Tuesday, May 12, 2015

A Response to the 'Consultation Draft Platform' of the ALP - Chapter 2 'A Strong Economy for all Australians'


by Tristan Ewins, ALP Socialist Left member of over 20 years 

Friends and Comrades;

Not long ago a ‘Consultation Draft’ of the National Platform of the Australian Labor Party was released for purposes of feedback between now and National Conference in July this year.  Over the coming weeks I will release commentary on this consultation draft. 

Today, though, I will discuss Chapter 2 specifically – which relates to economics policy.  Importantly, in the consultation draft there was little or no mention of economic democracy, exploitation or the public sector.  To begin, therefore, I will propose an addendum whereby in this section the Labor Party needs to come out clearly in favour of what I call a ‘democratic mixed economy’.   

Considering we maintained the Socialist Objective for the best part of a century - we should at least be able to sustain a Platform that as a minimum supports a mixed economy ; but a mixed economy which aims to extend the principle of democracy in the way I suggest here - as much as can practicably achieved.

Other areas of concern include: fiscal reform to pay for and extend social insurance, the social wage, welfare, social services and public infrastructure; as well as the progressive structure of the overall tax system.  The form of superannuation for the working poor also needs to be considered, as well as an notion of ‘equal opportunity’ which goes behind the narrow confines of the labour market.   The TPP also needs further discussion; and our capacity to grow the public sector, including natural public monopolies, and also to assist  the democratic sector (eg: co-ops) – also needs to be maintained.  The failure of ‘the market’ to provide just outcomes needs recognition also.   And the social wage and social insurance must assist and protect the working class as well as the most disadvantaged of all.   Finally ‘a simpler tax system’ should not necessarily be out aim if the end product is less progressive for distributive purposes.

IMPORTANT ADDENDUM re: ALP Economic Platform

In an earlier version of this post on the ALP economic platform there was a passage which read as follows:

  • "Finally, in keeping with our principles we will not deliver natural public monopolies or near-monopolies into the private sector because this may result in an abuse of market power."

This SHOULD have read as follows instead:  

  • "Finally, in keeping with our principles we will not deliver monopolies or near-monopolies into the private sector because this may result in an abuse of market power."

Clearly this changes the meaning completely.

Sincere apologies for any confusion.

Tristan Ewins

HENCE – beginning with a discussion of ‘he democratic mixed economy’ -  the following needs to be inserted at some point in Chapter Two:

“Labor believes in the principles and practice of a ‘democratic mixed economy’. Hence we seek to extend democratic principles and forms to the economy as far as is practicable.  Though there are limits to what can be achieved for the foreseeable future: the consequence of the prevailing ‘balance of forces’ both in the global economy, and the domestic Australian economy.  

Promotion of  ‘democratic principles’ in the economy includes support for sectors of the economy which can be held accountable to the populace in their capacities as citizens; as workers/producers;  in mutual association; and as consumers.  And this applies on both a large scale and a small scale. 

In this context we strive after the best balance between various kinds of enterprise which can realistically be achieved for the modern day. Such a ‘balance’ involves checks and balances between producers, government and consumers; and includes strategic socialisation of various kinds.  

In addition to existing private enterprise, and the need to remain engaged with the transnational corporations whose innovations and investment are essential to Australian jobs and material living standards, our vision for a ‘democratic mixed economy’ includes an expanded role for the following:

·        producers’ co-operatives of various types – on both a large scale and on a small scale;  This is also to include multi-stakeholder co-operatives which involve producers, regions and government

·        consumers’ co-operatives through which the associated consumers are empowered

·        Mutualist enterprise; for example Mutualist insurance

·        natural public monopolies, including in areas of essential services and infrastructure, where duplication of cost structures can be avoided to the benefit of the economy at large, and where the superior credit ratings of government result in more efficient finance

·        other public infrastructure (eg: where a natural public monopoly cannot apply because of existing privatisation; eg: through Public Private Partnerships)

·        strategic Government Business Enterprises which actually enhance competition in areas of oligopoly, concentrated market power and potential collusion; and also enhancing accountability to consumers

·        Government Business Enterprises which can also compete internationally - subject to global market forces

·        Public investment in Australia’s Natural Resources which are properly the property of the Australian people collectively.

·        Co-determination agreements between workers, unions and business – supported through a legislative framework

·        Democratic collective capital formation, including through the superannuation system, but also through public pension funds which will support the operation of a strong and fair system of Pensions in this country far into the future

·        Self-employment

To these ends we believe there is a role for government in extending democratic principles and forms to the Australian economy.  That includes:

·        through tax breaks, advice and cheap credit for co-operative and mutualist enterprise;

·        through co-investment to help co-operative enterprise upgrade its economies of scale so as to remain competitive in larger markets while retaining the co-operative form

·        through the creation/construction/maintenance of government business enterprises,  social services and welfare, and public-owned infrastructure

·        through an active industry policy

Finally, in keeping with our principles we will not deliver natural public monopolies or near-monopolies into the private sector because this may result in an abuse of market power.

