Australian Travel Notes from a Policy Wonk

Here are some notes on Australia, mostly from and for policy wonks.

Australia has a private pension system. In the 1990s a Labor government, with the support of the trade unions, created a system of private pension accounts to supplement the basic, means-tested state pensions that Australia has had since 1909. Employers are required to pay 9% of an employee’s wages (scheduled to increase to 12%) into the private accounts. The funds can be withdrawn at retirement (age 60 for new workers), at age 65, or in exceptional cases with disability. Workers can invest their funds with very few restrictions–workers, for example, can choose among a variety of mutual funds (such as Vanguard etc.) or invest with non-profit funds run by trade union associations or they can even self-manage. The accounts, now totaling more than 1.4 trillion, have increased savings and made Australia a shareholder society. Some issues remain including fees which are probably too high (better default rules could help) and a lack of annuitization (annuitization of some portion of the lump sum payment should be required to avoid moral hazard)–see here for one critique–but overall the system appears very favorable relative to the American system.

Australia farmers pay for water at market prices. Water rights are traded and government water suppliers have either been privatized or put on a more stand-alone basis so that subsidies are minimized or at least made transparent.

Australia has one of the largest private school sectors in the developed world with some 40% of students in privately-run schools.

Australia has a balanced-budget principle (balanced over the business cycle) which has been effective although perhaps more important has been a widely held aversion to deficits combined with an understanding of sustainability and intergenerational fairness (factors which also played a role in the decision to create private, pre-funded pensions).

Prostitution is legal in much of Australia and some of Sydney’s brothels have made significant capital investments.

The Australian civil service is of very high quality. I spoke at the Department of Prime Minister and Cabinet, the Treasury and the Department of  Industry, Innovation, Science, Research and Tertiary Education (whew) and in all cases I found the civil servants to be highly informed and sophisticated. I was not the first to bring up the term rent seeking or to laugh at the latest political shenanigans which everyone acknowledged had been done for votes and not for sound reasons of public policy. All consistent with Yes, Minister but it gave me a different perspective.

More than a quarter of the Australian population is foreign born but there is very little cultural or economic tension about immigrants within Australia (with minor exceptions over refugees (“jumping the queue”) and occasional minor flare-ups over job visas). From cab drivers to MPs the word on immigration was, “Not an issue, mate.”

I had some of the best Thai food I have ever had anywhere. Spice I Am was excellent (thanks!) and Home on Sussex was outstanding.

The Manly ferry is a great way to see Sydney’s magnificent coastline.

The world owes Sydney barristas (New Zealand also) an enormous debt for the flat white, perhaps the best form of coffee yet perfected. The flat white has made its way to London but is only now becoming available in a few high end coffee shops in New York.  I eagerly await for this trend to extend to Fairfax as I am already jonesing for another.

Australia has great natural beauty. The British should have left the convicts behind and moved everyone else.

Addendum: And here is Lars Christensen on Australian monetary policy, also very good, and Reihan Salam with more on education.


Filter coffeehouse on I St. near GWU serves flat whites. They're pretty good.

It's just a properly made cappuccino with a lighter roast bean, really?

They're as close as you will get. I don't mind them, but some other Kiwis don't find them up to scratch. There is also a Dupont Filter on 20th St.

I've been told the Cappuccino at pleasant pops ( is similar to a flat white. I haven't tried it myself.

I am a bit surprised. Perhaps it is my European heritage, but I found the coffee in New Zealand to be the worst I have had since Thailand. After half a week I switched to tea and never got back to drinking coffee in New Zealand. Perhaps I had bad luck and picked the worst places to get coffee, but still it was all filtered black "coffee" that was almost so watery that you could sell it as a soda drink.
If it is not espresso, imo it is not real coffee. I understand that others think it is too strong and such, but at least for me the watery kind they serve in New Zealand was undrinkable.

Although I like mix-coffees from time to time, I am generally not one for shopping at Starbucks for coffee. I think what mostly puts me of that they do mixes but with a high amount of suger, which I think kills somewhat the taste of coffee.

Max, NZ coffee has a strongly bimodal distribution. Some of the old cranks swear by instant - it's what they grew up with under the command economy that ran through the early 80s. They'll also drink really bad filter coffee. Everywhere else has fantastic espresso coffee. Getting a bad coffee is now rare here, unless you're going into dives frequented by the kinds of old coots who prefer instant.

