Saturday, February 28, 2009
Wednesday, February 25, 2009
by Tristan Ewins
A synopsis of the problem
Few of us consider in our youth that we shall ever know the kind of frailty and vulnerability suffered by so many of our elderly. Even the more immediate prospect of dependence upon an under-resourced public health system is not enough to galvanise us into awareness or action.
Our politicians must accept their measure of responsibility. There is a systemic undermining of the tax base and its progressive structure. Successive rounds of tax-cuts are readily accepted as a device to appeal to strategic layers of self-interested voters. Rather than lead public debate, many are won over by the spirit of opportunism - as opposed to appeal to our “better angels”; the spirit of compassion and kindness.
The consequence, of course, is a surfeit of care, with the health, dignity and happiness of our elderly below what is acceptable. There are a few broad areas of concern to this paper: all broadly pertaining to the subject of rights for the aged. There is the question of aged care, including the responsibilities of hospitals, and the role of hostels and nursing homes. Also, there is the need for additional aspects of care: in areas such as dental care, energy, air conditioning, and heating.
All these concerns need to be addressed in light of Australia’s ageing population - and the structural fiscal impact this will have on future Federal budgets.
The impending crisis of the ageing of Australia’s population - and its fiscal consequences - were addressed by the first Intergenerational Report in 2002, and in another Intergenerational Report in 2007. Specific areas of concern include pensions, aged care, health care, and a narrowing taxation base.
The projected “fiscal gap” arising from such expenses was projected to be about 5 per cent of GDP by 2041-42. (2002 report), or about 3.5 per cent of GDP by 2046-2047 (2007 report). To get this in perspective, 5 per cent of GDP today is more than $50 billion. The difference in estimates here serves only to underline the fact that it is impossible to pinpoint any such “fiscal gap” almost 40 years into the future.
Government must decide between austerity and the “user pays” principle, or progressive taxation reform - with increased tax and social expenditure as a proportion of GDP. As the years pass the choices facing legislators will grow ever more stark.
The second (preferred) option implies “locking in” structural budgetary commitments to maintain services and pensions for aged Australians. The narrowing taxation base also implies that higher taxes will also prove necessary to maintain and expand the social wage and welfare state for all Australians. The crisis of aged care in Australia has many dimensions, however. It is a problem of dire dimensions here and now - not merely “some time in the future”.
Insufficient staff skills and numbersIn correspondence with Charmaine Crowe, the Policy Co-ordinator of the Combined Pensioners and Superannuants Association (CPSA), I was informed of immediate crises in the standard and affordability of aged care.
Ms Crowe explained that one of the most essential elements of quality care are “staff numbers and skill mix”. Apparently “there are no mandatory staff/skill mix ratios”. The lack of trained staff comprises “the number one [reason] behind poor standards of care”.
Decent wages, subsidised training, recognised career paths, are all necessary to attract the best quality carers to the sector. Studies appear to back up these claims. A report on the aged care workforce by the National Institute of Labour Studies at Flinders University found that (in 2008):
Registered nurses in aged care are reputed to earn $250 to $300 a week less than their colleagues in acute care.
Furthermore, “the number of registered nurses in aged care [had] reduced from 21 per cent to 16 per cent”.
Residents requiring a higher level of care often need to be “turned” on a regular basis to avoid bedsores. And in case of incontinence, nurses need check on the conditions of residents regularly, and must be able to assist in showering and washing residents whenever the need arises. Diligence, and sensitivity to the dignity and humanity of residents is critical.
Against aged care as a businessAccording to Crowe, “for-profit” aged care is counter-productive. There is a contradiction, here, between an ethic of providing the greatest care and respect, and the motive of maximising profit and share-value. Ideally, there ought to be a mix of public and private providers - where private providers are run on a “not-for-profit” basis - managed by charities, churches and other community organisations.
Whatever the mix, though, measures of accountability and transparency are key.
AccountabilityCrowe, speaking on behalf of the CPSA, condemned the accreditation and monitoring process for residential aged care in Australia. There are many dimensions to the problem: but the inability of vulnerable patients to hold their carers accountable - often because of dementia and other conditions - is a central concern.
According to the citizens’ group “Aged Care Crisis”, there is a deep and disturbing culture in areas of “aged care industry” whereby standards of care are often unmet, and even after warnings there is non compliance.
A parliamentary report “on the operation of nursing homes … mentioned 46 nursing homes not meeting standards as at June 30, 2008.” These numbers, however, are deceptive. Originally 199 homes “failed to meet at least one of the 44 standards”. The figure of “46 homes” only applied to “those still non-compliant at the end of the year".
In other words, apparently 7 per cent of homes “had failed to meet at least one of the 44 standards in the last financial year”. In addition, the Department of Health and Ageing, received many complaints. Out of 2,830 nursing homes, there were 11,323 complaints, 66 per cent of which were investigated. Areas of concern included: health and personal care 3,106 cases; physical environment 1,598 cases; communication 1,496 cases; personnel 1,255 cases; abuse 1,117 cases.
In one especially appalling instance there were residents in one aged care home who weighed less than 25kg. It is not uncommon for staff to allow insufficient time for vulnerable residents to consume their meals. Without conscientious staff, including registered nurses in sufficient numbers, often nursing home residents are left to starve. It is an appalling breach of care.
Crowe holds that the accreditation process “lacks vigour” resulting in poor quality of care. Currently, nursing home management has the option of “nominating the assessor” who will conduct the accreditation review: a clear conflict of interest. Reviews need to be more thorough; without such conflicts. And more prolonged and thorough visits should be made without the generous preparation times currently allowed.
Again, according to Crowe, nursing home managements currently can enjoy a “warning period” of up to three months for the more rigorous accreditation checks. It is not surprising, therefore, that in most such cases full accreditation is achieved.
Whether or not quality of care is sustained over the long term, however, is another question entirely.
Methods of financeCrowe applauded the example of Denmark - whose social wage incorporates compensation schemes to ensure that the cost of care and disability are covered by the State. The principle is that the vulnerable should not be disadvantaged financially.
Denmark provides “rebates” for the disabled or frail - so that such people are not disadvantaged financially.