Strategic socialisation of different kinds can also ameliorate exploitation; and sometimes even enhance competition. Progress in extending a democratic mixed economy can also assist in ameliorating the self-destructive aspects of capitalism, while extending the principle of democracy into the economy in such a way as advances social democracy not just into the distant future - but beginning here and now."

What follows now are some excerpts from Chapter Two of the Consultation Draft of the National Platform – with my responses under headings labelled as ‘Comment’.

P 11    “Labor rejects the false choice between economic growth and equality. Excessive inequality detracts from economic growth and damages the social fabric. Labor believes in economic growth that is inclusive of all. We believe there is a role for Government in ensuring that people from all backgrounds and circumstances can both contribute to economic growth and benefit from it. The benefits of economic growth must be redistributed through the economy to those on low wages, not in work or reliant on welfare.”   

COMMENT:  To this we should add:  “We also believe that through the social wage and social insurance  we can redistribute wealth in a socially just manner from the wealthy to the working class.”

4) “Labor believes in economic policy that promotes social mobility and opportunity. Your family’s wealth should not determine your ability to grow to your full potential. Promoting equality of opportunity is at the core of Labor’s economic approach.”

COMMENT:   Here we should refer to diverse forms of equal opportunity – not just work;  but also education, civic activism and cultural participation and consumption as well.

6) “Australia’s long-term prosperity depends on competing successfully in global markets. This means Australia needs to produce high quality goods and services that the world wants to buy, and remove barriers to overseas markets. Labor will work to ensure major policy settings like skills development and training, infrastructure planning, tax and regulation frameworks do not hold businesses and workers back from achieving their full potential in global markets, while at the same time ensuring that all Australians enjoy a fair share of the benefits of growth. Strong and sustainable public finances underpin the progressive future we want for the next generation. Meeting the health care, pensions and education needs of future generations will require prudent budget management and prioritising support for those most in need.”

COMMENT:  We need to provide for those most in need; But also we need to provide for more general forms of collective consumption and social insurance which EVERYONE can benefit from.  For example through funding state schools; through funding the NDIS; through funding a National Aged Care Insurance Scheme which provides the highest quality infrastructure and services, but which eliminates user pays mechanisms for disadvantaged and working class families.  Also consider the universalism of Medicare – which now needs to be extended further throughout the health system.

7) “The market will often create the most equitable and efficient distributions of power, wealth and services, but markets sometimes fail. Government has a responsibility to intervene, to address market failures and the extremes of capitalism. Labor supports an active role for governments in addressing market failure, and improving equity and social justice through the full range of government policy instruments including expenditure, taxation, regulation, and the provision of goods and services.”

COMMENT:  Often markets do NOT create “the most equitable…distributions of power”; This point in the Draft Platform needs to be removed or edited so as to change the meaning.  Private sector monopolism – and sometimes oligopolism  - produces inefficiencies as well - and deserves a specific mention.

Responsible Fiscal Policy

9)   “Labor is committed to sound public finances by adhering to a fiscal strategy that achieves budget surpluses on average, over the economic cycle…”

COMMENT: this should be changed to read: ‘balance the budget on average over the economic cycle’;  And should also include mention of productivity-enhancing public investments that adds to economic growth.  (A good example is the NBN) The EFFECTS of these INVESTMENTS need to be taken into account re: the aim of “a balanced budget over the course of the economic cycle”.

  16.) Labor, as the party of universal, compulsory superannuation, will continue to put in place reforms to protect and to grow superannuation, to ensure the superannuation system meets an objective of providing a comfortable retirement for all Australians. This will include, when prudent, ending the Coalition’s freeze of the Superannuation Guarantee at 9.5 per cent, and fast-tracking the Superannuation Guarantee increase to 12 per cent, which will provide millions of Australians with higher retirement incomes. The current system of superannuation tax concessions has seen more than 35 per cent of the value of tax concessions accrue to the top 10 per cent of income earners. Labor will put in place reforms to address this imbalance, ensuring Australia has a sustainable and fair retirement income system. 

COMMENT: EXCELLENT to see recognition of the problem with inequitable superannuation concessions; a big victory for progressive forces if this finds reflection in strong policies.  But there are flaws in superannuation as well.  The working poor already struggle; and forcing them to contribute more of their own money into superannuation will worsen their poverty throughout their working life.  If we are to increase superannuation contributions, perhaps the working poor could be excused from contributing. (but not their employers)  Also there is the problem of inequity – affecting women, the disabled and the working poor especially.  Resentment against the Aged Pension could lead to austerity against some of the most vulnerable into the future.

18-30  ‘A Strong and Vibrant Small Business Sector’

COMMENT:  Mention should be made of co-operative small business somewhere in this section.

