Book Review: Two Futures

In August last year, Clare O’Neil and Tim Watts published Two Futures, an ambitious book that attempts to identify the key policy reforms Australia will need over the next twenty-five years.

It’s a book that will probably be most fun to read in 2040, when some parts prove very prescient and others very wrong. But that’s the nature of any attempt to write about the future, and O’Neil and Watts deserve a lot of credit for being prepared to systematically set out their ideas and the long-term assumptions that underpin them.

Surprisingly, the book received no in-depth reviews from the Canberra press gallery. The idea of the book — that two young politicians had written about the future — was well covered, but less so the ideas in it. In part, that may have been timing: it was released just before the Turnbull leadership coup. But now that the excitement over Turnbull’s elevation has subsided (and with few new ideas to show for it), Two Futures is worth revisiting.


The book’s most striking theme is Australia’s integration with Asia. O’Neil and Watts both live in electorates with lots of Asian migrants. A cynic might feel they are positioning for local votes, but the book gives the very genuine impression that the chain of cause-and-effect went the other way: that their constituents have been an inspiration for their policy thinking.

It is sometimes said that one of the great institutional contributions of the Australian Labor Party is to take ambitious, white, middle-class twenty-somethings and thrust them repeatedly into corners of the country that they wouldn’t otherwise have frequented. In O’Neil and Watts’ case, they have drawn significant conclusions from their own meandering migrations. As former globe-trotting, corporate types, they have looked around the heavily multicultural suburbs in which they are now raising their families and seen direct connections with the two billion people to Australia’s north, and enormous potential therein.

More than most policy-makers, they are aware that migration today is not the same as migration twenty years ago: that the likes of Skype, WeChat, AirAsia, eBay and Google Translate have made cross-cultural commerce much easier, and drawn distant social links closer together. Furthermore, they are conscious that what really matters is not what those changes look like now but what they may look like in a further ten or twenty years.

They critique our insular attitudes, our weak business links, and our failure to engage with the Asian cultures around us. They criticise the Department of Foreign Affairs and Trade (DFAT): “Currently, fewer than one in ten of its staff members are proficient in an Asian language”. They believe that Australia’s proximity to Asia is over-rated (“Beijing is closer to Berlin than it is to Brisbane”) but our migrant communities are under-rated as a source of advantage. They argue for denser flight schedules, bigger university scholarship programmes (both to and from Asia), better foreign aid projects, and more diversified exports. And they make the case through names: Massimo Luongo, Jang Han-Byul, Tan Le, Natalie Tran. At times, reading the book feels like listening to Sydney Airport calls for Xiamen and Fuzhou and Chongqing, or what it must have felt like hearing orders for ‘cappuccinos’ and ‘espressos’ in 1985.

In the final chapter, however, there is an interesting sentence. It says “We proposed earlier in this book a significant increase, over time, in the number of highly skilled Asian migrants coming to Australia”. It is interesting not because it restates their position, but because there isn’t a point earlier where they said explicitly that. There is a sense that they might have deleted or edited down material on the issue.

Skilled migration is a difficult issue for Australian progressives. The idea of competing with other wealthy, multicultural countries for human capital from Asia, using ever-better data and technology, feels cold and technocratic. It is akin to selective high schools as a policy: the individual stories may be inspiring, but the policy trade-offs are not. At the moment, Bob Carr has a stance on the issue, George Megalogenis has a stance, and O’Neil and Watts have one, as far any sitting parliamentarians do. But it’s interesting to read about in part because it’s not prominent on the collective agenda.

Permanent migration additions by area of origin, 1997–2014 financial years (Source: DIBP)


The book’s second key theme is inequality. This is prominent on the collective agenda, though the authors’ take on it is more multifaceted than most, and strongly connected to their first theme. O’Neil and Watts write up the familiar story of globalisation and digital technology, exemplified by the fact that Woolworths and Whatsapp have the same valuation (of about $25 billion) despite a very large difference in payrolls: Woolworths employs 200,000 people while Whatsapp employs about sixty. Digital innovation is good at creating value, and good at creating billionaires, but not good at creating capital — its big successes don’t re-invest their profits into new networks of stores or warehouses — and not good at creating jobs.

When it does create them, they are fairly narrowly circumscribed. O’Neil and Watts join the likes of Jeanette Wing and Tyler Cowen in worrying about the widening gap between those whose educations are leading them towards the equivalent of writing software for AirBnB or Amazon and those who may be heading towards the equivalent of cleaning apartments or delivering goods for them. The darker side of digital innovation is its unprecedented ability to separate those two groups out, economically and geographically.

The book ticks through the effects on inequality of urban planning, housing policy, and the taxation of capital. But its strongest point comes back to the influence of early childhood education, especially for the ex-manufacturing, ex-Housing Commission, non-English speaking households that make up a sizeable percentage of the authors’ electorates. For all the debate about government schools versus private schools, it seems that the biggest problem with Australia’s school funding, from an inequality perspective, is that the early childhood years get the lowest allocation of resources while Years 11 and 12 get the most. In effect, our largest tranche of funding arrives only after those who most need it are too far behind to benefit — or not there at all. As the book notes: “Only four in ten low-income Tasmanian students finish high school… In very remote parts of the Northern Territory, just two in ten do”.


