Will Labor Stand Up against Small Government and Austerity? And Reflections on Greece, Anti-Semitism and more

 

above:  Shadow Assistant Treasurer Andrew Leigh has been unfortunately equivocal on the issue of tax reform needed to ward off austerity under a future Shorten Labor Government.

 

In the following reflections the blog publisher, Tristan Ewins considers the dilemma faced by Labor on tax reform; as well as the Greek economic crisis, rising anti-Semitism and other issues.  He also calls for readers to register their support for a genuinely progressive Labor Platform at this year's National Conference.  Without such a Platform Labor will lack the flexibility on fiscal reform it needs in order to hold off against austerity - and instead improve the social wage and welfare

Tristan Ewins

Reflecting on this week’s QandA episode raises crucial questions as to whether or not Labor will seriously resist pressures towards austerity and small government amidst a manufactured ‘debt crisis’.  Tony Jones repeatedly pressured Assistant Shadow Treasurer Andrew Leigh to respond on that very question.  And sadly Leigh was largely evasive in response. (probably under pressure from his Shadow Cabinet colleagues)  Statements regarding a crackdown on corporate tax evasion were somewhat encouraging, yes.  But Sydney Morning Herald columnist Michael West is correct to proclaim approximately $2 billion of savings over three years as ‘pocket fluff’.   That tax policy is not going to ‘turn the tide’ on small government, punitive welfare and austerity.  In the context of an economy valued at approximately $1.6 Trillion the effect will be relatively marginal if there is not additional progressive tax reform elsewhere.  Empty rhetoric and tokenistic policies will make little difference for those who need our help.   I believe Leigh is better than this - and am hoping for a less equivocal stand into the future.

Of course Liberal proclamations to the effect that it is ‘cleaning up Labor’s mess’ also need to be met with healthy scepticism.  Current fiscal strains can be traced to repeated tax cuts and ‘middle class welfare’ during the Howard/Costello years.   Rather than capitalising on the China mining boom, investing the proceeds for the future, Costello and Howard implemented a series of tax breaks – largely for the relatively well off – resulting in today’s structural deficit.   Because from the outset it was clear the boom would not last forever, the short-term focus adopted by Howard and Costello condemned Australia to its current fiscal crisis.   (nb: the fiscal crisis is not the same as the ‘manufactured public debt crisis’; debt is serviceable; but there is a need to reform tax to maintain the social wage, welfare, public infrastructure) The situation was further worsened as a consequence of Liberal opportunism over the Mining Super Profits Tax -  which saw a responsible policy destroyed – further locking Australia into a fiscally unsustainable footing.

Labor’s next National Conference will take place mid-year 2015; and it is critical for Labor to reflect on what it stands for; and how it can defend services and social welfare against the Ideological Liberal drive towards austerity.  There is also a need to address an infrastructure crisis – with fiscal pressures locking the country into polices of infrastructure privatisation which pass on inefficient cost structures onto the broader economy. (the consequence of profit margins and inferior costs to finance via the private sector)   

What is most important is for Labor’s 2015 National Conference to endorse a Platform which keeps Labor’s options open!  Locking into a small government, low tax policy will provide Labor with no room to move in response to fiscal pressures; and consequently pressures towards brutal austerity. Without a reformed Platform this year, Labor will lack the mandate to pursue the necessary change after the next Federal election. At the blogs ‘Left Focus’ and “ALP Socialist Left Forum’ last year we initiated a campaign in favour of progressive tax reform, reform of superannuation concessions and more; including an expansion of progressive taxation in a first Labor term by about $40 billion.  (or by 2.5 per cent of GDP in the context of a $1.6 trillion economy)  

Such a policy would see Australia only ‘edging towards’ average OECD levels of government social expenditure – and should not be viewed as being ‘too radical’.   But failure to embrace a reform footing would inevitably mean sustained austerity even under a Labor government.   And a lack of meaningful opposition to the fiscal policies that underscore Liberal austerity would only strengthen the Conservatives’ hand, with policy convergence on austerity, punitive welfare and the like. 