“Not an issue, mate.”

weird, never been there but seen online comments complaining about leb rapists and chinese swots

The average Australian does not do much website commenting, I would be careful using such sources as your baseline.

The reason there is little tension over immigrants is that it is a lot easier to migrate if you are high quality - have plenty of money, or are in demand for some well paid job.

The reason there is tension over refugees is that most of them are fleeing terror, and of course the people who have the greatest cause to flee terror are those that are themselves terrorists. Among the refugees are a lot of very wicked people

And the detained children? Terrorists in training?

So, a quick overview from Wikipedia (not that some people care much about actually reading information) -

'The inquiry found that between 1 July 1999 and 30 June 2003, 2184 children were detained after arriving in Australia seeking asylum without a visa. Approximately 14% of those children came to Australia alone (unaccompanied children). Most of them came from Iraq, Iran and Afghanistan. Almost 98 percent of the Iraqi children were recognised as refugees.'

Though this time, considering that the Wikipedia articles details this - 'Mandatory detention in Australia refers to a feature of Australian immigration policy whereby the Australian Government has legislated for the mandatory detention of all persons entering the country without a valid visa, while security and health checks are undertaken and the legitimacy of their remaining in Australia is established.' I'm quite confident that a certain block of commenters here will enjoy the experience of learning how mandatory detention works.

Well, couple points:

1: All terrorists were children at some point, though obviously not all children are terrorists.

2: Definition of child? Somehow I think that a 17-year-old Afghani or Iraqi might have more terrorist sympathies than the global average. Unaccompanied children making an arduous sea voyage, we're not talking about primarily infants.

3: In the larger picture, good border controls may make for better societal acceptance of immigrants. Mandatory detention pulls the rug from beneath the argument that immigrants are criminals here to exploit legal loopholes, rather than people seeking a better life. It puts everyone through the "process".

Shouldn't Statistical Data be an easier way to do that rug pulling?

What % of Australian immigrants commit criminal offences and how does it compare to native Australians?

Shouldn’t Statistical Data be an easier way to do that rug pulling?

Yes, so long as it's applied at the start of the pipeline instead of after it spills out the end.

Israel does this quite efficiently: Jewish ethnics, first. Otherwise, the metaphor you're seeking is shutting the stable after the horse has bolted. For example, Sweden is betting the ranch that, ex post facto, Africans and Middle Easterners will pay sufficient taxes for the support of retired Swedes. If they're wrong, they've bequeathed a dystopic nightmare to the few children they're still having. Whoops, sorry kids.

Sure it would be high-minded to invite a Muslim Egyptian named Mohammed Atta into your home so he can take flying lessons and eventually become the first foreign-born CEO of American Airlines. In retrospect, after he blows up the house while fabricating explosives in your basement, you were just stupid and naive.

No. Statistically speaking, 100% of illegal immigrants are criminals. The tale is not of legal immigrants who come and commit crimes, but those who committed a crime just by coming in. By using mandatory detention, this salves that argument with "but they were detained for coming in illegally, and we only let the truly deserving stay". It punishes "queue jumpers", while still allowing for humanitarian asylum. I think it's a good balance, especially when compared to the US' "deportation or amnesty" dualism.


Makes sense. I thought you associated immigrants (in general) with being criminal.

Most "illegal" immigrants are not breaking any laws when they enter and ask for asylum. The "illegal" is a mislabelling. 90% of them are able to stay after their application is processed (and those for who the application is refused, they technically haven't broken any laws either - they just can't stay). The only ones usually prosecuted for illegal entry are the boat crew.

Let's see, what kind of people would save up a large (relative to their family and neighbours) sum of money, then take considerable personal risk in an attempt to set up a better life for themselves? Don't they sound just a teensy bit entrepreneurial, energetic, the kind of people Republicans like - apart from being insufficiently pale of complexion?

They are. And complexion has nothing to do with it, unless you can show that those evil Republicans are fine with illegal immigration when white people do it, and only when they do it. But conservatives generally hold more to rules. And all governments control immigration to some degree. Conservatives think those rules should be enforced.

Well, it's been a few months since I was last in Oz, but I seem to recall some issues with a de facto internment camp they were building in Paupa New Guinea to host the swarms of immigrants who they didn't want to let onto Australian soil. But who am I to contradict your cab driver?

Mandatory detention is just a way for the government to ensure there is strong support or at least low opposition to the relatively high levels of immigration.

