Sunday, June 27, 2010

The Legacy of Rudd Labor – and the challenge confronting Julia Gillard

above: New Australian Prime Minister, Julia Gillard and former PM, Kevin Rudd

Former Australian Prime Minister, Kevin Rudd has been deposed efficiently and suddenly. But now would be an apt time to consider the real legacy of Rudd Labor.  And now it is also a good time to consider the policy challenges facing Australia's Federal Labor government under the leadership of Julia Gillard: Australia's first woman Prime Minister.

by Tristan Ewins

Speculation had raged for weeks, yet still few seemed to have had warning of what was to come. Kevin Rudd – who once had been amongst the most popular Australian Prime Ministers ever – was removed in an internal ‘coup d’etat’: brutally, efficiently, suddenly. The impetus apparently came from the Victorian and New South Wales right-wing factions of the Australian Labor Party.

The Federal Australian Labor government had been taking hard blows in crucial areas for months; and a prolonged character assassination campaign against the Prime Minister was beginning to stick. Faced with a massive and unrelenting campaign by mining companies, and by large sections of the Australian media, Rudd sometimes appeared rattled or angry. Those wanting a pretext upon which to judge the Prime Minister felt the smears against his character were confirmed.

But the events of late June 2010 had been some time in coming.

First there was a public-funded ‘Home Insulation Program’ (HIP): intended to provide stimulus to ward off recession; but also to reduce energy consumption on heating, and thus ameliorate climate change. A creditable idea in its conception, the implementation, however, was poor. Several house fires ensued following the policy’s enactment, and four tradesmen died as a consequence of negligence on the part of the installation companies, and insufficient regulatory oversight. The government was thus discredited in the eyes of many in the electorate.

The government also came in for criticism for its failure to enact deep and effective legislation aimed at combating climate change.

Kevin Rudd had laboured to the point of exhaustion at Copenhagen to achieve a solid international position to take on the threat of climate change. He had also reached out to the conservative parties in Australia, but just when a compromise position seemed to have been consolidated the hard right of the Liberal and National parties revolted, with new leader Tony Abbott taking a ‘hard line’ against reform.

Many Australians were confused by the complexity of the proposed Carbon Pollution Reduction Scheme (CPRS) also; and under Abbott the conservatives capitalised upon this confusion. Abbott made gross – but effective - simplifications, playing upon peoples’ fears, labelling the proposed CPRS ‘a great big tax on everything’.

The Australian Greens meanwhile proposed a simpler (and perhaps more effective) carbon tax; but in what might have been a fateful decision, the author believes Labor strategists concluded such a strategy would be too hard to sell.

Adam Morton, writing in ‘The Age’, observes that it was the right-wing factions of Labor who ultimately pressured Rudd to put-off action on a CPRS “until at least 2013”; and that those who clinically assassinated Rudd’s Prime Ministerial career, had themselves partly to blame for damage to ‘the Labor brand’. This was demonstrated at the time by a significant defection of Labor’s support base to the Greens.

The final – and crucial – blow came in the form of Rudd’s confrontation with Australia’s powerful mining giants.

As the author has stated in an earlier post: Rudd’s proposed mining super-profits tax was both fair and sustainable.

I emphasise again, following on from our last post at ‘Left Focus’; economics journalist Tim Colebatch has established that:

“The Bureau of Statistics' recent round-up of industry data for 2008-09 estimates the profit margin in mining that year was 37.1 per cent. That's three times the industry average of 11.2 per cent… They're doing well.”

‘Kicking in’ only at profits of 12 per cent or higher, this truly was to be a tax of ‘super-profits’ in a meaningful sense of the word.

But Rudd could not stand against a combination of factors which set a truly dangerous precedent for Australian politics, and the meaningfulness of our democracy.

The mining companies had a potential war chest running into the hundreds of millions of dollars, and were able to saturate much of Australia’s media with a cunning and ingenuous fear campaign. In this they were aided by conservative Opposition leader, Tony Abbott, who parroted the required line on a daily basis as part of some unholy and opportunistic alliance. Abbott tried to have us believe that putting a premium on the minerals that belong to all of us would mean ‘the end’ of the industry and of tens of thousands of jobs. Finally, what must be assumed to be a convergence of interests between the mining companies, the conservatives and sections of the media – manifested in a crude framing of the debate; to discredit the government, and to destroy Rudd.

What this shows quite plainly is that Australian democracy is not so robust as to stand against the power of wealth in some circumstances. So long as wealth is able to dominate the public sphere, and set the terms for debate, democratic institutions and movements ‘do not have a chance’ when it comes to challenging the most powerful vested interests. The interests responsible in this sense for Rudd’s demise will want to obscure this to prevent Australians from drawing these obviously radical conclusions. Instead they will try and ensure ‘history’ is written on their terms: that Rudd’s demise was purely the consequence of flaws in his judgement and character.