35- 54  Trading with the World

41. Labor supports trade and investment liberalisation through the Asia–Pacific Economic Cooperation (APEC) forum. Labor will ensure APEC is a driver of regional economic integration and will take an active approach to its role in the region’s economic architecture. Labor believes APEC has a key role in promoting economic reform behind the border throughout the Asia–Pacific region and will promote these efforts. Labor will endeavour to strengthen APEC’s role in mobilising support for the WTO’s Doha Round. Labor will also support Australia’s engagement in the emerging regional trade and investment architecture under the auspices of the Trans-Pacific Partnership, the Regional Comprehensive Economic Partnership and the proposed Free Trade Area of the AsiaPacific. 

COMMENT: I’m not not sure about the TPP.  There hasn’t been enough consultation.  Also we need to make sure that any agreements we enter into do not prevent appropriate regulation; or prevent policies which are meant to support or encourage a ‘democratic mixed economy;  For example establishing natural public monopolies, or implementing tax breaks, advice and cheap credit for co-operative enterprise.

42. Labor will work to:

 Provide leadership to the Cairns Group and seek reductions in agricultural subsidies and protection;

 Secure reciprocal new market access for all of Australia’s economic sectors;

 Tackle non-tariff “behind the border” trade barriers such as excise tax arrangements, standards, customs procedures, subsidies and other restrictive measures which impede Australian exports;

COMMENT: This cuts both ways; sometimes standards must be applied; sometimes the ability of a nation to feed itself is important to its security;  Subsidies should also be allowed in strategic cases – and with assistance for co-operative enterprise. We should not commit ourselves to a framework which would 'tie our hands' on economic democracy and the strategic extension of the public sector into the future.  I am uncertain of the content of TPP and I’m sure many others in the Party are as well…

Specifically the Consultation Platform argues the following in relation to TPP:

54. A well-balanced Trans-Pacific Partnership offers the prospect of more and better jobs through improved access to member countries’ markets for Australian exporting businesses and their employees. Labor’s position is that the Trans-Pacific Partnership must be consistent with the following principles:

 Does not undermine the Pharmaceutical Benefits Scheme and public health initiatives;

 Provides for national treatment — that foreign and domestic companies are treated equally under the law, while not conferring greater legal rights on foreign businesses than those available to domestic businesses;

 Does not require Australia to remove protection of cultural industries;

 Retains the Foreign Investment Review Board and its powers to review foreign investment in the public interest;

  Retains quarantine provisions to reduce the risk of imported pests and diseases;

 Retains the flexibility to encourage industry development including through research and development, regional development and appropriate environmental, employment and procurement policies;

 Contains enforceable labour clauses that require signatories to enforce core labour standards in International Labour Organisation conventions; and

 Contains enforceable environmental clauses that require signatories to meet all relevant international environmental standards, including those in applicable United Nations international environmental agreements.

COMMENT:  In response the following points should be added:

·         Does not inhibit the right of government to support and extend the public sector, including maintenance of natural public monopolies

·         Does not inhibit the right of government to extend a ‘democratic mixed economy’, including through support for co-operative and mutualist enterprise of various sorts

A Fair and Efficient Tax System

67. Labor is committed to a fair and sustainable tax system that provides incentives for all Australians to work and undertake productive enterprise while guaranteeing adequate revenue to fund the proper role of government, including providing quality public services and ensuring an equitable distribution of income and wealth. Public confidence in Australia’s tax system depends on a simple and transparent tax system where everyone pays their fair share of tax. Labor has implemented important tax reforms to improve competitiveness, boost savings through superannuation, make superannuation fairer, simplify personal tax, reduce barriers to participation and provide better assistance to families. We will also continue this record of tax reform, making the system more efficient, less costly and more equitable.

COMMENT: ADD THIS:  “Specifically we support a simpler tax system only where the final outcome does not negatively affect our efforts to ensure a fairer and more equitable distribution of wealth and income.”

68. Future tax reforms will:

[large excerpt cut out]

 Minimise the impact of high effective marginal tax rates, particularly on those moving from welfare to work or the second income earners in low- to middle income families;

COMMENT:  The excerpt above is problematic as it suggests cutting tax for those who do not need to have their tax cut; That is, it suggests a general cut in taxes (the word ‘particularly’  needs to be deleted so it is clear the reference is only to the specific disadvantaged groups. The consequence of cutting tax more generally is that pressure is put on public finances, and hence also the social wage, public infrastructure, social services and welfare. It must be edited to read:

“ Minimise the impact of high effective marginal tax rates on those moving from welfare to work or the second income earners in low- to middle income families”

I hope the readers of this commentary will have found it interesting, and will be inspired to respond to the ‘Consultation Draft’ as well.  I especially hope readers will register their support for this document and the documents which are to follow.

Specifically members can provide feedback on the Consultation Draft Here:

If you want to support this Commentary please include a link to the appropriate URL in your submission.  Ie: link to this URL in your submission.  (it is the URL where this post was originally published)


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