I wonder if conscientious Australians somehow find it a wee bit harder to take the high moral ground about immigrants being potential criminals given that if you went far enough back down Australian history there was statistical certainty of all disembarking immigrants being criminals.

Immigrants enter established States. The Anglo-Australians weren't immigrants, they were colonists and settlers; or, if you like, conquerors. The immigrants only show up after the first wave establishes a functioning State which grants the later-comers their status.

The whole we're-all-immigrants narrative is just a rhetorical trick to try and convince people that immigration is some sort of inherent right instead of what it really is: a license administered by the State.

I think most of the Australian convicts came from debtors prisons.

Re: "Prostitution is legal in much of Australia and some of Sydney’s brothels have made significant capital investments."

Field research?

Re: flat white, recommend Kiwi Cafe in Arlington.

+1 If I remember correctly, Cassatt's does both flat whites and good meat pies.

@Urso: Alex captured the subtlety best when he mentioned "queue jumpers"--there is fierce opposition to people using rickety old boats to make the trip from South East Asia to here, bypassing the normal immigration procedure. There is even significant opposition amongst the existing immigrant population because of their histories in immigrating through the correct channels rather than paying someone to boat you over as a short-cut.
Australians recognise their history as an immigrant nation and are generally proud of how that's worked out.
The previous governments (beginning with a Labor/left and enhancing under a Liberal/right) instituted a tough regime of turning back boats, excising the extremities of the country from the immigration zone and moving people who did make it "illegally" to detention centres; all with the aim of creating a deterrent. It ended up being a huge success with the number of arrivals via boat dropping to a trickle. The current government (Labor) made much noise about it prior to office and wound a lot of it back when they came to office. Since then, numbers have gone to record levels and there is a general feeling that our borders are now "out of control". Australians just want to see immigration happen in an orderly manner. So, for the past couple of years, they have been backtracking and reinstituting much of the previous system, including "off-shore processing" (in New Guinnea amongst other places) in order to get it back to manageable levels and keep the population calm about the issue.
Aside from all that, each successive government has increased official immigration levels, including (particularly) the previous government which is often said to have been the toughest on "illegal immigration".
So, be careful with superficial judgements of large issues like immigration, there's often much more going on.

On the topic of flat whites. I used to be an avid flat white drinker but eventually decided that the interpretation of what the term means varies too widely so unless you know the cafe, no matter how classy, it's a gamble on what you end up with. "Latte" is a much stronger standard so I normally order a "double shot latte" and it's usually consistent. You'll even find huge confusion and disagreement if you google the topic. Try "flat white vs latte" for starters.
But good luck with your flat whites Alex, I hope they end up agreeing on something consistent over there!

Perhaps I was unlucky, but the few times I tried Flat White I was unimpressed. Any suggestions for a good Flat White in Sydney, Melbourne or Brisbane?

No, but try Auckland. Most mom-and-pop cafes do a good job.

Isn't a 'flat white' the same as a macchiato? Espresso with just a little foam?

On the more subsatantive points, I like all of them: provatised pensions and schools, balanced budget, etc.

I don't know. Have you tried one (flat white)? They may be constructed in the same way, but it could be that the difference is in the beans, roasting, water quality, barrista etc.

At any rate, the coffee quality down-under beats the pants off all US cities I've been to, except Pike Place markets in Seattle.

Not really. A flat white has a lot of milk and very little froth. A macchiato could be one of many things depending on where in Australia you live. If you live in Perth then a long macchiato will be filled with milk until a bit below the top of the cup, also they will have a thicker layer of foam than a flat white (unless you order a 'traditional' long macchiato, which is just espresso with a tiny bit of milk and some foam on top.) This confused state of affairs is the responsibility of the first large chain of coffee stores in Perth, they popularised long macchiatos but decided to apply the term to a coffee that bears little resemblance to a macchiato in the traditional sense. If you are in Melbourne a long macchiato is pretty close to a traditional italian long macchiato. Nowadays Perth has attracted quite a lot of interstate and overseas migration, accordingly no barista actually knows what you want when you ask for a macchiato. So always order a macchiato, this way they will usually go in to great detail about what kind of coffee you are after, and so you get your coffee just how you like it.

Finally an MR post I know something about. When I read the comments I almost always get the impression I have nothing to add.