That said: while Rudd sometimes disappointed his supporters dreadfully – think, for instance, of his failure to abolish the anti-union ABCC (Australian Building and Construction Commission), and his failure to restore unions rights to pattern bargaining - reflecting upon his legacy it is plain that this was a man with a genuine reform agenda.

While not fully ‘rolling back’ the repugnant industrial relations agenda of the former Howard conservative government, Rudd did enact changes that improved the wages, conditions, job security and rights of a great many Australian workers.

Rudd Labor sought to use the mining super-profits tax as the foundation from which to achieve an increase in employer contributions to worker’s superannuation funds.

Rudd Labor ratified Kyoto, and Rudd worked himself to exhaustion fighting for action on climate change at Copenhagen. He also had the foresight to make a massive public commitment to building a National Broadband Network which would position Australia to grow the knowledge industries which will arise in the coming decades.

Rudd Labor enacted landmark legislation for paid parental leave, made a genuine and heartfelt apology to Indigenous Australia’s ‘stolen generation’, and passed critical reform of pensions: especially in favour of those struggling on the Single Aged Pension. Stimulatory ‘cash payments’ were also targeted to some of Australia’s most disadvantaged and vulnerable.

Critically, Rudd Labor’s counter-cyclical investment and expenditure saved Australia from recession: standing in stark contrast to events elsewhere. For those who reflect upon this experience, the perceived superiority of the conservative parties on economic management should now well and truly have been refuted.

Further: reform of public health – shifting the burden proportionately towards the Federal government – while not sufficiently redressing funding gaps in the here and now – may have set the scene for future reform. By this I infer that if the Federal government is accountable for health, and in contrast with the states has the tax-levers at its disposal to increase funding – this might well place further reform ‘on the agenda’ for the future.

Finally, referring to a reform which had received limited public attention, Rudd stated his pride in lifting organ donation rates: with the consequence of many lives saved. This was of deep personal significance to the former Prime Minister, as he himself has been a recipient of organ donation.

In the future; reflecting upon his time as Prime Minister, Kevin Rudd can at least take comfort that his was a genuine and in many ways positive legacy.

Considering the recent state of Rudd Labor, though, the author feels that the former Prime Minister’s position was not beyond being salvaged.

A strategic withdrawal to a better defensive position might have been made in establishing a mining tax regime for which there had already been an Australian precedent. (ie: Petroleum and Gas resource rent) Or perhaps other measures – but not so far as to cut the projected increase in revenue by more than half. This could have been of great benefit in allaying voter’s fears.

And Rudd Labor could have capitalised upon its achievements once a compromise had been consolidated on the mining super-profits tax: with the fear campaign no longer ‘saturating’ the public sphere. As we have seen: there was indeed a significant array of genuine achievements.

But now the deed has been done. The power-brokers obviously believed that the haemorrhaging of Labor’s support base under Rudd was beyond remedy. Rudd was the ‘sacrificial lamb’ for Labor’s apparent ‘fresh start’. And despite the outrage of many, it is an important landmark as Julia Gillard emerges as Australia’s first woman Prime Minister.

Although in the past having proclaimed herself a socialist, and having come from the Labor Party’s left-wing, Gillard has not refrained from confronting unions. This has occurred regularly in her past capacity as Minister for Industrial Relations and Education. There are many who question her ‘left credentials’: but there are some also for whom any such doubts would actually be ‘a plus’.

Importantly, a Age/Nielson poll showed a surge of support for Gillard. ‘The Age’ has reported that:

"The government's two-party vote has leapt 8 points in three weeks, taking it to a 55-45 per cent lead over the opposition… On these figures Labor would sweep to power with almost two-thirds of the seats in the House of Representatives."

Many are responding to Gillard’s message that while the government had ‘lost its way’ she intends to get it ‘back on track’. Regardless of whether or not public disillusionment with Labor has been justified, Gillard is responding here to the sentiment in the electorate: and her message is finding resonance with voters. But importantly: in order to consolidate those supporters ‘returning home’ after defecting to the Greens, Gillard will need to construct robust policies on the environment.

While some focus on Gillard’s ‘shattering of the glass ceiling’, and her origins in the ALP Left, others will be wondering what the consequences of recent events will have for policy. It is the substance of policy implemented which, after all, matters most.

Public education and health seem to be passions for Gillard. But deep structural reform here would require tax reform in order to provide funding.

Would Gillard consider an increase in progressive taxation for her first term – of between 1% and 1.5% of GDP – focusing on the top 20% income demographic? Would she actively promote that position at the next ALP National Conference, and foreshadow this in the run-up to the election to secure a mandate?

Such modest reform – providing an annual pool of about $15-$20 billion from an economy of now at over $1 trillion annual value – could make a genuine and desperately-needed improvement to services in Aged Care, Mental Health, welfare and public education. Given our ageing population, it is also structural fiscal reform that cannot be put off forever without dire consequences!

And in the same spirit, would Gillard introduce a National Disability Insurance Scheme?

How these policy issues are resolved is ultimately what is most important: even more important than the individual who occupies the office of Prime Minister.

