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by Tristan Ewins
Greens policies for the Victorian State Election
On November 14th the ‘Sunday Age’ carried a feature regarding Greens policies for the coming Victorian State election. On the plus side these policies addressed issues that have been long-neglected – including by Labor. On the downside, Michael Bachelard doubted the affordability of the entire range of policies taken together.
As the Victorian State election approaches, this week we consider Greens and Labor policy in more detail.
In his article in the ‘Sunday Age’ Bachelard listed the following as Greens policies:
• subsidise low-income earners to pay increased power bills
• Increase health funding
• Reduce hospital waiting lists
• Build birth centres everywhere that needs one
• Increase mental health funding
• Fund mental health workers in schools, police stations, prisons
• Aged care for everyone who needs it
• $1 billion a year more for public education
• Free preschool
• Better pay for teachers
• No TAFE or school fees
• More for social housing
• $13 billion for more public transport
• Peak-hour trains and trams to arrive every 10 minutes
• Boost to legal aid funding, providing ‘justice for all’
Bachelard noted that few of these policies had actually been costed. Further, these policies are forwarded in the context of promises to actually cut tax in some areas: “with less gambling revenue, stamp duty and payroll tax”…
But on the other hand: “Taxes on carbon dioxide and electricity transmission would go up, though low income people would be protected from higher energy prices…”
Bachelard explains that the Greens are also assuming a national carbon tax (presumably implemented by the Federal Labor government) with significant funds “[flowing] back to the state”. ‘Wriggle room’ is also assumed in the context of a $43 billion state budget.
The critical question is how these strategies balance out on the budget bottom line if implemented. And with a swathe of new initiatives “holding the line” is not good enough. What would be needed is new revenue. And while Victoria can afford new debt so long as those debts are serviceable, dependence on debt-financing cannot go on forever.
There isn’t scope here for me to consider all the Greens policies listed by Bachelard, but we will look at a selection.
Firstly let’s consider Greens policy on public housing. According to Bachelard this Greens policy would involve a shift “towards social housing, including the construction of 29,000 more ‘affordable’ properties by 2014.” In the Bachelard article “professor of urban studies…Terry Burke” describes this ambition as “financially impossible to achieve”, with a price tag of “over $6 billion” (presumably for Victoria alone), putting “impossible” pressures “on the Commonwealth.”
In response to these claims, though: doing nothing is not an option. And considering the scale of the problem – neither are ‘half-measures’.
The crisis of housing affordability is amongst the worst of the Howard government legacies. The housing bubble has left a lasting impression not only for home buyers, but in the rental market as well.
Partly because of speculation encouraged by the Howard Conservative government, and partly because of undersupply, housing prices have spiralled out-of-control over the past decade or so.
And unfortunately – even considering an investment by Rudd Labor in public housing – Labor governments have not done enough.
In March 2010 ‘The Age’ noted that: “House prices in Australia climbed 13.6 per cent in 2009 alone after a decade in which they posted increases of about 170 per cent, according to the Australian Bureau of Statistics.” In the same article it was observed that Australia suffered a “current shortage of 200,000 homes and an annual shortfall of 60,000”, and that this “would balloon to 800,000 by 2020, if no reforms were undertaken.” http://www.theage.com.au/business/property/australia-faces-housing-affordability-time-bomb-developer-20100317-qdii.html
But assuming the level of investment suggested by the Greens was a ‘once in a generation strategic commitment’, replicated interstate and with the support of the Federal government, then it is reasonable to assume such a project would be worth the devotion of resources.
Notably, though: assuming maintenance of the relative effect on supply, lower but sustained levels of investment would need to continue thereafter over the long term – sufficiently as to keep pace with a growing population.
Even if a ‘once-off surge’ of investment reached the vicinity of $20 billion nationally, the crisis is genuinely such as to warrant it. Housing affordability must be a priority; and simply releasing new land at the urban fringe is not enough if government will not commit also to funding the necessary infrastructure.