A further option, here, is for residents of nursing homes or hostels to receive a “targeted supplement”. This could assist pensioners and their carers so they can afford basic goods and services.
Those suffering from dementia and other debilitating conditions may no longer be in a position to hold the nursing home management accountable. Even in cases where families are passionately dedicated to fighting for the rights of relatives in care, maintaining accountability is a Herculean task.
Perhaps additional funding should be provided for a community and family advocacy group to ensure greater accountability. In Australia, there are several modes by which aged care fees are conducted. In our correspondence, Crowe related that there are a number of modes of payment.
Often residents are expected to provide about “85 per cent of the full aged pension” to meet the costs of their care (about $33 a day). Those on higher incomes may be asked to pay up to $118 a day.
Finally, low care hostels can charge a bond - at any rate they like - with the exception that residents must be left with no less than $35,500 in assets.
Importantly, those better suited to “low care” should not be driven into “high care” nursing homes, simply because they cannot afford the “low care” option.
Here, the system simply is not progressive enough. There needs to be a more graduated and progressive regime of fees and taxes.
Wealth and inheritance taxes - levied on individuals with assets of over $1 million - could help ensure that residents receive the care they need: while only being charged as much as they can reasonably afford. No longer would ordinary residents of ordinary means need fear being forced to sell the family home.
Are our elderly “a nuisance” for the health care system?In the instance that elderly citizens do need care in hospitals, their rights and dignity needs be respected. They should not be shunned as “a nuisance”. I speak of a personal experience here, where a loved one was tied to her bed and drugged so as to keep her asleep. This was after a serious heart attack. Before her family had been contacted, the hospital authorities were already planning on moving her to a “high care” nursing home. And moves were made - also without consultation - to put down her pet cat. With family support, this person was later to spend several quality years in a low intensity care hostel, and made a partial recovery after rehabilitation. The beloved pet was rescued also. But without determined intervention by her family, this person’s future would have been very grim indeed.
Quality of life for the frail and the aged: dentistryThere are many other issues pertaining to “quality of life” for pensioners, including the frail and vulnerable. To begin: nursing homes rarely provide sufficient dental care. According to Doctor Clive Rogers, “nursing homes are passing accreditation tests even when their residents' mouths and teeth are so ravaged they risk serious illness or premature death”. Many such residents “[have] pus draining into their mouth [and] abscesses.”
Free dental care ought to be a priority for all Australians. But in the case of the most vulnerable Australians, our duty of care is even more plain. Dentists should be regularly commissioned to visit nursing homes and hostels: and should be “on call” for whenever the need for their services arises.
Quality of life: other elementsBeyond these essential concerns, there are other elements that would best be implemented to ensure quality of life for vulnerable and elderly Australians.
Residents should enjoy privacy with their own room - and to whatever extent possible - be in familiar surrounds.
Access to the “simple pleasures” of parks, gardens could potentially provide a significant improvement to residents’ quality of life.
Food must be of the highest quality available. And there must be sufficient attention from staff to ensure residents finish their meals, and do not waste away. Malnutrition and dehydration are disturbingly common.
Inadequate staffing levels directly contribute to this problem.
Opportunity for recreation, where possible, is also important. Television, music and radio should be provided - including in residents private rooms. And into the future - where residents are increasingly technologically literate - there should be access to internet services as well.
For those healthy enough to undertake them there should be regular outings, including visits to shops, churches or gardens. For those who wish it, pastoral care should be provided. And social interaction between residents should be facilitated where possible.
There should also be provision of therapy services where required to maintain as much mobility as possible.
Heating and air conditioning for all nursing homes and hostels are essential. Given the kind of heat waves seen in Australia in late January 2009, this should be mandatory. Appallingly, no such common standards exist yet.
Finally - in an important aside - the role of carers needs be recognised and provided for. On average - with instances both of high and low intensity aged care - there is a government contribution of approximately $40,000 a year. Generous and just support for carers, here, could delay significantly formal admission into high or low intensity care. It is rational - and it is right - that carers' pensions be dramatically increased. And the love of family can be such that even the most caring nursing professionals cannot provide.
ConclusionIn this paper I have attempted a comprehensive review of the aged care crisis - and have suggested a variety of options for reform.
Some might baulk at the assumed cost of the programs suggested. But in light of the suffering of our most vulnerable, I appeal to the common humanity of our legislators. They, too, will grow old one day. For all our sakes, such reforms would be very well justified indeed.
Sunday, February 22, 2009
(part one of a two-part series on the rights of the aged)
Considering the rights of aged pensioners
All too often, the rights of aged pensioners are overlooked in what is sometimes a callous and cynical political game.
For the residential care system - high and low intensity care, there is already an urgent need for reform. This paper, however, will survey the plight of those aged Australians not yet in residential care, but struggling to “make do” in the broader community.
Whether dependant upon the Aged Pension, or otherwise supplementing this with continued paid work even beyond the official retirement age, these Australians deserve security, comfort, dignity, social engagement and purpose. Many services and allowances should be made available for elderly Australians after application of a generous and fair means test.
We will consider some of these - one at a time - leading towards the conclusion of this paper.
Choice in work and retirement
To begin, Australia should not respond to the ageing of our population by raising the minimum retirement age beyond 65. Indeed, it would be preferable to set this threshold to 60 years for both men and women. After 40 years - or more - in the workforce, it is reasonable that elderly Australians be free to pursue their passions. This is especially important in cases where that work has involved drudgery.
That said, many elderly Australians, given the choice - and the incentive - would continue work. For some, work does provide social engagement and connectedness; as well as opportunities for self-expression, purpose and personal development.
Providing tax and welfare incentives for continued work can provide an element of choice. The existing Pension Bonus Scheme is an important move in this direction, but ought to be more generous at the time of its inception. However, Combined Pensioners and Superannuant’s Association Policy Co-ordinator, Charmaine Crowe, has identified a number of problems with the program.
At first payments are minimal: $1,373.80 for the first year. Thereafter payments increase more steeply: $5,495.10 for the second year; $12,364 for the third year; and $21,980.40 for the fourth year. After five years payments reach is $34,344.30. (These calculations apply only in the case of singles. Rates for couples can also be found here.)