While recognising the Rudd legacy, we need now to look to the future and work for a Gillard Labor victory; hopefully with the critical and reasonably conditional support of the Greens in the Senate.

But this needs to take place in the context of building a base of support for reform of tax and social wage provision – and other critical areas such as the environment and industrial relations - under Gillard Labor.

The task for progressives is to make our support – and with this support for such a reform agenda – indispensable for Labor – but in a context within which Labor is still electable.

Despite recent setbacks, we should not resign ourselves to the notion that ‘this is the end’ for reformist Labor governments.

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Sunday, June 20, 2010

The Mining Super-Profits Tax Debate – an analysis

The Australian Labor government has proposed a landmark mining ‘super profits’ tax, but resistance from a cashed-up mining industry is revealing the fragility of Australian democracy.  This article considers the arguments around this tax debate in detail.

By Tristan Ewins

For the most part since its election in 2007, the Rudd Labor Australian government appeared to enjoy a position which could almost have been said to have been unassailable. Kevin Rudd himself was riding high in the polls as one of the most popular Prime Ministers ever.

Importantly: Labor steered Australia successfully from the threat of recession, engaged in the practical and necessary business of counter-cyclical expenditure and investment in the face of dogmatic and opportunist resistance from the Conservative Opposition. Rudd’s apology to Australia’s ‘stolen generation’ of indigenous peoples removed from their families was also crucial and ground-breaking. And more recently, the wages of Australia’s lowest paid were to a significant degree restored.

But in recent months these achievements have been obscured behind scandal over the implementation of Labor’s home insulation scheme; and almost entirely overshadowed by a co-ordinated campaign to derail Labor’s proposed ‘mining super profits tax’. We will deal here mainly with the struggle over tax reform.

Labor Party parliamentary candidate, Andrew Leigh has put the case for the ‘super profits tax’ at the ALP website itself. Leigh points out that twenty leading Australian economists support the proposed tax: including himself, John Quiggin, Fred Argy, Allan Fels and many others. And the revenue gained from the proposed tax is projected to pay for a 2% reduction in Company Tax more broadly; and this is to provide the scope for a rise in employer superannuation contributions from 9% to 12%.

In Australia, superannuation is a system of private retirement savings, sponsored by government, with contributions by both employers and workers. While there are serious flaws with regard to equity in the broader scheme of superannuation, obviously the proposed reform could make a big difference to the retirement incomes of Australian workers over the long term.

At the Australian Labor Party website, David Bradbury has also put the case for the proposed tax.
Bradbury argues:

“The existing royalties system is inefficient and out-dated and hasn’t kept pace with the increasing profitability of the resources sector through the mining boom. Before the last mining boom, the Australian people received $1 out of every $3 of profits in royalties and charges, but at the end of that boom, that rate was down to $1 out of every $7.”

Labor Minister Craig Emerson also puts a case in favour of the proposed tax.

Writing at Australian political website ‘The Punch’ Emerson explains how the ‘super profits tax’, a form of ‘resource rent’ taxation, would replace the current system of royalties. He argues that the proposed tax regime would be fairer in that it taxes profits specifically, instead of “on the [basis of] the amount of minerals extracted.” This, Emerson insists would actually remove disincentives for new investment.

Australian economist John Quiggin has also put many arguments in favour of the proposed tax reform.

He explains that in cases where mining companies make “super-normal” profits regardless of tax, the proposed tax reform will not comprise an obstacle to investment.

Specifically, Quiggin entreats us to take mining industry threats of capital flight ‘with a grain of salt’, listing occasions on which the mining giants have made threats in the past:

“…when they were upset about tax policy, about environmental restrictions, about Aboriginal land rights, about union wage demands and work practices…”

Finally, Quiggin believes such a tax would be equitable, falling mainly upon wealthy investors “many of whom are foreigners.”

Veteran Fairfax journalist Tim Colebatch has also made a number of interesting points in a recent opinion piece.

The title of this piece is perhaps misleading: “Resource Tax amounts to 50% nationalisation of the mines”. The tax no more represents nationalisation than does Company Tax considered more broadly. And even though Colebatch is dubious of Treasury claims that: “the community's share of mining profits has shrunk from 55 per cent over the five years to 2003-04 to 27 per cent in 2008-09”, he nevertheless recognises that the government has a genuine case for reform.

A crucial point, as Colebatch recognises it that:

“The Bureau of Statistics' recent round-up of industry data for 2008-09 estimates the profit margin in mining that year was 37.1 per cent. That's three times the industry average of 11.2 per cent… They're doing well.”

In fact mining profits are sometimes even higher than this.

Colebatch also observes that:

“Analysts believe the mining boom is the main driver of the dollar's rise, which has wiped out sales and profits for industries lacking its huge profit margin as a cushion.”