Finally – the fiscal reform we have suggested here would provide scope for other progressive policies.  This could include (but not be limited to)

·         a National Aged Care Insurance Scheme,

·         comprehensive Medicare Dental

·         alleviating poverty for the welfare dependent and for low-wage workers

·         properly implementing Gonski and the National Disability Insurance Scheme without resorting to punitive policies against other vulnerable groups

·         developing a policy with the aim of ‘closing the gap’ on life expectancy for those with mental illness

But without progressive fiscal reform  Labor could only provide the same drift towards austerity; even albeit more reluctantly.  Certainly Labor could not pose as the party of social progress; and would stand to cede further electoral ground to the Greens; while also damaging its attempts to renew and inspire its membership base.

Other issues also arose from the most recent QandA.  For instance the argument was forwarded that childcare subsidies only worsened cost pressures as private providers pocketed the money without passing on the savings.   The obvious response is that greater emphasis on public and not-for-profit childcare would help do away with those pressures. 

Similarly, it was no surprise that while the question of housing affordability was raised – and even the question of negative gearing – there was no consideration of the potential role of a big investment in public housing to promote urban consolidation (helping to address social problems like increasing transit times to work that damage families and communities); and also increase housing supply and drive down prices.

Greek Depression and the Eurozone

All these questions around austerity are also relevant for Europe, and especially for Greece. Unfortunately Germany had tried to tie an EU financial bailout package to austerity and privatisation – to the point of severely impairing the ability of Greece to repay its debts sustainably.  The Social Democrats in Coalition with the Christian Democrats in Germany need to question this; and promote a new policy. With Greek unemployment at over 25 per cent, the consequence is economic Depression, loss of tax revenues, and unnecessary and extraordinary human suffering.  For Greece and other similarly affected economies (eg: Spain), the answer is one of sustainable economic restructuring, and sustainable repayment of debts on the basis of full employment.  The wealthy must also be made to shoulder a fair part of the burden.  This must mean active industry policies around creating new export industries – that improve these nations’ balance of trade.  Hence employment could be kept high, and the improved balance of trade could aid in the repayment of debts without a downwards deflationary and recessionary spiral; or forced privatisations and the like.   By comparison austerity is a ‘double whammy’: hurting the Greek and Spanish people while also destroying their ability to repay debts.

Importantly there remain broader questions of disproportionalities in capitalist economies: the consequence of competitive pressures which drive constant renewal of the means of production.  The Euro-zone economic crisis also provides an opportunity to question neo-liberal Ideology; and indeed to question capitalism as we know it.

Anti-Semitism Resurgent

Finally, this week’s QandA also saw a question in reference to growing anti-Semitism not only in Europe but also in Australia.  Anti-Semites appear to have been emboldened by the military policies of the State of Israel in its conflicts with Hamas particularly.  In Europe Jews increasingly feel unsafe – and are targeted violently ‘simply for being Jews’.  But this turnaround has not resulted in the same degree of public consternation on the Left as has  Islamophobia.   And indeed while there is a great deal of damaging ignorance and fear with regard Islam in Australia, the Left nonetheless needs to be careful and vigilant with regard this emboldening of anti-Semitism.  A new generation is being desensitised to the past sufferings and persecution of the Jewish people; and hence some may be open to historical revisionism on the Holocaust into the future.

The targeting of Orthodox Jewish communities appears to be especially fruitful for the anti-Semites – because significant numbers have always been fearful of what is clearly at variance with the ‘mainstream’ and is ‘different’.   On the Left there are periodic qualifications to the effect that while we condemn the military and other repressive policies of the State of Israel, we do not accept hate crimes and violent attacks against Jews.  But we need to be much more consistent and forthright.  We need to confront where the current tenor of debate on the State of Israel and its policies is leading.  For genuine Leftists certainly it is not in any way our intention to legitimise anti-Semitism.  But we have a responsibility to confront the emerging Anti-Semitic trends just as forthrightly and consistently as we confront bigotry against Islamic communities.  And just as consistently as we criticise human rights abuses by the State of Israel under its current right-wing leadership.