Such provisions may provide reason for pensioners to continue work long beyond the official retirement age. But there is an argument to be made that the process is discriminatory. Perhaps the payments should be more evenly spread, providing a more immediate incentive.
In correspondence, Ms Crowe also raised concerns about the severity of the income test for working aged pensioners.
To begin with, the current fortnightly income test for aged pensioners “kicks in” at “$134 a fortnight” after which 40c in every dollar is taken from the pension. As Crowe argued, “they take two steps forward and one step back”.
Most elderly people have difficulties in finding work. And with a means test so severe as to provide a crushing deterrent - even the prospect of casual work is substantially less appealing.
Compared to the preferential treatment of superannuation, treatment of earned income via the Pension Bonus Scheme - is not generous enough over the first couple of years. And for those attempting to supplement their pensions with earned income, the regime is punitive.
Superannuation also, more generally, reproduces class stratification in retirement - yet does not provide security for retirees in the event a financial crisis such as the one we are facing now. There is an unreasonable element of risk. A fully public pension fund scheme could address these issues.
Quality of life for every pensioner
There are many other essential issues regarding the rights of aged pensioners - and the support they deserve - so that each may enjoy true quality of life.
As noted earlier, support should be provided for all pensioners - in particular aged pensioners with generous but fair income and assets tests.
To begin with, quality heating units and air-conditioning should be provided for aged pensioners, and installed free-of-charge. These units need to be safe and energy efficient. During winter, in particular, elderly Australians are at risk of contracting pneumonia and similarly, air conditioning can be of critical importance - especially in light of the extreme weather seen in Melbourne and Adelaide at the time of writing. Failure to provide essential heating and cooling has the potential (quite literally) to be a matter of life and death.
Mobility is also a core contributor to quality of life, including the vital area of social engagement. Free public transport for these men and women must be provided while taxi vouchers ought to be provided where public transport is not a reasonable option.
Imposts upon those least able to afford …
With the increased costs of living, aged pensions should also be raised to ensure that none of these citizens live in poverty.
In some states, construction of private infrastructure will see an explosion of costs into the future. In Victoria, private tollways already provide a significant imposition.; while there is an increasing cost for water - supposedly to “send market signals” - in the context of drought and scarcity. Such measures, though, could hurt those most vulnerable.
The proposed desalination plant in Victoria is one such example. Peter Ker, writing in The Age reported that Victoria’s water retailers were set to double the price of water by 2013: with a decision being made in 2009. Yarra Valley Water, for instance, will charge its customers - on average - “about $585 per year”.
Such factors as this make plain the need for reform not only of aged pensions, but of all pensions.
Reform of pensions
There are a number of streams of thought on the reform of the aged pension. The Greens have for some time been arguing for “an increase of $30 a week” for the unemployed and for carers - and also for aged pensioners.
Drawing on last year’s figures, such a move would bring single aged pensions up from $562.10 a fortnight to $592. However, there needs to be a specific and persistent formula to make sure pensions keep up with the cost of living.
The Council On The Ageing (NSW), for instance, is calling for single aged pension payments of 35 per cent of male average total weekly earnings (MATWE). Specifically, the citizen’s representative group has developed a new “Cost of Living in Retirement” benchmark, which would translate to $750.60 a fortnight for singles, and $1125.90 a fortnight for couples. Alternatively, the Combined Pensioners and Superannuants Assocation, has made the case for a more tightly targeted regime of assistance “to be paid to around 1.5 milllion pensioners with little or no additional income”.
More specifically, the CPSA has argued in favour of an extra $80 a week for single pensioners who do not have additional income. These pensioners are those who would otherwise have insufficient income “to purchase essential goods and services”.
Finally - in the past, the author has made a personal call for a rate of 30 per cent of the male average total weekly earnings for single recipients.
Today, this would amount to $674.52 a fortnight. Rates for couples could be set at 90 per cent of the full single rate for each recipient. (for a total of $607.86 a fortnight each). This proposal is a more modest compromise for the time being.
Importantly, such reform could be implemented alongside the CPSA’s proposal for targeted supplements.
Even here, though, such redistributive measures could well necessitate tax reform. In the context of a devastated revenue base, and a ballooning deficit, there is little option. Many part self-funded retirees have lost an enormous portion of their income with the crash of the share market, and the rapid decrease in interest rates.
In addition to targeted supplements, reform in this field needs also to be accompanied by an easing of means tests at the lower end of the scale.
All such demands are achievable given the political will and decency of our politicians.
Importantly, by redistributing wealth within the economy, there would be no resultant drop in aggregate demand. If anything, those on lower incomes spend a greater proportion of their wealth. As a consequence, such measures could even increase demand.
Labor holds primary responsibility as it is in government. But Malcolm Turnbull, also, has sought to make political capital from the plight of aged pensioners. Instead of calling for tax cuts, perhaps instead he should “put his money where his mouth is”.
Other factors in achieving dignity, comfort, purpose and social engagement
Support for carers needs to be increased substantially so as to provide - where appropriate - a viable alternative to admission to nursing homes. Such support should be especially generous: given that it would ultimately save money which otherwise would be devoted to more intensive and costly professional care.
These reforms should be sufficient to ensure that pensioners not in care do not suffer malnutrition. But for those - for whatever reason - who are unable to shop for their own groceries - continuing support is necessary for “meals on wheels” programs. And here, there is need for thorough-going quality control.
To further ameliorate the stress faced by pensioners simply trying to survive and maintain some basic quality of life, more generous subsidies could also be provided for water and energy.
Health care, meanwhile, should be made available to pensioners with genuine need with no effective discrimination on the basis of wealth and class. As such, the Pharmaceutical Benefits scheme should be strengthened such as to improve affordability for aged and disability pensioners.
Housing stress and social engagement
According to Charmaine Crowe, more than 500,000 age and disability support pensioners “rent in the private market”. Many of these are suffering “housing stress”. In some cases, Ms Crowe has “spoken to pensioners paying 70 per cent of their income on rent”.