The point of this is that with the robust dollar, some industries such as tourism and manufacturing are becoming less competitive. Restructuring the tax mix as Rudd Labor is attempting to do is one way of redressing this situation. But cutting overall tax as a proportion of GDP is not an acceptable alternative as there remains a need to provide for welfare and services; including education and infrastructure from which business clearly benefits. (and therefore must pay its fair share to support)

As the debate on the proposed mining tax has developed the fragility of Australian democracy has in some ways become apparent. While the mining giants have a war-chest of billions to draw upon in pushing fear and disinformation, no political party, NGO or social movement can possibly compete.

Much of the Australian media have also apparently abandoned any pretence to inclusiveness and objectivity; throwing themselves head-first into what could honestly be described as a ‘campaign’. Somewhere, we must assume, there is a convergence of interests. The ‘Herald-Sun’, a Melbourne newspaper, for instance carried the headline:

“Bloody amateurs! Harvey Norman chief blasts Kevin Rudd, Wayne Swan over mining tax”

But excluded entirely from this article was recognition that elsewhere Gerry Harvey, the CEO of major retail chain Harvey-Norman, had actually stated that he did not oppose the tax.

Meanwhile: amidst the fear and disinformation, Labor’s implementation of paid parental leave – a landmark reform – received minimal attention from significant sections of the Australian media.

And Chief Executive of the Australian Industry Group (AIG), Heather Riddout, after stating her support for mining tax reform, focusing on “super-normal” profits in ‘The Age’, was ignored by much of the Australian media. (The AIG is a significant and important employer peak body)

Finally, sections of the media have constantly referred to the ‘mining super profits tax’ instead as the ‘super tax’, with an obviously altered connotation.

This kind of ‘framing’ of the debate – with very selective quotations, and sometimes a virtual ‘media blackout’ of themes inconsistent with the ‘campaign’ - is both biased and deliberate; and is a genuine threat to Australian democracy in the meaningful sense of the word.

Much attention has been paid to the perceived hypocrisy of the Labor government in devoting public funds to an advertising campaign of its own; but while Rudd Labor seems to be contradicting its past policy here, there are subtleties that are lost in this debate. In fact civic organisations need to be empowered as against the potential clout of big business; not just in these circumstances, but also more broadly.

In fact a fair compromise would be to devote sufficient public funds for information campaigns and advertising to be available for political tendencies across the political spectrum. One way or another we need to make sure the resources of political parties, NGOs and social movements and such are sufficient to be able to get their message across clearly, and not to be disadvantaged – or even eclipsed - by the level of resources available to the most powerful and wealthy interests.

Theoretically, government has other options at its disposal also. Were a ‘capital strike’ to take place, government could ‘step into the breach’. Abandoned mines could be commandeered, with fair compensation being paid to those who formerly held title.

And a public mining company could be established directly: with the effect of profits flowing directly to the community, literally providing many billions which could be invested in infrastructure and social services.

Perhaps the current political climate, influenced by the long-held neo-liberal consensus, works against such options. But when billions are being ripped out of the country with ‘super-profits’ every year, it is in the national interest for government to invest directly in mining.

Importantly, there are precedents which point to the workability of some form of mining super-profits tax. A ‘Resource Rent Tax’, has operated successfully in the oil and gas industries for over twenty years without any ‘collapse’ of investment.  Although as Tim Colebatch explains: while this tax is also applied at a rate of 40 per cent, it factors in only “above a benchmark (regarding profit levels) set 5 percentage points higher than Kevin Rudd and Swan now propose.”

Progressive blogger, John Passant has quoted John Kehoe of the “Financial Review’ to the effect that the existing mining tax proposal would only ‘kick in’ at 12 per cent and higher. This means the regime proposed by Colebatch would see higher taxes on ‘super-profits’ of 17 per cent and above.

As observed earlier in this article, there are many big mining operations which enjoy profits way above this threshold.

While the existing proposal from Labor is fair – and does focus genuinely on ‘super-profits’ (far above average business profits), it’s important also for the government to think about the current struggle strategically.

Under favourable conditions, it’s important to set new standards; especially where existing arrangements are unfair. Some commentators (eg: John Passant) have written that it’s actually the prospect of a new precedent that frightens the mining bosses most.

But the power of existing precedents certainly should not be understated.

Given this, it would be legitimate for Labor to consider some restructure of its mining tax proposal: to more precisely match regimes already existing and maintained successfully. By this I refer to the existing resource rent arrangements that apply in areas of the oil and gas sectors. That such a regime could be shown to have already been successful elsewhere – could go a great distance in allaying the fears of the Australian public. Such a compromise would still focus on ‘super-profits’, and – importantly - would establish a foothold for Labor in establishing the principle of resource rent for the mining sector.

And it is a very important principle to establish: as these non-renewable resources belong to the Australian people as represented by democratically-elected government; and there must be some reasonable kind of premium paid by miners on top of Company Tax to reflect this.

Calls for Labor to ‘dump’ Rudd clearly factor into a broader de-stabilisation campaign by the biggest mining bosses and their allies - such as the conservative Opposition which has sold-out the Australian national interest out of sheer opportunism. To replace Rudd now would also set a precedent – that Labor will ‘dance to the tune’ of big business whenever it faces real resistance.

