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Tuesday, August 17, 2010

Election 2010: Final thoughts as Australia goes to the Polls

above: Fibre Optic Broadband is essential to Australia's economic and cultural future

In this article Tristan Ewins examines some issues that could be crucial for Australians still to decide their vote for the August 21 2010 Australian Federal Election. Indeed, there are many issues who haven't received anywhere near enough exposure.

Australia goes to the polls this coming Saturday: August 21st 2010. But some voters will not make their decision until the final day. Others might not even decide until they arrive to vote.

That said, what kind is issues might play on such voters minds as they make their decision?

What follows is a consideration of some questions which might influence voters – even this late in the campaign.

Would-be-Prime Minister, Tony Abbott opposes the National Broadband Network; claiming it's too expensive, and that it shouldn't be public. But privatisation of Telstra created a private INTEREST which obstructed modernisation of communications infrastructure to defend its own profits. Does Abbott want to repeat this mistake?

He is also proposing an alternative to the National Broadband Network which makes use of inferior technology. This infrastructure should last decades; but if we don't invest in fibre optic broadband now, we will have to do so in the future. Tony Abbott talks of ‘waste’, but given his $6 billion commitment to broadband based on inferior technology, and its probable short-term life span, does he really know what he is talking about?

As compared to the Abbott proposal, Communications Minister Stephen Conroy expects under the NBN “speeds of up to 1000 megabits per second”, 10 times the speed originally envisaged by the government. Conroy described Labor’s NBN investment as being "truly about future-proofing". http://www.theaustralian.com.au/national-affairs/taxpayers-to-pay-no-more-for-nbn-with-even-faster-download-speeds-labor/story-fn59niix-1225904313190

Another commitment from the Abbott campaign is their determination to drop the resource rent (ie: mining) tax which gives the people a share of profits which come from resources belonging to all of us. Rio Tinto and BHP now accept the tax. But Abbott’s plan to drop the tax would cost the budget bottom line over $10 billion a year.

This, in turn, raises the question: What SPECIFICALLY will Abbott cut - amounting to a full $10 billion a year - in order to pay for this promise? Will he take the knife to Health again? Already we know he plans to abandon GP ‘Super Clinics’ designed to take the pressure from hospitals.

Abbott wants to implement a Parental Leave scheme which will discriminate against parents on low and middle incomes. According to Jenny Macklin, Abbott’s scheme: “would provide high income earners living in cities with up to $75,000 and hairdressers, cashiers and hospitality workers much less.” http://www.alp.org.au/federal-government/news/abbott-team-question-his-judgement-on-paid-parenta/

But even voters on low incomes would pay as a proportion of costs from Abbott’s Company Tax levy would flow through to all consumers.

Abbott’s parental leave scheme would initially cost over $8 billion over the first two years. Voters on low and middle incomes would effectively subsidise those on high incomes. Is this fair? Why should voters on low and middle incomes vote for this?

By comparison Labor’s existing scheme “provides 18 weeks' pay at the minimum wage, currently about $570 a week”: a flat rate for all. http://www.smh.com.au/federal-election/gillard-fires-up-over-parental-leave-20100731-110q0.html

There are crucial questions on taxation policy, also, which have barely featured in media coverage. Abbott is considering the Henry Tax proposal for a flat 35 per cent rate for earnings from $25,000 up to $180,000. Michael Stutchbury of ‘The Australian’, however, thinks there may be complications. http://www.theaustralian.com.au/national-affairs/commentary/no-wonder-hes-cautious-on-tax/story-e6frgd0x-1225902762475

These concerns, and also some of my own, are as follows.

How will this affect overall revenue? Where's the money coming from? Will the GST rise? And where's the fairness taxing an average income earner at the same rate as a person on $180,000/year? Will Abbott announce the FULL details of his plans for tax well ahead of the election day? Voters deserve the full story.

Then there are Liberal claims about ‘debt’ and ‘waste’.

In fact, Liberal claims of ‘stimulus waste’ are greatly exaggerated; and their advertisements downright deceptive. At first, Liberal ‘attack ads’ accused Labor of an ‘$8 billion waste’ on ‘school halls’. This has now been revised to ‘UP TO $8 billion’.

‘The Age’, however, reported that the costs of Labor’s ‘Building the Education Revolution’ (BER) infrastructure program “blew out by [only] up to 12 per cent”. Any blow-out is obviously a problem; but the Liberal response via their ‘attack ads’ has been one of extreme and deliberate exaggeration. http://www.smh.com.au/federal-election/school-building-costs-blew-out-by-up-to--12-per-cent-inquiry-20100806-11lpi.html

Despite the hype, the Sydney Morning Herald has reported that only 2.7% of all schools engaging in infrastructure projects funded by Labor's BER program have reported problems with the program! See SMH: http://www.smh.com.au/business/claims-of-stimulus-waste-were-greatly-exaggerated-20100808-11qdj.html

And meanwhile the BER program provided economic stimulus when it was desperately needed: with school communities all over the country now enjoying vital infrastructure which will enhance education processes and outcomes for generations.