Furthermore, according to the Department of Health and Ageing, in 2008 “close to 6,000 people aged 65 years or more are homeless.”
With Prime Minister Kevin Rudd promising $6.6 billion on 20,000 units of “social housing”, surely much of this should go to the most vulnerable in our community.
Then there are other - generally under-appreciated issues - that are also central in maintaining quality of life. For some, educational grants could be provided. This could include anything from Higher Education, to “Neighbourhood House” programs.
For some this could provide a means of re-entering the labour market. But the aspect of social engagement, or even simply the motive of human development, is more than enough to justify such measures.
In a similar vein, “community circles” should be fostered to help prevent elderly citizens “withdrawing” from social life.
And a modern program to eliminate poverty must also consider the need for social activity, and inclusion in a digital age - in pace with ever advancing standards and means of communication. Fast internet access is today a central need for most Australians, pensioners included. Calculation of such costs needs to be factored into any attempt at setting a benchmark against poverty.
Finally, for those who are capable or interested, gentle fitness activities should be encouraged - and provided free-of-charge, for example, water aerobics.
A broader crisis - not only the aged pension
Of course, there is a crisis faced by all manner of pensioners - not only aged pension recipients. Areas of concern include: the aged pension, disability support pension, single parents pension, carer’s allowance, Newstart and Austudy.
As Australia is drawn into the global fiscal crisis, and the resultant recession, the most vulnerable should not be made to pay the price through austerity. Formulae need to be developed to provide for the needs of pensioners “across the board”.
If need be, taxes should be raised: to provide decent and just pension rates, tax rebates and supplements for low income earners, and the construction of major infrastructure projects that will drive quality of life and productivity into the future.
During the Great Depression of the 1930s many had to line up at soup kitchens. Desperate battles were fought against evictions, and unemployed workers were exploited for a miserable and threadbare sustenance. But now, in 2009, we need not make the most vulnerable pay for a crisis brought on by greed, systemic failure and the ill-informed ideology of neo-liberalism.
Austerity for vulnerable pensioners must not be an option. Yes, there will be need for sacrifice. But assuming real social solidarity, despite the depth of the crisis, the kind of human misery of the 1930s need not be repeated.
Tuesday, February 17, 2009
"The Politics of Economic Disaster"
Every day, I read another economist, journalist, or government official opining on how best to achieve economic recovery in this country or that. Needless to say, the remedies all contradict each other. But almost all of these pundits seem to me to live in fantasyland. They actually seem to believe their remedies will work in some relatively short period of time.
The fact is that the world is only at the beginning of a depression that will last for quite a while and will get far worse than it is now. The immediate issue for governments is not how to recover but how to survive the growing popular anger they are all, without exception, facing.
Let us start with the economic realities of the present. Just about everybody throughout the world - governments, enterprises, individuals - has been living above their income for the last 10-30 years, and doing it by borrowing. The world went giddy with inflated earnings and inflated consumption. Bubbles have to burst. This one has now burst (or actually several bubbles have burst). The impossibility of continuing on this path has sunk into consciousness, and suddenly everyone has gotten scared that they are running out of real money - governments, enterprises, individuals.
When that fear takes over, people stop spending, or lending. And when spending and lending declines significantly, enterprises stop producing or slow down. They may close down entirely, or at least fire workers. This is a vicious cycle, since closing down or firing workers leads to lower real demand and causes further reluctance to spend or to lend. It's called depression, and deflation.
For the moment, the United States government, which is still in a position to borrow money and print money, intends to throw some new money into circulation. This might work if the government threw an awful lot, and threw it wisely. But quite probably, it won't do it wisely. And quite probably throwing the amount that might work amounts to little more than creating another bubble. And the dollar might then really fall much faster than other currencies, pulling down the last important prop to the world-economy.
In the meantime, there is less and less money for daily consumption of all kinds for the bottom 90% of the world's population (and it's not so good for the top 10%). People are getting restless. Just in the last month, we have seen people in the streets protesting economic difficulties in a growing number of countries - Greece, Russia, Latvia, Great Britain, France, Iceland, China, South Korea, Guadeloupe, Reunion, Madagascar, Mexico - and probably a lot more that haven't been noticed by the world press. In fact, it's been relatively mild up to now, but the governments are all on edge.
What do governments do when their primary concern is dealing with internal unrest? They really have two choices - shoot the protestors, or appease them. Shooting works only up to a point. For one thing, the agents of force must themselves be well-enough paid to be willing to do it. And when there is a serious economic downturn, arranging this is not all that easy for the regimes.
So the regimes begin to appease their populations. How? First of all, by protectionism. Everyone has begun to complain about the protectionism of other countries. But the complainers are all practicing it themselves. And they will do a lot more of it. The free market economists all tell us that protectionism makes the overall economic situation still worse. That's probably true, but politically quite irrelevant, when there are people in the streets wanting jobs - now!
The second way governments appease when there is unrest is by social-democratic welfare measures. But to do that, governments need money. And governments get money from taxes. The free market economists all tell us that raising taxes (of any kind) during an economic downturn makes the overall economic situation still worse. That may be true, but in the short run that's also irrelevant. As it is, in a downturn, tax receipts fall. Governments can't keep up even with current expenditures, not to speak of paying for increased expenditures. So they will tax in one way or another. Or they will print money.
Finally, the third way they appease is by a healthy dose of populism. The real income gap between the top 1% and the bottom 20% both within countries and worldwide has grown enormously in the last thirty years. The gap will now be reduced to the more "normal" gap that existed in 1970, which is still very large, but somewhat less scandalously large. Hence, you have governments talking now of "income caps" for bankers, as in the United States and France. Or you can prosecute people for corruption, as in China.
It's a bit like being in the path of a tornado. The worst can come upon governments suddenly. When that happens, they have only minutes to take shelter in their cellars. The tornado then passes, and if one is still alive, one comes out to survey the damage. The damage will turn out to be very extensive. Yes, one can rebuild. But then the real argument begins - about how one rebuilds, and how fairly one shares the benefits of rebuilding.