Greens prioritisation of public transport is also admirable: but with a growing population and an inevitable degree of urban sprawl can new investment in roads be put off forever?
And it will be interesting to see the form power subsidies for those on low-incomes would take. One option could be to create ‘quotas’ for renewable versus dirty (but cheaper) energy. By allowing those on welfare and low incomes to draw fully from non-renewable sources, and by promoting ‘quotas’ of renewal energy use for others - an effective subsidy could come in to play. Perhaps further subsidies should be applied for those on welfare AND low incomes in the case of water as well.
In an area apparently not canvassed by either Labor or the Greens, it is also notable that cross-subsidies could be best applied in the context of a return to natural public monopoly in energy and water. Such conditions could also encourage better value for consumers generally.
Social-commentator Dick Nicholls, in a 2008 article noted how:
“In the corporatised New Zealand industry the wholesale price of electricity declined 17% in real terms between 1987 and 1997, but the retail price increased by 20%.” http://www.greenleft.org.au/node/39055
And in an Australia-specific example, Nicholls explains that:
“In South Australia, between 1994 and 2002, residential tariffs increased by 40%, with the state's regulator claiming that 20% of the total tariff was due to privatisation.” http://www.greenleft.org.au/node/39055
Even where efficiency gains have been delivered under private utility ownership, gains have been diverted to maximise profits and share value instead of flowing to consumers.
Re-socialisation of utilities under these circumstances makes sense: and there is a need amongst the major parties (including the Greens and Labor) to scrutinise and ultimately reject the neo-liberal ideology which rules out ‘natural public monopoly’ in order to maintain a ‘pure’ position on the theme of exclusively private markets.
So many of the policies canvassed by the Greens are crucial; but the final policy we’ll consider, here, is Aged Care.
I’ve already considered the Aged Care crisis at this blog elsewhere. Readers are welcome to consider earlier ‘Left Focus’ articles of mine at the following URLs:
And also: http://leftfocus.blogspot.com/2009/02/another-look-at-aged-care-crisis-call.html
A ‘total package’ for Aged Care must include support for carers; mandatory heating and air-conditioning in all hostels and nursing homes, free dental care, as well as more staff and a better ‘staff mix’ – with more registered nurses, and better pay and conditions to attract these into the system.
Other ‘quality of life’ issues include privacy, and access to individual rooms; as well as: “access to the “simple pleasures”…[such as] parks [and] gardens. Access to television, music – and into the future access to information and communications technology (ICT) must be considered a basic right.
But the broad range of initiatives canvassed by the Greens would cost money – and lots of it.
Amidst all these issues, the bottom line is that crises involving an ageing population (with related health and welfare costs); and involving housing supply and insufficient urban fringe infrastructure – cannot be addressed without an increase in revenue. Increasing the retirement age is not fair, though – and the timid response to such proposals in Australia by the labour movement is mind-boggling.
A rising cost-of-living also demands welfare reform as well as further tax-rebates for those on low incomes. The best place to address this is at the Federal level, with progressive tax restructure, and vital grants flowing through to the states for provision of services.
If the Greens are serious about the reform agenda they propose they need to consider how these ambitions can be realised in the context of Federal and State government co-operation. To provide these kind of outcomes we need a progressively-structured increase in taxation nationally; rising for this term of the Federal Labor government in the vicinity of 1%-1.5% of GDP.
The Greens have the right kind of ambitions, and their policy writers look to have their hearts in the right place. But they need to be clear on how they are going to deliver. If any of their spokespeople are able and willing to elaborate on this, they are most welcome to do so via Comments at this blog.
Labor policies for the Victorian state election
Looking to the Victorian ALP website it appears that Brumby Labor is putting a lot of emphasis on Liberal costings, and the sustainability of their promise to slash Stamp Duty. The Labor line seems to be that Ballieu is making promises he simply cannot deliver; and that it is Labor who enjoy a 'proven history of fiscal discipline.'