On the immigration front:
1. Sydney is not an accurate reflection of the country.
2. Peoples attitudes vary quite a bit across Sydney itself, go out to Western Sydney and there will probably be more polarised views.
3. Australia spends a lot on settlement services, I think this has greatly influenced immigrant integration and thereby Australians opinions about immigrants.

The school system over here is pretty complicated. Don't be fooled by terms like independent or private. Independent schools are often public schools and private schools receive quite a bit of funding by our Federal Government. Pretty much all schools are moving towards the one curriculum, be they private or public. As far as I can tell private schools serve largely to agglomerate children with parents who are well off and care enough to spend their own money on educating their children. Other than through peer effects, our private schools seem to add little in terms of educational outcomes, unless you think sport is part of education.

"Other than through peer effects, our private schools seem to add little in terms of educational outcomes"

I thought Harris' theory from "The Nurture Assumption" was that peer effects make up nearly everything that's left after you strip out heredity?

Yep, I more or less agree. So that basically means that the fees at Australian private schools are a fee for access to a peer group, this fee is then spent on rowing coaches. Is this optimal?

No. And that's "barista".

Too bad the US doesn't have an opposition party that believes in balancing the budget over the business cycle.

Don't forget about Australian monetary policy:

This was an Alex post that sounded very Tyler-like. I was fooled.

Aside from the bit about flat whites (I never got the impression of Tyler as a coffee drinker, although I don't have any idea if he is), I agree

Nice report. I agree with you about the Manly ferry.

Flat whites have been available in Boston for years, at the Flat Black Coffee Company in the Financial District. Probably best coffee in Boston.

Immigration from Latin America is almost non-existent, and immigration from Africa is a fraction compared to Europe and East Asia.

Alex glosses over the fact that of the 24% who are foreign born almost a third of those are from the UK and New Zealand. It looks like over half of immigrants are from countries that are predominantly European. That goes a long way towards explaining the lack of ethnic and cultural strife due to immigration.

Are lebs European? Beacuse I'm pretty sure greeks won't be in a year.

New Zealanders who emigrate to Australia raise the IQ of both countries.

The world owes Sydney barristas (New Zealand also) an enormous debt for the flat white, perhaps the best form of coffee yet perfected.

Next time you're in New York, go to Abraco Espresso on 7th street near 1st Avenue. Their Cortado is similar to a flat white; usually I prefer tea, but this coffee was a transcendent experience.

Take a look at the Australian health care system also. It's really effective and popular.

Australia also is #1 in personal violence amongst OECD countries. There there is this:

Updated: Thu, 31 Jan 2013 06:12:44 GMT | By Agence France-Presse

Australian sprinter banned over racism row

An Australian sprinter who claimed ahead of the London Olympics he was racially abused by officials and accused the athletics federation of vilification, has been banned from competition for six months.

Athletics Australia slapped him with a six-month competition ban on Thursday over the remarks, which it said had been debunked after an "exhaustive independent investigation".

The ban, which covers both domestic and international competition and is effective until August 1, was punishment for "making statements and engaging in conduct likely to bring the sport of athletics into disrepute", it added.

Steffensen, a silver medallist at the 2004 Athens Olympics and two-time Commonwealth Games gold medallist, has had several run-ins with athletics chiefs and served a three-month ban in 2010 for abusing national officials.

A 2007 study by Australia's Human Rights Commission found that racial abuse and vilification were common across the nation's sporting codes from amateur through to professional level, leaving ethnic minorities under-represented.

The brothels in Australia also generally offer rimjobs, which tends to be rare elsewhere.

That's all well and good, but I guarantee you won't find a single ho in the entire country who isn't completely hairless.

Must be the climate.......

Depends. If they offer r-jobs and let you rim, they will most likely have had their anus hair removed. But if they just offer r-jobs, they might have anus hair.

"More than a quarter of the Australian population is foreign born but there is very little cultural or economic tension about immigrants within Australia."

This is simply wrong. Immigration is a constant and often hot-button issue within Australian politics; the extremely strong barriers to immigration to Australia simply hide it from view for casual visitors. (The high cost of unskilled labor also results in a similarly high cost of living; both Sydney and Melbourne generally show up in the top 5 - 10 most expensive cities in the world.)

the extremely strong barriers to immigration to Australia simply hide it from view for casual visitors

Oh come now. It's not like Australia had ultra-racist immigration policies until the 1970s.

Actually, they could combine immigration policies and coffee preferences and call it the "Flat White Australia" policy.