The final key theme of Two Futures is democratic reform. Again, the authors link it with their earlier themes, framing it as a question of how Australia can act more fully on those big, quiet agendas — like the rise of Asia or the allocation of education funding — that don’t move around enough on a day-to-day basis to generate their own headlines or storms of activity on Twitter.

In the vein of Acemoglu and Robinson, they argue that Australia’s democratic institutions are crucial: they need to be responsive to public opinion, but at the same time they need to give elected representatives the time, space, resources and power to pursue complex reforms.

The Australian parliamentary system seemed to achieve that for significant parts of the 20th century, but to falter almost by clockwork in 1999, when it implemented its last major reform in the Goods and Services Tax. Since then, search engines, smart-phones and social media platforms have made politics faster and more intense every year. They have revolutionised the raising of awareness, the dispersion of news, and the formation of online communities of interest. They have increased the supply of political discourse, in the form of posts, petitions, articles, emails and other forms of political expression, to perhaps triple or quadruple its 1999-era volumes.

But for the most part, this has been a broadening, not a deepening, of people’s engagement. There has been no accompanying revolution in how to channel those community opinions into the compromising, decision-making processes that sit at the heart of Australian politics and produce its outcomes. Those processes — the Senate hearings and budget allocations and discreet contacts between powerful people — still operate much as they did in 1999. There have been a few notable successes of online campaigning, but as a rule, the impact of social media has been much smaller than its growth. The biggest beneficiaries of all those passionate posts about politics have been the social media companies themselves, who assess them instantaneously for their ability to grab and hold attention and recycle them into a million whirling Buzzfeeds of like-minded self-expression.

This micro-segmented tabloidism has suited what O’Neil and Watts call the “anti-politics nature” of the Greens Party and the post-One Nation populist right. But it has proven tough on the major parties and their leaders. And it has proven tough on the conscientious parliamentarians of every party who try to keep up with all the emails, posts and tweets sent in their direction. That O’Neil and Watts found time to write Two Futures is amazing. That the press gallery did not find time to review it in detail is understandable. Journalists have also been left with little time to think.

Beyond the theory, there is also a strongly personal undertone to the democratic sections of Two Futures. They give the impression that two bright, young professionals, accustomed to tech-savvy, corporate environments and ready to launch change management efforts across migration and education, arrived in Canberra in November 2013 only to find themselves in a very different workplace, and possibly a different century.

A key target of their frustration is Question Time, which admittedly is a crazy thing to force our representatives through at 2pm on every parliamentary sitting day. O’Neil and Watts propose rotating Question Time topics in the same fashion as the Westminster parliament: devoting one day to health, another to taxation, and so on. They want to cut down the number of MPs and Ministers who attend it, and move some of the broadcasts to prime-time. In essence, they want to make Question Time more like Q&A. That’s an easy idea to mock if you don’t like Q&A as a television show (and many people in politics don’t) but there is no doubt which format has the stronger ratings and the higher quality debates.

For understandable reasons, they tiptoe around the big electoral issues: group-voting tickets, Senate reform, fixed federal terms and voter registration. They strike out briefly into the wild and woolly territory of Labor Party reform, advocating for ‘Online Policy Action Caucuses’, a modified version of Stephen Donnelly’s ‘Policy Action Caucuses’ that passed Labor’s 2011 National Conference but died away soon thereafter.


Beyond its key themes, there are a lot of other sparkling fragments scattered throughout the book.

O’Neil and Watts write at length about technology and the public sector. They believe digital community managers are a real and important job, and that governments haven’t been quick enough to realise this. DFAT again comes in for criticism: “DFAT’s dedicated resourcing for social media comprises just 1.8 full-time equivalent staff”. In the same section, they write: “Australia is quick to arrange a photo with native animals for visiting celebrities, and there is now a six-hundred-page ‘koala diplomacy’ manual in DFAT, but too often that’s where the cultural exploration stops” (emphasis added).

Late in the book, there is a great digression about how nobody knows anything about defence policy, except defence people. Few Melburnians would have noticed the two LHD warships being built in Williamstown, even though they constitute the second-most expensive infrastructure project ever undertaken in Victoria. Tim Watts’ subtle promotion of naval defence throughout the book (the shipyards are in his electorate) makes you remember how crude that Peter Russo thing was in House of Cards.

At the very end, there is a subtle, concluding point about how the Australian commentariat tends to crave excitement in our reforms. Everyone wants government reforms to have a big, flick-the-switch, Hollywood moment, like floating the dollar did, or marriage equality presumably will.

But looking forward, it seems likely that the biggest and most crucial reforms, in areas like migration and education, won’t have that. Their effects will take years, if not decades, to play out. Two Futures argues that we have to be passionate and bold about them anyway, even if it’s a long, slow, glacial grind and there never is a victory party or ‘Mission Accomplished’ finish to celebrate. This seems mature, and perhaps even a perspective through which the broader Australian Labor Party can reassert itself against its trending digital competitors. At the NSW Labor conference last month, there were positive signs of movement in that direction, from Bill Shorten and others. Higher land taxes and cutting negative gearing (which Two Futures also proposed) are not reforms that are well-suited to the social media era: they don’t tug at the heartstrings or purse-strings through tested ‘personal story’ emails or ‘We did it!’ Instagrams. Yet they are critical to the long-term distribution of wealth and power, and they are being debated.

For those who watch these things, the very last line of Two Futures is a thank-you to Labor’s ‘Class of 2013’. It is an interesting class to watch.

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