go, okay, I think this is a goer. Our migration work for the first few years was under the Morrison government. We didn't get very far at all. But once the work's done, it's in the bottom drawer somewhere. That's why the ongoing advocacy is really powerful. Something Katie mentioned is sort of creating the groups that then sort of sustain advocacy over time. We’re funded to do that ourselves, but it took from woe to go, you know, as a general idea, from the moment we started Body of Work, we don't expect there to be big policy changes for probably four to five years. And if it's faster than that, then it's normally serendipity.

And so, you know, the lessons for us are, your best chances when a review gets up. Now, if the submission process for the review is like two weeks, you can pretty much guarantee they already know the answer. But if it's a serious review, it's your best shot, often. Now, the Henry review is a tricky one because that was very blue sky. And there are probably things that Henry proposed like the mining tax was very elegant. If you just proposed an increase in royalties, it probably would have happened, and we'd probably have collected an extra $50 billion or more by now. So there is a trade-off between practicality and theoretical elegance.

Michael Brennan: Obviously, I ran the Productivity Commission, so the idea of recommendations that don't go anywhere is just totally foreign to me. So a couple of observations, I think.

The Productivity Commission is an august and proud institution, but in many ways has a bit of its own mythology. And when I first went there, I felt that there was an overemphasis on the idea that a strong recommendation with good evidence was enough. And it was actually almost a little unseemly to be talking to government much after issuing a report. And I always felt, it's not really advocacy, but it's just kind of sitting down with officials and talking them through why did we come to the view that we did, what were some of the other alternatives. In some cases, there's even a bit of nuance around what stakeholders are saying, there’s actually a lot of intel you pick up over the course of a year-long inquiry that's actually very useful kind of knowledge, intangibles, you know? And I think that's the sort of evolution that the Productivity Commission's been on. I think that'll be all the more true under Danielle Wood. And I think it's a good thing. 

Michael Brennan on the Moving the Needle panel.

Credit:

Savannah van der Niet for Inflection Points

The only other thing that I used to reflect on a bit is that I think we can get a bit caught up on the specific recommendation. Did this get up? Did this not? I liked what Brendan said about changing the way policymakers think, because I think because that's intangible, it's often hard to measure, but that's the currency of policy influence in a lot of ways. The thing about Grattan's work on immigration was it wasn't necessarily “just abolish this visa” or “change this threshold”.

But the idea that we would, above certain thresholds, just dispense with occupation lists, I think, was fundamental. It was this idea that we're just thinking about this the wrong way. We're trying to plug perceived gaps using a very bureaucratic process, which is going to be imperfect. And it's an absolute magnet to rent seekers. And we do better just to have a threshold and say, above that threshold, we don't really need the lists. Then you're playing to that comparative advantage. 

Going to your first question, Miriam, about, the people in the departments who do this sort of policy implementation, let's respect their area of skill. We'll give them basic idea. They can go away and work out how you go about doing this. Don't get too caught up on whether your model is the right model. Just focus on, have you imparted that new thinking?

Myrim Robin: Katie, you touched on this a lot in terms of like the entrenched groups that can be opposed to any particular policy reform. Do you look when you're proposing a policy reform for areas where there aren't entrenched groups or do you have to take them on? And if you do take them on, do you have any tips? I mean, you've already given us a few, but do you guys have other tips or do you have further thoughts?

Brendan Coates: I'll jump in there really quick, which is it's easiest when there is where the opposition is not a particularly sympathetic or powerful group. you know, employment lawyers on when it comes to non-competes is a good idea. Example, migration, like what struck us is that there just wasn't actually that much opposition to a lot of the reforms because it's just was something, we uncovered a problem that I don't think people would have realised that it existed.

So I think the idea that we uncover problems is actually, yeah, it's the problem definition that's more important than the specific solution, because we're often throwing rocks from the outside. And while we have expertise in policy design, and sometimes we know the systems really well, sometimes like the migration work, we learned how the migration system functions. We didn't know how to do that beforehand. And you know, Katie's example of the educators or the experts seems to be another one of those where it was a theory about how to teach reading differently that just wasn't supported by empirical evidence. 

Katie Roberts-Hull: Yeah, I do think that if the opposition doesn't have the evidence behind them, then that's a good target. And that actually happens a lot. There's a lot of groups that are just completely unrepresentative of not just evidence, but even just what people really want, who have been around for a long time. And they just haven't been disrupted. When the disruption comes, sometimes it can happen really fast because they're sitting on like broken ice.

Brendan Coates: That actually just raises one more point for me, which is when we did a review of all Grattan's recommendations on which ones have been taken on and which ones hadn't. What we found is that where there was an entrenched interest, if we had the evidence, we often won. Where we lost was where it was unpopular. So if our reform was unpopular, very few of those got up. Whereas everyone wants their kids to read better, and if a bunch of academics are saying one thing and the evidence then says something different, I think that becomes an easy story to tell.

Michael Brennan: Yeah, I must admit I'm reflecting on what you said, Katie, about be correct, not balanced. And so I'm sort of chastened by that because as you will recall, in my remarks, I said, there's no policy that's an absolute slam dunk. It's all about trade-offs. And I think those two views are reconcilable. We're talking about different sorts of issues. I think when you've got something where it is effectively a kind of scientific, almost clinical judgment about an answer, it is possible for the opponents of that reform to be “wrong”.