How long will this gloomy picture prevail? No one knows or can be sure, but it will probably be a good number of years. In the meantime, governments will face elections, and voters will not be kind to the incumbents. Protectionism and social-democratic welfare serve governments the way the cellar does during a tornado. The quasi-nationalization of banks is another way of taking shelter in the cellars.
What we the people have to think about and prepare for is what we do when we emerge from the cellar, whenever that is. The fundamental question is how are we going to rebuild. That will be the real political battle. The landscape will be unfamiliar. And all our past rhetorics will be suspect. The key thing to realize is that rebuilding can take us into a far better world - but it can also take us into a far worse one. In either case, it will be a far different one.
by Immanuel Wallerstein
[Copyright by Immanuel Wallerstein, distributed by Agence Global. For rights and permissions, including translations and posting to non-commercial sites, and contact: email@example.com, 1.336.686.9002 or 1.336.286.6606. Permission is granted to download, forward electronically, or e-mail to others, provided the essay remains intact and the copyright note is displayed. To contact author, write: firstname.lastname@example.org. These commentaries, published twice monthly, are intended to be reflections on the contemporary world scene, as seen from the perspective not of the immediate headlines but of the long term.]
Monday, February 16, 2009
This article concerns caps on expenditure and tax - mooted by Labor Finance Minister, Lindsay Tanner... Browsers are encouraged to read and discuss.
For further analysis of Labor's stimulus and the recession - also see the immediately prior entry: Debating the Stimulus - and the rights of the needy
Labor Finance Minister, Lindsay Tanner has 'ruled out' any increase in taxation to service debt as a consequence of the government's $42 billion stimulus package.
Furthermore, the Minister has ruled out any additional expenditure beyond a 'cap' of "2 per cent" until the Federal Budget is again in surplus."
The conservative Opposition, meanwhile, has criticised Labor's stimulus package as landing future generations with the cost of servicing debt.
Such claims comprise a cynical attempt to 'posture' politically for the future - with no concerns for the needs of workers, families, pensions - in the here and now.
In light of the enduring benefit to future generations from the infrastructure we build now, Turnbull's posturing appears all the more so absurd.
But there are significant questions, also, which arise with Lindsay Tanner's 'self-imposed restraints'. For instance - what does a '2 per cent cap' refer to? Does it refer to 2 per cent of GDP? (somewhat over $20 billion?)
And what would be the consequences of this for welfare reform, as well as new infrastructure programs - such as a public 'National Broadband Network'; or massive investments into renewable energy?
Setting a minimum standard for single pensions of 30% of Male Average Total Weekly Earnings (MATWE); just what kind of budgetary comittment will this require into the long term?
Assuming Labor borrows in order to get broadband 'off the ground' - what kind of commitments will be necessary to service this debt into the future? Here, even 'part-private monopoly' is undesirable. Therefore, it is worth asking: what would be the costs of funding such infrastructure fully with public funds?
Taking the scenario of unemployment rising by an additional 300,000 by mid-2010, how can such structural impositions on the Federal budget be sustained without tax reform?
If we are to see meaningful welfare reform, including provision for hundreds of thousands of unemployed, there must be cutbacks elsewhere; or otherwise there must be an increase in progressive taxation. The only other option is to let pensioners 'bear the brunt' of austerity.
Regardless of this, one option is to 'do more with less': restructuring the taxation progressively around the current base. In so doing, Labor could provide greater assistance for low-income earners. Here, means tests for pensioners could be eased - effectively cutting back on tax - while making up for the shortfall by increasing rates at the higher end of the spectrum.
Because those on low incomes generally spend a greater proportion of their income on domestic consumption, such moves could provide the economy with extra buoyancy.
But even this would be insufficient for those overwhelmingly dependent upon their pensions.
In the long run, Labor's commitment to hold taxes down is irresponsible. It is a policy which is driven by focus groups and polling.
Who knows when - or if - Australia will return to the kind of minerals boom which allowed for our dependence on Company Tax receipts under Howard? Systemic restructure is necessary to maintain - let alone expand - the tax base.
Given extraordinary circumstances, Labor would be better advised to place a cap of no less than 4% of GDP on additional annual expenditure - with an expansion of the total tax base by 2%.
The dilemma faced by Labor is encapsulated well by veteran columnist, Ken Davidson, in a column in 'The Age' for February 16th.
Mr Davidson supposes the need for an even more robust package than would be allowed for by a 4% cap on additional expenditure.
"The collapse in private-sector demand must be replaced by a corresponding increase in government spending to avoid lower economic growth and higher unemployment.
Rationally, the problem is the size of the hole that will be left by the collapse in private spending. This should dictate the size of the stimulus needed to fill the gap and avoid growing unemployment.
On this basis, the $42 billion package introduced to the Parliament by Treasurer Wayne Swan was about half that necessary to sustain non-inflationary growth without rising unemployment over the next four years."
Clearly an even more formidable stimulus package is necessary to sustain growth.
Interestingly, though, Davidson holds that it does not therefore follow that taxes must rise.
This is hard to understand - and is confusing given Davidson's usual support for tax reform, and an expanded social wage.
Ultimately, social democratic governments are elected to enact just and progressive social reform.
This means: improving public education, transport and health care; providing communications infrastructure and participatory social media such as with the ABC; providing generous and just welfare; ensuring decent and humane care for the frail and vulnerable; 'bridging the gap' in indigenous health and education; promoting public pension funds - which minimise individual risk; promoting economic democracy through tax subsidies and low-interest loans for co-operative enterprise, mutual societies and the like.
Excellent infrastructure and services ultimately come at a price - even regardless of the long term benefits they provide.
While Labor might hold off on expanding overall tax now - to maximise stimulus - in the long run the ALP must 'deliver the goods.'
Failure to do so could see Labor left behind - as the social democratic mantle is taken up by the Greens: and/or other parties of the Left.
Friday, February 13, 2009
Kevin Rudd - we need to Keep up the Pressure on Labor in the lead up to the next Federal Budget.
Stimulus Package Passed
Today the Australian Labor government of Kevin Rudd passed a formidable stimulus package through the nation’s parliament amounting to $42 billion.
Also passed were measures to provide insulation to every Australian home –at a cost of $3.7 billion– with flow-on effects for energy efficiency for years to come.