Australia's immigration runs on a points system so it is biased toward educated/entrepreneurial immigrants. Most of the immigrant groups are aspirational and aiming to integrate into the society. The health care system allows individuals to buy private insurance on top of a baseline medicare type system. Doctors are free to charge extra to a patient on top of the government rate reimbursement. This is radically different from the US of course, where Medicare patients cannot be charged more than the official rate. In essence Australia allows physicians to price discriminate, and the wealthy patients effectively subsidize the and make possible the treatment of poor patients. The Australian Labor Party wanted to eliminate the private option but could not because in the 1940s the Australian Medical Association got a clause inserted into the Australian Constitution prohibiting the 'conscription' of doctors.

Surprised you didn't mention the highly regulated workforce and high minimum wage and conditions Alex? Or the fact that almost all of the universities are public...

Here in Raleigh-Durham-Chapel Hill there are a number of high end coffee shops that serve good flat whites. And, even if it is not on the chalkboard most baristas know what it is and how to make it. Even (much smaller) Winston Salem has several shops that feature flat whites, probably due to the large student population-WS also seems to have an inordinate number of bars, including some very impressive cocktail spots, for what is really just a largish town.

At the risk of sparking a Melb/Syd flame war, I think flat whites are a Bleak City invention. I believe they were developed to cope with those cold windy winters.

Only bit I disagree with, Alex, is "The British should have left the convicts behind and moved everyone else". (With the exception of continuing legacy cost for Indigenous Australians) A major factor in Australia's success was that the colonialisation was primarily convicts, a break from the rigid British class system. In many ways (particularly under Macquarie's reforms) the "new start" afforded to ex-convicts was more meritorious (though coming from a limited talent supply) than a privelege-based system (something that arises now and the, such as or the rise of mining directors).

I shouldn't have said 'legacy costs'; a misleading term. Nevertheless, it is important to note what has happened to Indigenous Australians post-colonisation.

Although we do have one of the highest proportions of foreign-born, this doesn't, on its own, make us a more tolerant society than others in the world. The largest category of immigrants originate from the UK. So much for your last comment about moving everyone else!

So Alex (and Tyler), what's your explanation why so many US public policies are stupider than Australia's?

If you can't say it in public, you can email me ; -)

The claim on racial harmony is simply untrue, at least in my experience. As an East Asian who has spent several years in both Australia and New Zealand (and now living in the United States), I found Australia to be by far the most racist place I have lived in - a lot of the casual and overt racism that I experienced in both Sydney and Melbourne would be unthinkable in most American cities (I have limited experience with the countryside of either country). What's more, many Australians I knew claimed that racism is an "American" phenomenon. Bizarre!

I don't think he was talking about racial harmony, just pointing out that their more pro-immigrant. However a good portion of the people who immigrate are from New Zealand, South Africa or the UK so it's possible to be both "pro immigrant" and have large parts of the population be racist towards non-whites.

Being a white guy from the midwest, I'm shocked both by the amounts of racism, or at least mistrust, coming from the older Aussies here and also by the numbers of Muslim and Asian immigrants who make a good go of it here anyways. Even in the burbs, you're likely to find a few corner shops ran by a (slightly overworked) Chinese immigrant.

As far as policy goes, they do a lot of things smarter than the US does right now, but they also have a huge amount of nanny state that just wouldn't fly. It's also much easier to run a country where 2/3 or more of the people live in just three states. If you roll out any program well in the three or four biggest cities, you've already hit 40 or 50% of the people who may need it.

That's a fair point re the health system and comparisons may be odious but the US health system does not appear cost effective by most metrics I can think of.
The Economist did a survey and found that the Dutch got most bang for their buck healthwise so perhaps that model would work better but from memory Aussie was No2 for cheap, quality healthcare

It may not work in the US but there's nothing wrong with picking up a few ideas and trying them out..

Alex you say "Australia has great natural beauty. The British should have left the convicts behind and moved everyone else."
As a child of Irish Transportation five generations removed, the British created the conditions that led to Irish revolt, so why should we not also have the unintended benefits of our resistance by being transported to Australia?

Sent your post to an Australian friend (prof of economics, retired). He responds ...

"Salon Kitty, a B and D establishment close to U of Sydney is located in an upscale neighbourhood. A few years back it had a giant billboard on the major highway leading into Sydney from the SW with pictures of two georgous dominant mistresses in leather with the banner " Don't punish yourself: that's our Job". I almost ran into the car in front....."

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