That said: at times Rudd has looked rattled, as if he was entirely unprepared for the scale of resistance he would face in promoting resource-rent reform. Rudd needs to project an image of being calm and in-control.

Prominent political theorist, Christopher Pierson, has considered the dilemmas facing social democrats in great detail. Observing a general trend in social democratic politics, he has written:

“social democratic politics has always been resolutely possibilist or pragmatic.” “…being available to fight on another day is almost always preferred to heroically taking the field against the odds.” (Pierson, 2001. p 57)

There are times when commentators, political parties, social movements and NGOs need to be more uncompromising. If everyone always simply focused on the relative political centre, broader political debate would be silenced, and the course of long-term progressive reform stymied. That means there is still a need to talk about things even that are not possible for the time-being.

But following Pierson’s observation - Labor, for now, could do to withdraw to a ‘better defensive position’; adopting the compromise suggested by Colebatch, and selling resource-rent reform on the basis that the same regime has been implemented successfully elsewhere in the Australian economy. Again: precedent is very important in cementing an aura of credibility in the eyes of the electorate.

There are interests in the mining industry which certainly feel that they have been ‘singled out’: but beyond this there is a genuine case for reform; that the Australian people truly deserve a share when it comes the natural resources which belong, collectively, to all of them.

The challenge for Labor, though, is to apply these principles fairly and indiscriminately, regardless the interests involved; for the principle of distributive justice, and for the collective sake of the Australian people.

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Sunday, June 13, 2010

Oil Stained Hands

above: the author, Wes Bishop

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"Will all great Neptune's ocean wash this blood

Clean from my hand? No, this my hand will rather

The multitudinous seas incarnadine,

Making the green one red."

- William Shakespeare, Macbeth, 2.2

Wes Bishop condemns BP for the catastrophic oil spill off the US east coast, and calls for them to be held to account. But more than this, he argues that all Americans must now also take responsibility by demanding from their politicians proper regulation of the sector.

During the final year that George W. Bush was in office, Americans all felt the squeeze at the pump as oil prices skyrocketed. Yet, as the 2008 election ended and new political leaders readied themselves for the oath of office, Americans witnessed the downward spiral of gas prices. Breathing a collective sigh of relief, many began to feel comfortable in thinking that the country had paid its final price to out of control oil companies.

Then 2010 arrived.

Although the world wide recession is still keeping gas prices moderately low, Americans and people all over the world will soon feel the crippling crush the oil companies can unleash. Unfortunately, this time the charge will not be four dollars a gallon, but instead billions in cleanup, billions in lost revenue for other industries, and the incalculable cost of destroying our aquatic and costal habitats.

I speak of nothing other than the 2010 BP Oil Spill.

By now the storyline that has emerged is known by anyone with cable television. In late April an explosion occurred on an oil rig that had ties to BP, Transocean, and Halliburton. Eleven workers were killed, and the initially optimistic reports peddled by the companies in question were found to be lies.

Instead of five thousand barrels it has been discovered that for nearly two months over twelve thousand barrels a day have been pouring into the Gulf of Mexico.

The environmental and economic consequences of this disaster, that still has not been resolved, will take years to repair. So enormous are the ramifications of this disaster that commentators are at a loss to describe to the public exactly what is occurring.

However, one thing that is crystal is the problems that led to the disaster occurring in the first place. So far much of the criticism that has been brought forward against the companies has been dismissed as playing a guilt game. This line of thinking holds that it is more important to solve the problem then it is to point fingers. Although this is true the public should not be fooled into letting the guilty off the line. There is no argument that hind sight is twenty/twenty, nor that everyone is perfect and that mistakes will never occur. But it is insane to openly know what caused this disaster and do nothing about it.

This essay will look at the true problems that caused the spill of 2010. Yet, before people start easing themselves into preparation of an article that will run circles around a big corporation, know that the real problems that caused the spill did not come from BP. It did not come from any corporation. It did not come from any government. Instead, the problems that led to the spill came from the everyday citizen of the United States.

Yes, the government deregulated the oil industry.

Yes, BP cut safety measures to make a profit.

Yes, the government, including President Obama, only months before had been pushing for more off shore drilling instead of making the necessary choices to move forward with energy.

These are all true, but they all exist because people tolerate them.

The government deregulated the oil industry, not only because of money from special interest, but also because people believe that it is better for a company to regulate itself then it is for an objective third party. BP cut safety measures to make a profit, but Americans have shown themselves to be more interested in cheap products then high environmental standards. The government is still dragging its feet to fix the energy crisis we are all barreling towards, but many Americans want to ignore everything that is being said by scientist in favor of what fairy tale is being spun by paid liars.

All of these things point to the conclusion that our problems are not being caused by corrupt companies, or corrupt governments. Instead this suggests that our problems are coming from a crisis of philosophy that is blinding us to the obvious.

Well into the middle of the crisis Rand Paul, a candidate for the office of Senator, told cameras that the government had no business interfering with this crisis. He even went so far as to say that it was un-American of President Obama to hold the companies responsible.