However, the package was redrafted after concerns raised by the Greens, Family First, and independent Senator, Nick Xenophon.
Specifically, Xenophon managed to extract $900 million to be devoted to restoring the Murray-Darling basin.
Planned payments to single-income families and tax bonuses for workers, meanwhile, were wound back by $50 to $900.
These changes were supported by Australian Greens senators. The money saved, as a consequence, (over half a billion dollars), was redirected into a number of measures - including the creation of “over 10,000 green jobs”.
The Greens also secured an agreement from the ALP to ‘sit down and talk’ about welfare reform. But no firm commitment on pensions was given by Labor.
Such an understanding may comprise a good start – but does not go nearly far enough. (We will consider this in a later post.) The unemployed will be particularly vulnerable as we lurch deeper into crisis. These people should not be made to shoulder the burden, and reform of pensions ‘across the board’ is needed urgently.
Around the world governments are facing the reality of financial and economic collapse. Global action is necessary to ‘jump start’ the world economy – and to breathe new life into consumer demand and investor confidence.
Critically – reflating unsustainable ‘bubbles’ – whether in housing or elsewhere – is not the answer.
In the immediate future, the aim is to boost economic activity here and now. But further on, governments need to invest in the kind of long term infrastructure and skill-formation that will provide for productivity and quality of life.
Investment in public housing – for ’20,000 social housing units’ – is a vital response to the plight of vulnerable Australians. But an ever greater investment is necessary – in light of the crises which are gripping our nation.
Investment, here, fulfils a crucial human need – and can buoy the economy over the coming months.
GIven the extraordinary circumstances, the government ought to provide funds in full for reconstruction - in instances of those disadvantaged who had been unable to afford insurance.
But the task of providing for fire victims should not detract from prior plans to construct housing elsewhere. The project needs to be expanded in its scope.
Finally, Rudd Labor needs to get its house in order with regard to the construction of a National Broadband Network.
The massive task of constructing a joint wireless/fibre to the home network could provide thousands of jobs into the future – while driving productivity – and appreciably improving our quality of life.
Such a project should be fully public funded and owned: as even 'part private' monopolies can result in abuse of market power.
For all these plans to work, though, – over both the short term and the long term - global co-operation and co-ordination is required. And
Amongst all this, though, it seems that the leader of the Opposition in
Well may we hope that the Australian people will see through Turnbull's opportunistic gambit. Playing upon fears of ‘Labor debt’, Turnbull will be hoping that Australian voters will turn on the government as the crisis deepens, and later on as debt needs to be serviced sustainably once the economy finally returns to growth.
The spectre of ‘Labor debt’, here, is put forward in a shallow line of argument which has gained currency with repetition – again and again - over the years.
But even if the debt we incur now must be serviced later: it is only through investment in infrastructure, housing, and welfare – that the most vulnerable are protected: and that the basis of future growth and quality of life is set.
Failure to invest in infrastructure now will impact negatively on productivity into the future: and will feed into a ‘recessionary spiral’. We need, therefore, simultaneously to address the crisis 'here and now' - while planning for future growth.
So - here - amongst the community of progressive bloggers - what should we do?
We must ‘get out there’ and argue for reform: supportive of Labor’s measures – but demanding more. We must fight the tendency towards austerity – and we pressure government to target assistance to those most in need.
Labor could also have gone further for these people. Leading into the next Federal Budget, we must demand far-reaching welfare reform.
Preferably, with the support of the Greens and Family First, we might look forward to an increase in the full single rate of all pensions to at least 30% of Male Average Total Weekly Earnings. (MATWE) This would amount to $674.52 a fortnight.
A rate of somewhere between 85%-90% of the single rate could, meanwhile, be provided for couples. (Difficult estimate as we do not have access to modeling.)
We will consider this further, though, in a future posting. At this stage I encourage readers to contribute to the debate. Your comments are welcome. (but no flaming or trolling)
Keep up the pressure – the next major flashpoint will be the 2009 Federal Budget. Progressive forces need to mobilise and co-operate now. By winning the the debate in the 'public sphere' (the 'cultural struggle' some would say) we provide Labor and others 'room to move'.
The struggle we wage here and now is just as important as that going on in our parliaments!
Tuesday, February 10, 2009
Postmodern Socialism: Romanticism, City and State,
Original contribution to a critical debate,
Review by Tristan Ewins
It's been some time (several years) since I read this book, so my memory might fail me sometimes. Nevertheless, it is enough to say that this is one of those books whose arguments are so clear and compelling that the reader is strongly influenced by the arguments encountered years after first perusing its pages.
This is a compact title, packed with strong arguments as to the relation between socialism, postmodernity, romanticism and the state. Beilharz argues that romanticism was always a strong element in socialist thought: this despite attempts by some to develop Marxist analysis into a science.
Considering the 'pros' and 'cons' of anti-modernist romanticism and modernity, Beilharz sides with the Modern project, although rejects what he deems to be 'Faustian pacts'. (ie: Modernisation regardless of social cost)
Concluding that we still live in that space we have come to refer to as 'modernity', Beilharz rejects postmodernity as an 'era' but wonders, after Lytotard, whether postmodernity is best considered as the 'critical moment' of modernity. This leads in to a thorough, and sometimes inspiring, consideration of the merits of socialism in an age where socialism is considered by many to be dead.
It is Beilharz's view that Marx remains one of those influential historical figures between which we must choose. Insisting the relevance of socialism in a world still wracked by an underworld of poverty and inequality, Beilharz argues for a 'Promethean Marxism': one which brings critical light to humanity, but which is nevertheless bound by its own limitations and the failure of Marxist prophecies to be fulfilled.
Beilharz denies, as one author had written, that 'Marxism heals the sick', but insists that in these uncertain times, he is still 'useful to think with.' Such Marxism may never promise true emancipation, but like Luther is resolute: "Here I stand. I can do no other."
Beilharz concludes by stating that, thanks to hermeneutics, we can have 'as many Marx's as we choose'. The uses to which Marx can be put is limited only by our imagination and our powers of interpretation.
