Security: wrapped in a 'cost-free' blanket
"Security" is the new catch-all excuse for massive, over-the-top spending without having to prove value for money, or pass a cost-benefit analysis, says economics guru Saul Eslake. From manufacturing through food to electricity and water, "security" has become the password for avoiding rigorous, independent, arms length scrutiny.
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Security: wrapped in a ‘cost-free’ blanket
By Saul Eslake*
These days, the surest way to gain acceptance for policy proposals that former Treasury secretary Ken Henry might have called "frankly, bad" is to wrap them in a ''security'' blanket.
If you want a government to do something that entitles you to some form of protection from competition (especially overseas competition), some kind of subsidy or tax break, or some other privilege not enjoyed by ordinary folk, but you know that your proposal wouldn't pass any kind of rigorous, independent, arms-length scrutiny – such as might be undertaken, for example, by the Productivity Commission – then your best chance of getting what you want is to succeed in portraying it as being somehow essential in order to enhance some form of ''security''.
''National'' or ''homeland'' security is the best label for achieving this purpose, since, after the terrorist attacks of September 2001, money has been literally no object when it comes to spending on anything that its proponents claim will ''reduce the risk of terrorism'' or in some other way enhance ''homeland security'' (to use an American phrase that has been imported effortlessly into Australian parlance in this context, even though Australians have never previously referred to this country as the ''homeland'').
In their recently published book Terror, Security and Money, University of Newcastle professor of civil engineering Mark Stewart and his co-author John Mueller from Ohio State University calculate that the United States has spent more than $US1 trillion ($A965 billion) on domestic homeland security over the past decade, over and above what it was spending before 2001, and excluding the costs of the wars in Iraq and Afghanistan, in response to something that has cost fewer lives than the number of people who drown in American bathtubs each year.
Yet, as they also show, these expenditures have never been subject to any kind of probability assessment (what is the probability that the event we are spending hundreds of billions of dollars to counter will actually happen?) or cost-benefit analysis (what has been the gain, in terms of lives saved and other harm prevented, relative to the expenditure incurred?)
Mueller and Stewart's cost-benefit analyses show that hardening cockpit doors in planes (so that they can't be penetrated by terrorists as occurred in the September 11, 2001 attacks) has been a cost-effective security measure. On the other hand, they demonstrate that the US Air Marshal Service, and its Australian equivalent, the Air Security Officer Program (under which armed officers travel incognito on selected flights) "fail a cost-benefit analysis, usually quite miserably".
Mueller and Stewart also undertake a cost-benefit analysis of the ''porno-scanners'' that have been used in American airports since 2010 and which are to be used in Australia from some time in 2012 onwards. Using assumptions that are biased towards finding these devices to be cost-effective, and high estimates of the cost of a ''successful'' terrorist attack on a plane, they conclude that the "scanners fail a cost-benefit analysis quite comprehensively".
Transport Minister Anthony Albanese has said he "makes no apologies" for mandating the installation of porno-scanners at Australian airports. Perhaps he should, and not only to the travelling public, whose time is wasted and whose privacy and dignity are to be pointlessly infringed by these machines, but also to taxpayers for such a pointless waste of their money.
Mueller and Stewart suggest that Australia hasn't wasted as much money on security measures as the US. However, their analysis considers only the costs borne by governments. In Australia, much of the spending on security measures at airports has been undertaken, at government direction, by airlines and airport operators, and the total amount is much harder to ascertain.
What is clear is that very few (if any) questions have been asked about the ''value for money'' Australians have obtained for the vast increases in expenditure on security over the past decade. For example, the cost of running the Australian Security Intelligence Organisation (ASIO) has risen by more than 400% in the past decade (compared with an increase in total Commonwealth government spending of 95%) – and will increase by a further 24% over the four years of the current forward estimates period (as against a 17% projected increase in total Commonwealth spending). ASIO's staffing has increased threefold in the past decade. More than $600 million is being spent on the agency's vast new headquarters in Canberra. My understanding is that none of this has ever been subject to the sort of scrutiny that would be applied to similar proposals.
But the lessons for those wanting government favours in other areas have clearly been widely noted. It's become fashionable to stake claims for subsidies, tax breaks, or protection from competition in terms of security – hence:
- Tony Abbott now tries to justify increased protection for Australian manufacturing in terms of ''national security'';
- Bob Katter and Barnaby Joyce want increased barriers to imports of agricultural products in order to enhance ''food security'';
- various primary producers argue against the removal of bans on imports of competing products on the grounds of ''bio-security'';
- government-owned electricity network operators defend vastly increased spending on their assets (and the large increase in electricity prices that result from it) as being required for ''energy security'';
- state governments have spent billions of dollars on desalination plants to improve ''water security''; and so on.
In each case the underlying – and in some cases explicit – purpose of appending a ''security'' label to the favours being sought is to decry any suggestion that they should be subject to such base considerations as ''cost'' and ''benefit'', or ''value for money''.
There are, of course, occasions and circumstances where our security, in the traditional sense of that word, is imperilled and where a commensurate response by government is warranted. The terrorist attacks of September 11, 2001, and subsequently in Bali and elsewhere, were such occasions. But even occasions such as those do not justify the expenditure of vast sums of public money (or substantial erosions of civil liberties) without due consideration and careful evaluation. And the same principle should hold even more strongly for attempts to wrap old-fashioned ''rent-seeking'' in a ''security'' blanket in the hope of evading proper and diligent scrutiny.
* Saul Eslake is a program director with the Grattan Institute, but the views expressed here are his own. This article appeared first in The Age newspaper, where other articles by him can be accessed. Saul was the Chief Economist of ANZ from 1995 to 2009, and is currently a member of the Federal Government's National Housing Supply Council, Chair of the Tasmanian Arts Advisory Board, and a non-executive director of Hydro Tasmania.