Tim Colebatch - Economics editor of ‘The Age’ - has also blown Liberal claims to the ‘high ground’ on debt out of the water. Writing on August 12th, Colebatch claimed that the Coalition “has used up almost all its budget savings for new spending and tax cuts, leaving it with a bit over $1 billion of net savings over the next four years - on its own costings.” http://www.nationaltimes.com.au/opinion/coalition-cuts-amount-to-just-01-of-budget-spending-20100811-11zss.html

To put that in context, with an economy valued at over Aus $1.1 Trillion, we’re referring to less than 0.0025% of GDP in additional surplus for the Coalition as opposed to Labor.

Here would-be-PM-Abbott is playing upon negative preconceptions built up with regards Labor and economic management: but the reality is that Labor stimulus prevented recession, and Coalition claims on debt management simply have no substance.

Recession under Abbott would have meant a downward spiral of unemployment, falling public revenue and government debt. Abbott has been ‘running scared’ from a debate with Gillard on the economy. He doesn’t want his policies subjected to real scrutiny.

Under Labor Australia has maintained its ‘AAA’ credit rating, aiming for a return to surplus – after the critically-required stimulus - within 3 years. http://www.factsondebt.com/Fact-1.aspx

And drawing on Treasury statistics: “Australian Government net debt is expected to peak at 6 per cent of GDP in 2011-12 compared with a peak of 94 per cent of GDP for the G7 economies.” http://www.factsondebt.com/Fact-1/Fact-3.aspx

And regardless of this, fears about public debt need to be placed into perspective.

Reduction of public debt under the Howard Coalition government came from privatisations – asset sales which saw reductions in debt matched or outstripped by reductions in government revenue.

And neglect to modernise infrastructure and invest in education - as typified under Howard - costs the economy in the long-run. Obviously what’s needed is a balance between managing debt, and investing for the future.

Neglected issues and final observations

There are other issues which also have been neglected during the campaign, and in media analysis of policy.

Firstly: affordability and availability of housing.

Under Howard a housing bubble developed which grossly inflated property values. This means that even modest movements in interest rates have a greatly magnified effect on mortgage repayments. Many can no longer afford home ownership.

What is needed is a massive investment in social housing; not only to provide for the poor and vulnerable; but crucially - to increase supply and make housing affordable again. Simply releasing new land alone isn't enough, though - because there is the added cost of new infrastructure. Neither major party is leading on this issue, afraid to make an investment of the necessary scale to make a real difference. Greens policy on this issue seems deeply-thought-out; but on their policy websites they provide no costings. http://greens.org.au/policies/care-for-people/housing

Secondly, there is the demographic challenge, and the need for a reformed social wage

Australia has an ageing population; which means in the future we'll have lower labour market participation. This will effect revenue and squeeze funds for services, infrastructure and welfare. We also have tendencies towards labour market polarisation which means we need a stronger social wage in areas such as health, education, welfare and transport. This needs also to be complemented with subsidies for energy and water, as well as communications; and intervention to support social participation. The consequence is that we need progressive tax reform to maintain welfare, infrastructure, services. Who will do the right thing and progressively reform tax?

Finally, there is the matter of a National Disability Insurance Scheme (NDIS).

Australian Medical Association (AMA) President, Dr Andrew Pesce, stated in July of this year:

“Labor’s draft National Disability Strategy is based on the right for people with disability to enjoy full and effective participation and inclusion in society, and the right to have respect for inherent dignity, individual autonomy, including the freedom to make one’s own choices, and to be independent.” http://www.ama.com.au/node/5906

According to the Australian Institute of Health and Welfare estimates there are 1.5 million people [in Australia] with a severe disability and that will grow to 2.3 million by 2030. http://www.theaustralian.com.au/national-affairs/commentary/disability-group-mad-as-hell-and-ready-to-fight/story-e6frgd0x-1225845897896

All of us; and all our families are potentially at risk. Therefore: providing dignity, security and participation for those affected is a matter of personal interest to all of us. It is also a matter of human decency.

According to ‘The Australian’ an NDIS would come “with a price tag: a net $4bn to $5bn a year to cover people aged under 65.” http://www.theaustralian.com.au/national-affairs/commentary/disability-group-mad-as-hell-and-ready-to-fight/story-e6frgd0x-1225845897896

That’s about half of what it would cost for Abbott to cut the resource rent (ie: mining) tax.

