Can Canberra learn anything from the Melbourne Cup? Tomorrow’s running of the 154th Race That Stops a Nation will be, as usual, a good example of punters trying to pick winners, which federal governments of all stripes also can’t resist doing. So, how are punters — and taxpayers — doing?
Well, favorites won the Flemington classic 34 times up to 2013, which works out a success rate of 22%. But let us look at the return on investment. The average odds on those winning favourites is 4.4-to-1. So, if I back only favourites, in the long term I can expect a $1.00 return on a $5 wager — a 20% return on my investments over 153 years.
However, there have been periods of up to 20 years where no favourites came in, and this is where Canberra should pay attention: For any one- or two-term government, there can be no guarantee that its anointed “winners” will bring a payout. Making it even harder is that Flemington’s punters are betting on a handicap race that has seen the investment of considerable effort and acumen to give all runners a theoretically equal chance of collecting the gold cup. In Canberra, when politicians decide to bet billions of dollars on their considered opinion that the NBN, to cite one recent example, is a London-to-a-brick winner, they can be reasonably certain they are going to do their dough.
The inescapable conclusion for any federal government is not to bet at all. A better and more responsible approach would be for Canberra to regard itself as if it were the owner of the racecourse. It would do all it could to keep the track in top-class condition, not vary the entry rules from year to year, and not change the course after the race has started.
The Federal Government might also help the economy’s equivalent of breeders and trainers. After all, the closed stud book for thoroughbred horses has severely limited the improvement in winning times. There has been no improvement since 1920 in the winning times for Cup or the W. S. Cox Plate, a weight-for-age handicap.
Is the closed stud-book approach paying of for Canberra, where bets drawn on the public purse go mostly to scientists? Well, marketers, lawyers, accountants and all sorts of entrepreneurial types have spawned new areas of economic growth, but they don’t get a look-in.
Tomorrow, after Parliament has paused to listen to race broadcast, our leaders might like to consider how the mathematics of picking short-term winners is stacked against them. Much better, the smarter ones will conclude, to run a fair and honest racetrack, make it easy for all hopefuls to enter the starting barrier and, when the shouting is done, tax the winners.