In response on Stamp Duty, Labor is promising a targeted and focused (hence smaller) reduction of their own – tightly focused on newly-built first homes in regional Victoria. This is smart urban planning, also: as by focusing on the development of regional centres, pressure is lifted from the Melbourne housing market, while partly-containing urban sprawl. http://www.alpvictoria.com.au/news-events-media/news/baillieu-s-stamp-duty-hoax-will-break-the-budget/
Brumby Labor is also claiming to hold the ‘high ground’ on the environment; re-iterating their commitment to reduce emissions by 20% based on 2000 levels. As part of this commitment, Brumby Labor is emphasising their plans for a “staged closure” of the ‘dirty’ Hazelwood power plant. http://www.alpvictoria.com.au/news-events-media/news/baillieu-embraces-tony-abbott-s-climate-scepticism/
For the Greens these measures have not gone far enough; but the dilemma for voters is whether to ‘reward’ Labor in expectation this will encourage further action; or whether to apply greater pressure by supporting the Greens. There are issues of ‘electoral synergy’ between the ALP in Greens which I raised in the ‘Left Focus’ instalment immediate prior to this.
Meanwhile: with fear of violent crime spiralling, public transport safety has also become a major issue. In response to Liberal policies, Labor has committed to “returning staff to every station on the electrified metropolitan rail network” and “delivering a central CCTV control room that will make our trains safer for commuters.” Further Labor are promising to “fund 100 additional Transit Police for a total of 350 across the network.” http://www.alpvictoria.com.au/news-events-media/news/ted-baillieu-reneges-on-pso-train-station-policy/
And yet today’s ‘Sunday Age’ (21/11/2010) – on its front page - exposes the fear campaign around violent crime as being founded upon false and exaggerated claims. While Victoria’s overall crime rate has fallen by 29.9% since 2000-2001, Victorians are being confronted with a “law and order election”. The Liberals imagine they could be swept to office upon a wave of fear; and Labor has done little to question this trend – for fear of inviting a backlash in the face of what for many is ‘indisputable’ and ‘common sense’.
The role of the media for cultivating these perceptions also needs to be scrutinised.
What is also notable is the extensive record of Victorian Labor when it comes to support for Public Private Partnerships. (PPPs) Columnist for ‘The Age’, Ken Davidson, has long taken Labor to task on just this issue, accusing the government of ‘fleecing’ the public. In March 2010 Davidson observed that “[according the the government’s budget papers] there are now $10 billion worth of public-private partnerships on Victoria's books as liabilities.” (approximately $4 billion of this related to the Wonthaggi desalination plant) http://www.theage.com.au/opinion/politics/lenders-fudges-facts-on-ppps-20100504-u71f.html
“On the assumption that the overall return to investors on these projects is a conservative 10 per cent, the cost to Victorians as taxpayers and water consumers will be of the order of $1 billion a year. Given that the government's AAA credit rating means it could borrow the same amount of money for an interest expense of $500 million… “Half a billion dollars could finance the interest expense on $10 billion - enough to transform Victoria's transport, education and health systems.” see: http://www.theage.com.au/opinion/politics/lenders-fudges-facts-on-ppps-20100504-u71f.html
Meanwhile -- Davidson’s proposed alternative
“involves piping water from north-west Tasmania that can supply the whole of Melbourne. This frees up 90 per cent of Melbourne's water from the Thomson and Upper Yarra dams.” http://www.theage.com.au/opinion/society-and-culture/not-too-late-to-stop-the-disaster-that-is-our-desalination-plant-20101010-16dxd.html
The trend towards Public Private Partnerships – which originally gathered pace under the Kennett Liberal government – has rarely been subjected to proper scrunity. Public debt finance has always been cheaper (this is usually the case for governments, and especially given Victoria’s ‘AAA’ rating); and provision for private profit margins has always meant that the public pay comparatively more for PPPs over the long-term.