Beilharz's vision of socialism, as explored in his examination of 'the city', tends to be one of the mixed economy, the Australian city of Melbourne, caught between deliberate planning and spontaneity, being something of a metaphor for the kind of socialism he would envisage.
In an indirect way, part of this book might be considered an argument for market socialism, although importantly this is never stated categorically.
For its size, this book is full of ideas, and well worth the read. It remains a significant influence on the reviewer’s thinking to this day, and I would recommend it to anyone concerned with the issues it explores.
nb: There is a link on this page - at the left margin - to Amazon's listing for 'Postmodern Socialism'.
nb: There is a link on this page - at the left margin - to Amazon's listing for 'Postmodern Socialism'.
Monday, February 9, 2009
The Victorian Premier John Brumby has launched the 2009 Victorian Bushfire Appeal Fund in partnership with the Australian Government and Red Cross to support communities impacted by devastating fires which have ravaged many parts of Victoria.
Individuals and organisations wishing to make a donation to the Victorian Bushfire Appeal Fund can go to www.redcross.org.au or call the toll free number 1800 811 700.
Saturday, February 7, 2009
Australia: The Case For Re-nationalising Communications
January 30, 2009
Even now it does not seem so long ago that a genuine "mixed" economic model prevailed across nations the world wide.
In the wake of Depression and World War II, the challenge posed by communism - and emboldened social democratic and labour movements - framed the parameters of a virtual consensus.
On the one hand, policies of Keynesian, state-guided demand management, and full employment were combined with strategic public ownership. Areas were broadly accepted as being the realm of "natural public monopoly": especially infrastructure and utilities. This included transport services and infrastructure, welfare services, power, water and communications.
"Natural public monopoly", here, provided for nation-building and the minimisation of underlying cost-structures. Progress was also achieved elsewhere: progressive tax transfer and welfare systems, free public education, socialised health care, and so on. Strong investment in public infrastructure, goods and services also complemented attempts to preserve a "full employment economy".
Additionally: in Australia, there was the Commonwealth Bank and numerous state banks; and there were also state-owned insurance providers, state lotteries, public broadcasters, public housing and the like.
Importantly, it was recognised that provision for human need cannot be reduced to the working of "free markets". The poor and the marginalised, and minorities, in particular, do not commonly wield significant "market power" as consumers.
The benefits of the "mixed economy" model were many. Public enterprises provided dividends that could then be redirected into vital services. Cross-subsidisation helped ensure that essential services such as water and power were available on the basis of need. Public housing was provided for many who would otherwise go homeless.
Government ensured support for pure and applied scientific research - while there remained a role for public and home-grown defence industries - which some might have identified as being a matter of "national security". In banking, insurance, and elsewhere - strategic intervention actually complemented competitive forces in markets which otherwise might have been characterised by oligopoly and collusion.
Communications infrastructure - the focus of this essay - was provided as a matter of natural monopoly - reducing potential cost structures, and venturing into rural Australia: where "free markets" would refuse to go. And despite claims that the private sector was being "crowded out", public ownership - considered broadly - was strategic. Despite hysteric cries from the neo-liberal Right, there always remained a deep, pivotal, and ongoing role for responsive and competitive markets.
For most on the social democratic Left, this was never in question. Indeed, there was a productive tension between the socialist aim of eliminating exploitation, and the liberal preference that ordinary people be free to invest their wealth as a matter of personal choice. However, in the wake of the second oil shock and stagflation, the old consensus was all but wiped away by a new one: neo-liberalism.
The proponents of the new orthodoxy waged war on the mixed economy model, as well as upon the role, influence, and perceived legitimacy of organised labour.
In Australia, labour and financial markets were deregulated. State-owned banking interests and insurance agencies were privatised. Gas, water, and electricity - were all privatised - or otherwise corporatised - in anticipation of privatisation at a later date.
In many areas there dawned an ideological fetish with privatisation and markets that defied sense. Competition in energy and water, in particular, was "anti-intuitive" for consumers; and is, in many ways, unworkable without great waste.
Other social objectives such as full-employment - were also abandoned by many so as to provide "anti-inflationary discipline" in labour markets; but it is beyond the purpose of this paper to analyse such ramifications in depth.
The Logic Of Privatisation - Australian Telecommunications
Of particular interest for this paper is that communications services and infrastructure were gradually privatised. Over time, this process unfolded only with the rise of private oligopoly and wasteful cost structures because of duplication. Notable here was Telstra's continued monopoly interest of the copper-wire network, and the sheer waste of competing mobile phone networks owned by Telstra and Optus.
While there was an explosion of new communications technology in Australia around the time the sector was opened to "competition", this was not merely the result of market forces. The same services that have arisen since the advent and spread of mobile phone telephony and internet technology would arguably have proliferated anyway had a public monopoly of infrastructure remained. Indeed, it is certain that more efficient cost structures would have resulted in cheaper services for consumers.
"Competition" no value for consumers
Writing in 2005 in the wake of the agenda of privatisation and competition, veteran journalist and economist Ken Davidson noted that:
Since the [1990s] ... [when] Telstra was a regulated monopoly ... OECD figures show that the cost of a representative basket of services ... increased relative to the average by 15 per cent - equal to about an extra $140 a year on the average household telephone bill.
Davidson described this as an "effective tax households pay annually to subsidise the Government's competition fetish". Furthermore, Davidson noted how, in the name of competition, Telstra has been forced "to pay a higher wholesale price for access to its own network than its competitors do". He cites the example of Optus, which "paid $800 million to get a cross-subsidy from access to the network worth about $2 billion".
Such arrangements provide a massive subsidy to "rent-seeking" retail communications enterprises, which has come directly at the cost of consumers and citizens. While regulators have attempted to combat the tendency towards monopoly in the sector, Telstra has been prevented from delivering the full benefit from its economies of scale. It seems, thus, that consumers lose either way: facing the risk of exploitation by a private communications monopoly, or otherwise suffering the costs of maintaining artificial "competition".
As a fully public concern, monopoly did not necessarily pose a problem. Before corporatisation, privatisation, competition - Telstra (formerly Telecom) - was accountable to government, and hence to citizens. It could be bound to a public charter, and could provide benfits from its economies of scale without any cause to exploit consumers or workers.