Many have defended this position as a respectable stance of libertarianism. Somehow this philosophy has convinced people that BP really does have the right to do as it wants. That it is somehow BP’s oil, not the peoples, and therefore everyone should shut up and allow the free market to work.

Yet, the oil polluting the Gulf of Mexico, and soon the Atlantic Ocean, does not belong to BP. It communally belongs to the people of the United States. Granted, if certain conservative elements in the United States had their way the oil would belong to private industry, but as of now natural resources still belong to every person of a nation. When individuals make the case that we do not have the right to regulate how a private company behaves with natural resources they are sorely mistaken. We have every right to decide how, when, and where a company extracts those materials.

BP pays the United States government to go in and retrieve oil, with the understanding that it is going to be able to sell that resource for a profit.

However the question begs to be asked, why should the American citizen need to pay for something they own?

The answer given by many is that the American citizen has to pay BP because BP is the one that refines the oil. BP is the one who paid for the permit. And BP is the one that takes a risk on retrieving the oil. Many of these answers are interesting for the assumptions they make. Overhanging all of them is the Chicago School of Economics idea that private industry is the best equipped to handle any type of service, and that if government were involved it would simply interfere, and be inadequate.

Yes, one sees the logic to this statement. If the government were to retrieve the oil then it might engage in risky practices and cause a monumental oil spill that would wreck havoc on local and national economies and environments.

Also, BP is not engaging in any risk. By paying off legislators, who then lower the level of money the company has to contribute to fix a spill, companies and law makers have made it much more attractive to cut regulations, engage in risk, and then write off failure on the tax payer.

Enraged? According to many “libertarians” you have no right to be. The free market will work, they say, to re-establish balance. However, what they are not saying is that the free market is working to balance budget books, not common welfare or the greater good.

In the Banking Crisis of 2008 private industry failed as well, and needed the government to interfere to fix their mistakes.

This time the private industry does not necessarily need government interference to survive. What government interference is needed for is to ensure that the spill is contained and that people, guilty of nothing, do not become financially ruined for another’s actions.

Unlike the financial industry oil companies will never have to worry about being swept aside, because everyone needs the product they sell. What is so darkly amusing is that the oil companies own this monopoly because we give them the access to the natural resources, they make a profit, and then use that profit to buy off our politicians to ensure that only favorable regulations are passed, that the monopoly continues, and that we are held captive by their price games.

This time it was an oil spill in the Gulf, next time it could be, if certain forces have their way, a nuclear meltdown in the heartland of America, or some other horror brought on by out of check greed.

Unchecked companies and capitalism will not save America, nor will it move it into a secure future. Humans will perpetually suffer the same fates as long as they repeat the same follies. We have repeatedly seen what occurs when powerful corporations are permitted to cut corners. We have repeatedly seen what happens when the government and big companies become too close. Time and again this lesson has been slapped in the face of everyone, and time and again it has been ignored. Like children with a lit stove we, for some reason, have not learned the lesson of getting burned. And like children we continue to cry when we inflict pain on ourselves by not being more careful. We scorn those who warn us, and we play with fire.

Make no mistake, I am all for prescribing blame on BP but like the Scottish Queen of Shakespearian lore, we all have blood (or in this case) oil stained hands. We can, like the dramatic character, attempt to scrub ourselves clean, but we are quickly running out of pure water to do so. Only by re-examining our philosophies will we ensure true regulation, and prevention of such disasters.

Sunday, June 6, 2010

Strategic issues for the Left: and What agenda for Labor in 2010?

above: the author of this article, and editor of 'Left Focus', Tristan Ewins

In this article Tristan Ewins looks at the strategic issues facing progressive political forces, including the dynamics between the most radical and more mainstream wings of the broad Left.  Further, he considers the specific policy issues challenging the Australian Labor Party with the 2010 Federal election swiftly approaching.  The analysis is focused upon the Australian Left, but the themes are also crucial for the global movement.

Political activism is a process of challenge and discovery for many. Some are drawn to predominately Marxist organisations and their focus on grassroots social movements, while others are ‘drawn to the coalface’ of mainstream politics - involving themselves in the Greens or student Labor.

In reality there are lessons to be learned from all these many varied channels.

Organisations on the radical Left have often been the first to ‘trail-blaze’: leading and mobilising progressive campaigns. Communists in Australia were the first to campaign for indigenous rights, against the Vietnam war, for a social welfare safety net during the Great Depression, and against the White Australia Policy.
By contrast, parliamentary Labor has often found itself in a difficult position: unable to lead debate as a consequence of electoral pressures, and pressure from ‘the big end of town’.

And regardless of the many shortcomings to be found in Marxist traditions; these traditions retain insights of value to those willing to consider them with an open mind. We might include here an appreciation of the economic cycle in capitalism, tendencies in capitalism towards monopoly which actually undermine competition, and the Marxist call for working people to ‘win the battle of democracy’ in the fight for a fair society and a democratic economy.