Arguments for ‘PPPs’ based on diverting ‘risk’ also seem empty in the face of contracts which bind Victorian taxpayers to pay billions for desal plant water even when there is no demand – and when there is an abundance of supply.
On the other hand, Victoria’s population is growing, and there will be expanded demand for water into the future.
Furthermore, with stress upon the Marray-Darling basin, some have argued that Tasmania may arise as the country’s new ‘food bowl’. These matters were discussed on the 7:30 Report in September 2010. (see: http://www.abc.net.au/7.30/content/2010/s3024352.htm )
The consequence of this is that Tasmania may need its supply of water into the future.
But even assuming this, a fully-public desalination plant would have provided better value for tax-payers. And the project might also have been deferred until such a time that the need was more immediate and indisputable.
Finally, Brumby Labor is trying to claim the ‘high ground’ on social justice – pointing to its ‘Fairer Victoria’ initiative, and refuting claims that it ‘no longer stands for anything’. Specifically, Labor is pointing to investments of “$1 billion a year for the past five years under the Fairer Victoria package.” Professor David Adams describes this “co-ordinated and preventive” “umbrella of investment across vulnerable communities, childhood development, education opportunities, mental health and disability services” as positioning Victoria nationally ''just ahead of the game''. http://www.theage.com.au/victoria/victoria-state-of-the-fair-go-or-the-fob-off-20101023-16ynd.html
And yet while overall Victorian investment in public housing is seen by some as lagging, the Liberals are also portraying Labor’s homelessness policy (a $42 million package; see: http://www.theage.com.au/victoria/brumby-to-spend-42m-helping-homeless-20100922-15myv.html ) as having ‘come too late’. There are around 20,000 homeless people in Victoria alone.
This article has only involved a small sample of Labor and Greens policies. There has not been sufficient scope to provide an exhaustive exposition. But hopefully the analysis here will have provided for some a deeper understanding of the issues at stake.
The ‘Sunday Age’ editorialised today (2/11/2010) under the heading “Labor? Liberal? What difference would it make?” Although drawing to this editorial’s conclusion there was at least the observation that – 'unlike in NSW' – “[Victorian] Labor offers a competent managerial government.”
Years of Public Private Partnerships, outright privatisations and policy convergence have left much of Labor’s core support-base deeply cynical. Many have defected to the Greens. And even now some are speculating about future private toll-roads under Labor.
The Liberals would be no better. Their commitment to the neo-liberal ideology means there will be no scrutiny of ‘privatisation gone too far’. And their ‘tough on law and order’ policies represent crass and dangerous population at its worst.
What is more - Labor’s ‘Fairer Victoria’ programs – while needing to be expanded upon – could also imaginably be targeted by the Conservatives to pay for their $750 million in Stamp Duty cuts. (which are several times the scope of Labor’s proposal) see: http://www.heraldsun.com.au/news/victoria/parties-fight-to-cut-stamp-duty/story-e6frf7kx-1225957471507
No-one seems to be talking about utility re-socialisation to restore natural public monopolies. Hopefully it’s not too late for Labor and the Greens to reconsider these issues into the future.
Again: The Greens are mostly making ‘all the right noises’ but have to come up with a workable model for funding. Conceivably this might involve co-operation with Labor at a Federal level to provide funds for water and energy subsidies, aged care, public housing and other priorities. Progressively-structured tax reform (ie: expansion) over the coming three years of the scope of 1.0%-1.5% of GDP could provide room for these initiatives.
It would also be refreshing were the Greens to take a high-profile position against infrastructure privatisation.
Despite the rivalry, Labor and the Greens actually need each other if progressive reform is to be achieved.
Here’s hoping Labor/Greens co-operation in the Victorian parliament ‘bears fruit’ with real, tangible and genuinely realisable change over the coming years.