And of course the elderly must be fully covered also.

A new levy similar to the Medicare Levy could be established at a rate of 1% or 1.5% for taxpayers.

But regardless of the human need it appears the major parties are shying away from such fundamental and urgently needed reform: as a consequence of the price tag.

Again, the Greens have supported an NDIS type scheme in principle, but haven’t put a dollar-amount on that commitment. http://greensmps.org.au/content/media-release/transformative-change-disability-services-essential-equal-future-greens

This author is still hoping Labor will announce a NDIS as a last minute ‘drawcard’ establishing Labor’s superior credentials in Welfare and Health, and providing scope for enhancement of mental health services.

Conclusion

There are many important issues facing voters in this election. Labor acted quickly in response to the Global Financial Crisis. Labor stimulus was swift – as necessary – but moving so quickly inevitably involved some waste. The alternative was recession.

Although forced to compromise, Labor’s resource-rent tax will take in approximately $10 billion a year: providing scope for the Company Tax cuts that underpin an increase in employer superannuation contributions to 12%.

Labor rolled back the worst of WorkChoices – but there is more to be done. No worker should be worse off under Award modernisation; and workers deserve the right to pattern bargaining.

There are many other issues as we have discussed here also.

In the face of Liberal deception on debt, waste and stimulus, the real choice for socially and economically-conscious voters is between parties of the Left and Centre-Left.

There’s the choice of rewarding Labor for what reform it has achieved; or trying to nudge Labor into further action by voting for the Greens.

Some will not be able to stomach the kind of pragmatic electorally-driven decisions Labor has made: for instance with regard to refugees. And Green balance-of-power in the Senate may spur more of the kind of reform as we saw with Labor and the Greens having worked out reform of Disability and Aged Pensions in response to a rising cost of living.

But rewarding Labor for what it HAS done right may provide the motivation – and the self-interest - for more reform as well.

This election will be close. Every vote matters. Make your vote count on August 21st.

AND ALSO: If you enjoyed this article PLS join our Facebook group - to link up with other readers, and to receive regular updates on new material. see: http://www.facebook.com/group.php?gid=58243419565

FINALLY: This article should be re-appearing in On Line Opinion Wednesday or Thursday this week - before the August 21 election.   Feel welcome to let your friends and contacts know, and contribute to this last minute debate at On Line Opinion when it takes place.  It's worth contributing as there should be thousands of readers.

5 comments:

  1. BTW readers - immediately before this article we published a link to an article on the Australian economy by Economics Nobel Laureate Joseph Stiglitz. It's also well worth a look!

    see:

    http://leftfocus.blogspot.com/2010/08/crisis-down-under-joseph-stiglitz.html

    In an earlier post there was also a complaint that we did not urge a vote for the radical Left. (ie: parties Left of the Greens)

    But all on the broad left are welcome to comment in this thread; including links to, or discussion of, their election policies.

    sincerely,

    Tristan Ewins (Left Focus publisher)

    ReplyDelete
  2. Hi Tristan. I agree with the follwing comment in an article in Socialist Alternative called Abbott only has a chance because Labor is so right-wing.(http://www.sa.org.au/australian-politics/2870-abbott-only-has-a-chance-because-labor-is-so-right-wing).

    'The very possibility that the Coalition could win this Saturday’s election is an indictment of the ALP. Labor’s right-wing policies have shifted the whole terrain of official politics to the right and opened up a chance the conservatives could be back in power after only three short years in opposition."

    ReplyDelete
  3. This excellent article is also published at http://theangle.org

    Congratulations on an excellent analysis Tristan.

    ReplyDelete
  4. An important adendum: The Liberals are now saying they will work towards a $6.2 billion surplus - doubling the promised surplus of the ALP. (New annoucement just today - AFTER this article was published)

    But what does this mean at the end of the day? Prudent governments pursue the right mix of stimulus, investment and restraint at the right time.

    Simply saying 'our surplus is larger than yours' is really nowhere at the end of the day.

    Too big a surplus could have a deflationary effect (meaning more unemployment); and could occur in a context which sees insufficient investment in the infrastructure and services upon which future productivity, prosperity and quality of life depend.

    So - As opposed to Tim Colebatch's assumptions - quoted in this article - the Libs are now promising a larger surplus. But whether they can DELIVER it is another issue entirely.

    And finally - the Libs game of 'one-upsmanship' on a projected surplus is nowhere outside the full context; the appropriate economic mix - stimulus, investment, restraint - at the right time, targeted properly, and of the required quantity...

    Given the Libs' inclination towards a 'scorched earth' policy here - and what it would mean, it's no wonder Abbott is running from a proper economic debate.

    ReplyDelete
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