On the other hand, organisations on the fringe Left often exhibit a damaging sectarianism both towards each other, and against potential allies in the Labor Party. While they are in a position to lead progressive campaigns without the kind of compromise which arises in electoral ‘real-politic’, sometimes hostility towards progressive Labor activists undermines the potential for a ‘broad front’ against social injustice.

This failure to engage with Labor activists in the context of progressive campaigns – or deterrence faced by Labor activists in the face of hostility - means that those Labor supporters will have limited experience when it comes to grassroots activism. This then flows through to the culture of the broader Labor Party – which is a bad thing for all of us!

This sometimes-hostility between Labor and the militant and revolutionary Left also means that neither side learns the lessons which can be drawn from mutual engagement. One such lesson is that both the militant and/or revolutionary Left and the ALP can – in a way – complement each others efforts.

We will return to this later.

In popular culture, Labor is often referred to as a ‘Centre-Left’ party, with the Conservative parties referred to as ‘Centre-Right’. One of the most important lessons to be drawn here is that the ‘centre’ is always relative and contested.

Many on the Conservative side of politics would like to press the political milieu – and thus ‘the relative centre’ in Australia much further to the Right: cutting government expenditure on infrastructure and social services; destroying protections for workers; failing to recognise injustices such as those suffered by indigenous Australians.

And there are many of us in the ALP, Greens and other tendencies who would like to press the relative mainstream to the Left: in favour of a more progressive taxation system funding first class social services; and also in favour of greater rights for workers, more investment in ‘closing the gap’ for indigenous peoples, and to advance the cause of a mixed and democratic economy.

But the ALP specifically is an electorally-focused party. It is a party which must respond to and take account of electoral pressures if it is to attain and hold government.

The consequence of this is that there are two levels of struggle we need to take account of.
Firstly there is the electoral context. In this sense the ALP must aim to be part of a successful electoral bloc.

While groups to the Left of Labor can officially and more freely campaign according to their values and build grassroots movements without much in the way of compromise, the ALP and even the Greens need to tailor their policies and their message to their electoral base.

Because the relative centre has shifted to the Right in recent decades – often (unfortunately) with prominent figures in the ALP helping to lead the way, the consequence of changed expectations is that even if parliamentary Labor wants to advance a more progressive agenda, they must temper their message.
With the Greens now to the Left of Labor, they campaign for the support of a narrower demographic – and thus can take a stronger line when it comes to emissions reduction, tax reform, social expenditure, and other areas.

The bottom line in this electoral contest is that ultimately Labor, the Greens, and any other forces on the ‘broad left’ form an ‘electoral bloc’: compromising together on policy (ie: ‘give and take’) in the event a Labor government is formed.

The aim of such a bloc ought be to push to the limits when it comes to policies on economic democracy, social justice and expansion of social services, environmental sustainability, tax reform, the rights of labour and other areas. But as an electoral bloc we need to recognise that mainsteram parliamentary parties cannot push these limits further than what is electorally sustainable.  (although that is not to say that social movements cannot mobilise and act independently)

Most importantly here - the policy limits of such a bloc are themselves set by a broader cultural struggle: a struggle which is in some ways more important that the electoral contest itself.

At this point it might be instructive to consider the case of Antonio Gramsci. Gramsci was an Italian Marxist whose ideas continue to be relevant for non-Marxists and Marxists alike. As against a ‘war of movement’: the kind of ‘lightning seizure of power’ as occurred in Russia 1917, Gramsci held that often a ‘war of position’ would be more practical.

Such a ‘war of position’ is more of a long and protracted contest – taking shape throughout institutions, workplaces and the cultural sphere. It comprises a long fight for ‘hegemony’ which can potentially be adapted for a liberal and democratic context. Indeed, such a context is preferable, as opposed to the kind of brutal and desperate struggle that occurred in Russia 1917 and the civil war which followed.

As inferred, therefore, the cultural struggle – the struggle for hegemony – must be at the core of any movement for progressive social change. This struggle takes place in our classrooms, our newspapers, academic and popular journals, political websites and online networks such as ‘GetUp!’, with union campaigns – and yes also with radical campaigns on the Left pushing the limits beyond where parliamentary Labor can afford to tread.

The point here – regarding complementary roles for both Labor and the revolutionary and/or militant Left – is that they can take different positions in the broader fight for change. In the electoral struggle Labor can achieve office – and thus a level of influence – that more overtly radical forces cannot. The more overtly radical Left, on the other hand, can lead the cultural struggle and push the boundaries of debate, mobilisation and political action beyond what parliamentary Labor can manage as a consequence of the demands of electoralism.

Ultimately in this context there are realities we must take account of. It may be uncomfortable for a mainstream electoral party to face, but the truth is that Australian and world politics are dominated by ‘the big end of town’. The wealth of what some call ‘monopoly capital’ is so great and so concentrated, that few dare challenge their power – or even openly recognise that this concentration of power is a problem – for fear of an economic and political backlash.