The debacle of telecommunications in Australia shows that whatever legitimate role there is for innovative and responsive markets - there are places private markets will not, and sometimes should not go.
Options for the "National Broadband Network"
Now, though - with Rudd Labor's promise to invest in a National Broadband Network - we have the opportunity to break with flawed assumptions, and to establish a natural public monopoly in the new fibre optic broadband infrastructure.
Such a massive undertaking could also be a central force driving employment in difficult times.
Before the 2007 Federal Election, Rudd Labor had promised to provide what it estimated as around half the necessary funding for a new "fibre to the node" network: roughly $4.7 billion. The cost of providing a National Broadband Network to all Australians, however, may have been underestimated.
Telstra spokespeople themselves have insisted that the government must "[increase] the size of the tender from $4.7 billion to about $15 billion" to provide full coverage to 98 per cent of the Australian population.
Should further funds be committed, this might also imply the alternative option of full "fibre to home coverage"- as opposed to "fibre to the node". Such technology would most likely have greater longevity, greater speed, and would place Australia at the forefront of the ongoing global communications revolution.
As Monash University senior lecturer Nicholas Beaumont suggested: "[with] faster speeds ... I believe it would be [a] huge driver of innovation." He continues, arguing that the formidable investment can be justified: "when people have built other infrastructure like railways, people were aghast at the sums involved but they drove our productivity into the future." The flexibility of "wide area wireless" technology should also receive consideration as demand for internet use "on the go" becomes greater. Increasingly, there is likely to be demand for the convenience of wireless, and the higher speed of fibre-optic broadband. Seeing as so many consumers will likely want "the best of both worlds", there is strong cause for both such networks to complement each other in the form of one nation-wide authority.
In building the National Broadband Network, such implications must be given due consideration. Rudd Labor needs now to "get the policy settings right", to provide maximum speed, quality, and flexibility to all Australians - and affordability as well.
And, whereas it is essential that communications policy not discriminate against rural communities, the spectre of public investment on such scale raises the question: why not simply establish the new network as a fully public concern?
A natural public monopoly - bridging wireless and fibre-optic networks - with cross-subsidies for low-income consumers would provide flexibility, speed, breadth of access, and affordability. Even regardless of the prospect of wasteful infrastructure duplication -surely a private monopoly - or even a part-private monopoly - should not be acceptable given the danger of such market power being abused.
Re-socialising Telstra ...
While any new public network might depend partly upon access to existing Telstra infrastructure, Labor Communications Minister, Stephen Conroy supposes Telstra could be bypassed in any tendering process.
The need for such new infrastructure would not have posed a problem had Telstra remained a fully public concern. The only question, then, would indisputably have been the public interest. Now over a million Telstra shareholders could stand to lose. But, private investment typically involves risk: and the public interest, considered more broadly, must prevail.
Importantly though, there is an alternative: a re-socialised Telstra.
Such an organisation could capitalise on the company's deep pool of talent and equipment, overseeing a generational shift to state-of-the-art communications infrastructure.
Two options include the following:
o structural separation: with a public monopoly of infrastructure; or
o full re-socialisation including retail arms of the enterprise.
The first option may seem attractive to some as it represents a rearguard compromise with the dominant neo-liberal ideology. Hence there is likely to be less immediate resistance. Such compromise could be seen as a necessary stage en route to a regroupment - and ultimately establishing a new dominant paradigm of the "mixed democratic economy". Importantly, such moves could also garner broader support as there is still some residual popular preference for the concept of "natural monopoly" in the case of such infrastructure.
The second option, however, represents a more immediate shift towards such a paradigm: reclaiming a role for strategic and competitive Government Business Enterprise, as well as socialised infrastructure.
Apart from a prevalent ideological opposition to the mixed economy - and even to public ownership "in principle" - arguments for re-socialisation are strong. (Although Optus' mobile network cannot but remain private as duplication here is entrenched beyond remedy).
A re-socialised Telstra with a new natural public monopoly in fibre-optic cable communications infrastructure - and wireless infrastructure - could potentially provide cheaper and higher quality service. Partly, this could be the consequence of rigorous scrutiny from consumers and government: and partly following more efficient cost-structures. A public Telstra, under such circumstances, would have no cause to abuse its market power.
Following re-socialisation, subsidy for "rent-seekers" could be wound back - with the public carrier once again being released to provide the full benefit of its economies of scale. Again - the consequence could be cheaper service for consumers.
And importantly: many consumers are conservative in preferring the Telstra "brand" and hence there is strong demand for ongoing Telstra involvement in concerns such as Big Pond. Government should be sensitive to popular sentiment in this regard.
Finally, we are on the verge of a new digital entertainment and communications revolution. Old communications and entertainment paradigms are likely to decline with the fusing of digital television with internet services and content. The new paradigm looks set to be interactive, participatory, open, and consumer driven. Imaginably, consumers will be able to shift seamlessly from "pay for content" services, to free-to-air content - if necessary sponsored through pinpoint advertising - adapted to consumer profiles, or where such information is unavailable, adapted to suit the content.
Of course there is need for the involvement of public enterprise, here, alongside co-operative and community enterprise, and private enterprise as well.
Public communications/entertainment enterprises need to be especially bound by a charter. This includes quotas and funding for local content, and content for minorities. It is much easier to bind public concerns to such a charter than it is in the case of private concerns - which pursue profit and share-value-maximisation ahead of provision for an inclusive and diverse tapestry of human need.
Under such circumstances, there is a potentially core role for a public Telstra, along with public and community broadcasters working together: taking the lead in the provision of content.
It is time for Rudd Labor; and for Communications Minister, Stephen Conroy in particular; to divest themselves of neo-liberal shibboleths - and reconsider the meaning of social democracy, and the democratic mixed economy - for the "new frontier" of telecommunications.
Tristan Ewins is a freelance writer based in Australia. He describes his politics as 'liberal socialist' and 'left social democratic'. He has been published widely - including in 'On Line Opinion', Australia's 'Centre for Policy Development', 'The Canberra Times', and others. He can be reached by email at email@example.com
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