I think that's the difference because one of the things that I've always felt is in the policy world, where it is often trade-offs, where there is a distributional implication, even what we refer to as, quote, good policy, can be a kind of, it's a bit cute, you know? It's like, well, what we mean by good policy, or more to the point, what we mean by bad policy, isn't that it's scientifically wrong, or that it’s even if it supported by vested interests. The vested interests often aren't wrong, they're actually quite right that they stand to lose something, and that's not unimportant. But what we might mean by bad policy is that the policy would fail in its own terms, maybe the intent of the policy is going to be actually undermined altogether, or to Brendan's point, those who gain from the policy aren't quite who you think. With the implication, once you bring that into light, you wouldn't think quite the same about the policy. 

You do have to sometimes think a little differently about those ones where there's no scientific answer to an issue like non-competes. There's not really a scientific answer to migration policy. There might be a scientific answer to how to read. But in the first two, there will be an element of compromise that you can't pinpoint an objective truth, but to the point that we're here to talk about tonight, the quality of the conversation that leads to those policy outcomes is fundamentally important.

Myrim Robin: Okay, let's go one more question. If there's one thing that you could have either more or less of to make Australia better at pursuing meaningful policy reform to be a more efficient, productive, happy country, what would it be?

Katie Roberts-Hull: Well, I know I said that research isn't enough and you have to activate it, but I do want more research because I think especially in education, there's really not much quality quantitative research on what works best for teaching. I'm growing even more concerned about that because almost all of our research comes from the US and now that research may not be happening because of all the cuts.

Katie Roberts-Hull on the Moving the Needle panel.

Credit:

Savannah van der Niet for Inflection Points

So I think that in Australia in particular most of the education research tends to be, I would say lower quality, or at least not quantitative, and certainly not very many like RCTs or any kind of rigorous research that you can kind of use like this phonics research sort of evidence-based sitting on. And so that's something that I do think about a lot is how to get that happening more in Australia in a way that would make sure that we have that kind of bank of high quality research that we can use to make decisions over time.

Michael Brennan: Yeah, well, this is not a very practical reform, but to me, the biggest thing I would change if I could wave a magic wand is to either remove altogether or massively diminish the role that culture wars play in public policy debate. I think it's been the biggest challenge, the biggest kind of barrier to good policy and good policy discourse that we have more and more, in my view, imported quasi-moralistic stances into all manner of issues where a kind of pragmatic, empirical, respectful and civil debate would have yielded much better policy. 

I think climate policy is the obvious example of this, where we kind of allowed it to descend into a sort of moralism on both sides about either ambition or kind of woke elites or whatever. This is an issue that is essentially best served by a kind of pragmatic, as I say, civil evidence-based debate around trade-offs, costs, benefits, et cetera. And again, to Inflection Points, I think that's injecting that. A return to this idea that we can talk about the facts. We can agree and disagree civilly. It's not all about who's a good or bad person. And we don't sort of put all of these issues into a kind of culture war bucket. I think we'd be hugely better off.

Myrim Robin: When we were talking about this, you mentioned a culture war, a different one, about generational issues. Did you want to touch on that? It might be a bit less popular in this room.

Michael Brennan: Yeah, I'd better watch it lest I not get out alive. But Brendan knows I made this comment at the end of the Allegra Spender roundtable last week. I think this is another example of where something's come into the debate a bit, particularly on tax, but on housing, where there’s a tendency to debate in terms of the battle of the generations. You know, the problem is that the baby boomers made off with the loot and Gen Z and the Millennials have been left without. And like a lot of these tropes that exist in the policy debate, there is a germ of truth to that. There is clearly a sense in which one generation did particularly well. And I'm not a boomer, so I've got no dog in this fight, but one generation did particularly well out of rising property and share values, et cetera.

Then I just have this misgiving equally that just that framing everything in those terms gives rise to a bit of zero-sum thinking. If I think, what do young people in Australia right now really need? What they need is a pro-growth agenda. That is the big issue. And if there was a failure of the baby boomers and Gen X, it wasn't so much holding onto the money or stealing too much of the pie. It was failing to pass on the recipe. The issue is, not supporting growth and indulging anti-growth policies. I would say that is the most important thing for young people today.

Brendan Coates: So I should have mentioned at the start, our work on migration was funded by the Susan McKinnon Foundation— which also funds e61—and then by the Scanlon Foundation. Obviously we hold the pen on the work, but they support the work. And that goes to the point that I think, as Katie mentioned, there's just a paucity of... I look around a whole bunch of questions. There's just an absence of evidence, and particularly empirical evidence. The number of questions we could answer with the data sets we now have vastly outstrips our capacity to do so. So I suppose I would end with, you know, you need more Grattans, so if anyone wants to double our endowment come and chat to us. 

But it's more about, if you're into philanthropy, the missing piece, the hard thing to get money to fund work is policy-based advocacy, even though I think the return on investment from that, whether it's Grattan, it's YIMBY Melbourne, which I'm associated with as well, is just enormous. But it makes, probably, donors feel a little bit uncomfortable, because you're getting into the fray in a way that you're not if you're funding education for disadvantaged kids.

Ethan Gilbert, Brendan Coates, Katie Roberts-Hull, Myriam Robin, Jonathan O’Brien, Michael Brennan, and Manning Clifford in front of the Wheeler Centre full house.

Credit:

Savannah van der Niet for Inflection Points

Thank you for all those who came to our launch event. We'll be following up our first issue in a few weeks with some new and engaging essays on productivity, innovation and the care economy in Australia. Subscribe to our newsletter to stay across the latest from the Inflection Points team.