Closing Appeal:

Our Campaign in favour of progressive reform of Labor’s platform is approaching the goal of 500 supporters on Facebook.  See HERE for our ‘model Platform’.  And See HERE to register your support. 

To help us ‘get over the line’ and maybe even go further depends on your support!  Please ‘Like’ our page at Facebook; and let all your friends and networks know about our campaign.  It is crucial to achieve a Labor Platform this year which at the very least keeps our options open on tax reform, progressive welfare reform, and extensions of the social wage.



nb:  independent socialist blogger John Passant has also written a piece on the insufficient nature of Shorten's proposed tax changes.   Readers may be interested in taking a look:

"Labor's tax avoidance crack down statement was the old pea and thimble trick. It wants to give the impression of doing something about big business tax avoidance (always a popular issue among ordinary workers) without really frightening the big business horses"See:  http://enpassant.com.au/2015/03/03/labors-crackdown-on-tax-avoidance-shorten-fiddles-and-revenue-burns/

Abbott a'Courting and Conservative? PPL, Nannies and the Nanny State

above: Tony Abbott
In this guest-post article Tom Holland provides a critique of Tony Abbott's complex ideological contortions.  Holland explores the tensions between 'Abbott the Conservative' and 'Abbott the economic liberal'.  Holland thinks it ironic that Abbott puruses policies for parental leave and elsewhere that could be described as 'socialist'.  The blog publisher (Tristan Ewins), however, observes that populist social programs have been implemented in the past by Conservative social forces seeking to broaden their appeal. (eg: Bismarck's 'practical Christianity' - Social Programs implemented in 1880s Germany partly intended to undercut the Social Democrats)

This article was originally published at Tom's blog on March 31st 2012. 

See:  http://cousinzoidfarb.blogspot.com.au/2012/03/abbott-acourting-and-conservative-ppl.html

Tom Holland

Tony Abbott has gone a'courting this year with big ticket policy proposals for women voters, and in the process has exposed confused purposes at the heart of Coalition policy formation and an ideological departure that will disappoint conservatives.

The extremely generous proposed Paid Parental Leave (PPL) scheme, and the recently announced plans to extend the child-care rebate to in-home nannies are policies designed to woo women voters to Mr Abbott and the Coalition. Both of Mr Abbott's proposed schemes have their merits and are likely to appeal to voters. But both policies are decidedly 'big government' initiatives, and are at odds with Abbott's attacks on the Government, most notably over the Carbon Tax and the NBN, and more broadly with 'small government' conservatism that underpins Liberal thought. Recent weeks have produced friction and confusion for the Coalition party room accommodating the growing divide between the tenets of their faith and the approach of their leader. Does this change in policy sit with Abbott's political philosophy, or does it represent a divergence in favour of populism?

Abbott, the Conservative

The Liberal Party in Australia is the custodian of two ideological traditions - Liberalism and Conservatism. One champions the importance of the individual while the other places faith in the importance of our society's institutions. The contentions of both philosophies create a natural contradiction, which continues to this day. But with the emergence of socialism, to which both were opposed, a pragmatic union of the traditions occurred in the modern Australian context in the form of the Liberal Party. Party members still identify as liberal or conservative, known as 'wets or 'dries', with Tony Abbott very much in the latter camp.

Damien Freeman wrote an interesting analysis of the the political philosophy of Tony Abbott in Quadrant in 2010, examining what Abbott saw as the obligations for a conservative politician to justify policy decisions. He notes that Abbott, in his book Battlelines, explains that a conservative is not burdened to produce a unifying ideological justification for policy in the same way as socialists or liberals.

Abbott argues that the other ideological traditions are obliged to impose and justify change based on their philosophical model on how they wish the future to be. He argues that progressive conservatives, rather than opposing change, accept the inevitability of a changing society and need to ensure that this change occurs in deference to the past and its institutions - “achievement is possible because ‘pygmies are standing on the shoulders of giants’”.