Within popular forums – including those on the ‘broad left’ - we need overcome this fear to identify ‘the elephant in the room’. We may not want anything like a ‘Stalinist command economy’ – but we should want to deliver economic power meaningfully into the hands of ordinary people.

Importantly, there is reason to suppose that Rudd Labor is not ‘pushing the boundaries’ as far as it could get away with; and unions meanwhile are not taking enough of an independent position to lead debate when it comes to the rights of workers.

The cause of health care reform – moving to Federal funding - is an important example here. By increasing the Federal Government’s tax base progressively by as little as 1 per cent of GDP, we could mobilise such resources (over $10 billion) as to make great inroads into hospital waiting lists – without putting pressures on elderly and other patients whose premature release could lead to death. Some of these funds could also be devoted to improving the quality of care in aged care facilities.

And by increasing the tax base on top of this by an extra 0.5 per cent of GDP, we could afford welfare reform – giving a ‘fair go’ to job-seekers and students.

Over the long term, Labor could aim for the kind of advanced welfare state and social wage as prevails in countries such as Sweden, Holland and Denmark. Labor could begin with a ‘three term plan’ (including the current term) to expand desperately-needed public expenditure by as much as 4.5 per cent of GDP over that period.

Meanwhile: the Henry Tax Review could provoke such debate so as to open the way for further tax reform. Labor could reform the ‘tax mix’ to give a fairer go to those on lower and middle incomes – shifting the tax burden instead to those in the top 20% of incomes.

Such reform would focus on a base narrow enough for distributive objectives, but broad enough to provide a real boost for revenue and social wage expenditure.As part of this process, the tax free threshold could be lifted, benefiting those on lower incomes, with increases and restructuring with regard to higher brackets covering the cost. And HECS – the ‘Higher Education Contribution Scheme’ which affects tertiary students – could be restructured – including a repayment threshold that is increased and indexed in real terms.

In addition to this a ‘disability insurance scheme’ could raise revenue vitally needed for some of our most vulnerable: and in such a fashion that seems to be ‘common sense’ and even self-interest for ordinary Australians.

And anticipating global demand for wireless broadband into the future, Rudd Labor could also push investment in public infrastructure in that field. Under conditions of global (ie: universal) demand for both wireless and fiber-to-the-home networks, after all, arguments about competition are rendered redundant.

On top of this, arguments could also be made about consolidating a mixed economy in areas such as banking and social housing. A public-owned bank could enhance competition, countering the logic of oligopoly and collusion, and providing bank services to even the poorest on the basis of need. And expanded social housing could correct the ‘housing bubble’, making home ownership and rental more realisable for those who are struggling to find a place for themselves in a tight market. Infrastructure modernisation is also crucial in the context of a growing population, with urban and regional consolidation.

Finally, Labor must deliver basic rights to workers; making good its promise that no worker be worse off under Award modernisation, while supporting pattern bargaining for its next term; and restoring the real wages of Australians on minimum incomes.

There are many in the Labor and Greens grassroots who long for more radical change. Economic democracy, for instance, should be extended via a variety of mechanisms including mutualism and co-operatives – but we will not focus on this for today.

The kind of policy ideas already dealt with here, meanwhile, ought comprise something of a ‘minimum program’ for Labor from now and on into the next two terms of Federal Labor government – with support from the Greens in the Senate. Such ideas should form the basis of a ‘common ground’, uniting the ALP Left, Right and any independents behind an achievable program for change.

Moving to our conclusion, it is also critical for Labor and other activists to acknowledge that the parliamentary party is not ‘the be-all and end-all’. Party membership must be made meaningful and rewarding for the grassroots. Here, grassroots organisations could also enjoy more freedom to lead debate on crucial issues of social justice than enjoyed by the parliamentary party.

Following on it ought be noted that there are times when civil disobedience is a vital element of any meaningful and genuine liberal democracy. Responses to social injustice could legitimately include the defence of a picket line to protect the jobs and entitlements of workers, or ‘sit-ins’ and political strike action to resist a war of aggression - or demand public housing for the homeless – whose condition is genuine and desperate. These causes activists can uphold at the grassroots level beyond the scope of the parliamentary Labor party, and other parliamentary forces.

The coming Federal election comprises a vital test for Labor, the Greens and others on the broad left.
If as an avowed Christian Abbott claims to genuinely care for the most disadvantaged he must support a bipartisan consensus to ‘fix’ the public health care crisis, deliver high quality aged care for all in need, provide shelter for the homeless, and improve the welfare safety net – including elimination of poverty traps - even if it means some (relatively moderate) increase in tax.

Instead - Abbott’s opportunistic opposition to tax reform, as a means of funding desperately-needed infrastructure, welfare and services – suggests a level of hypocrisy – a weakness which could be exploited by Labor, the Greens and the broader Left.

With so much at stake one other thing is also clear: it is a contest we cannot afford to ignore.

Tristan Ewins

The author is an RMIT Politics PhD student, freelance writer and grassroots Labor Party activist.

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