Whilst Abbott argues that an all-encompassing ideological justification is not required of the conservative, Freeman does enumerate a few ways Abbott believes policy can be explained. Firstly, the ideological explanation from either a liberal or conservative perspective. Secondly, an 'approach that transcends ideology' and goes to nationalism and the national interest. Thirdly, a purely pragmatic policy approach without ideological abstraction. And finally, what Freeman calls the 'counter-ideological approach' where policy is directed towards frustrating an opposing abstract idea rather than promoting one's own.

When Abbott defeated Malcolm Turnbull and Joe Hockey, both liberals, for the leadership of the party, he restored a conservative approach to politics and brought with him his political philosophy. Through the prism of Freeman's analysis, one can identify where Abbott would justify his efforts up until this year. He opposes the Carbon Tax on counter-ideological grounds, takes a hard stand on asylum seekers on what he sees as nationalistic grounds and could justify his opposition to pokies reform on liberal ideological grounds. But when one considers recent policy announcements, it is difficult to explain these using Abbott's own methods.

The Nanny Scheme and Paid Parental Leave

This week it was announced that a Nanny scheme would be referred to the Productivity Commission by a new Abbott Government as a matter of priority. It would entail extending the non-means-tested child-care rebate to nannies, who are not currently covered. The child-care rebate increased under the Rudd Government to 50% of costs to a maximum of $7500 per annum per child with child-care subsidies already costing $3 billion dollars a year. The nanny scheme threatens to increase this burden.

While it is likely to produce some migration of children from centre to nanny care, thus ameliorating the expense, it will still be a costly undertaking for the tax-payer. Mr. Abbott has said the scheme must come from within the constraints of the "existing budget envelope", but given that he rejected the proposal at the last election due to its sizeable cost, this does not seem a realistic expectation. More recent comments from Liberal sources have suggested that Abbott knows this.

The other key policy announcement by the opposition recently was the PPL scheme, which is more starkly contrary to their aims of minimising government spending. The Coalition's PPL scheme will pay a new mother a full replacement wage for 6 months, including superannuation, of up to $150,000 per annum and is expected to cost $3.2 billion. Counter-intuitively for the Coalition, it will sting its natural business constituency to pay for it. Under the scheme, a levy of 1.5% tax will be applied on businesses earning over $5 million.

In this sense, it is not dissimilar to the Carbon Tax which Mr Abbott has lambasted as overreaching government interference in the economy, and has routinely warned will drastically increase the cost of living with flow-on costs to consumers. Perhaps this is not lost on some members of the Coalition with the scheme drawing uncharacteristically public opprobrium from the Liberal backbench and mixed signals from the front bench.

Abbott, the Populist

So lets return to Abbott's methods for explaining conservative policy. These policies are contradictory from a conservative point of view with government funding of the family unit via the PPL, only to disband it with incentives for carers to return to work through the Nanny scheme. Neither scheme is easily justified through nationalism, nor pragmatism when there are adequate existing schemes. And they can hardly be described as counter-ideological as each are 'big government' policies which will spend more on these issues than the social-democratic government of the day.

The Abbott opposition has spent much of its tenure attacking Labor for imposing a nanny state on Australians. Yet now, they have introduced two cornerstone policies, which have been described as close to Abbott's heart, which are closer to socialist in philosophy than liberal or conservative. As Emma Alberici put to Barnaby Joyce on ABC's Lateline programme, if "the Coalition in government would reverse the nanny state, [why are you] saying the state should pay for nannies?"

The answer lies with Abbott, and a departure from the political philosophy that guided him this point. Perhaps a still personally unpopular Abbott, faced with a re-united Labor Party, even with a recent thrashing in Queensland and abysmal polling at present, senses that he must lift his efforts to personally appeal to voters. The PPL and Nanny scheme are policy for populism's sake, and we may see more of it yet before the next election.