'For an Equal and Democratic Australia' model ALP Platform - Updated for 2018

Dear Friends and Comrades;

We’re Promoting an Updated version of the ‘For an Equal and Democratic Australia’ Model Platform for the ALP. The program is updated for 2018 from a very similar version platform I promoted for the 2015 Conference.

At this point we’re still considering suggestions to expand the document – and your ideas are welcome. Contact Tristan Vaughan Ewins at Facebook if you have a suggestion you would like to make.

The ALP needs a vision for the ‘big picture’ of social welfare, democratic and nation-building reforms it needs to implement in government.

Included are proposals on tax and welfare reform, social insurance, environmental reform, a ‘democratic mixed economy’ and much, much more.

Please also propose motions in support of this program at your local branch, or your ALP student club. Or you may belong to a ‘third party organisation’ (eg: a welfare organisation, charity, student union or other advocacy group). Motions of support from these organisations are also welcome! If you successfully pass a motion in favour of this document please leave a comment to Tristan Vaughan Ewins at Facebook so I am aware of this and can promote our success in garnering support.

With enough support and wide enough distribution we may influence debate on the ALP National Platform – to be decided upon this year in 2018.

If you are a delegate we would especially be interested – pls let us know.

But we will keep on campaigning after that also: to continue to build momentum for a genuinely progressive Federal Labor Government for 2018 or 2019 and onwards.

Again: if you support the goals of this ‘minimum platform’ please respond to this paper by ‘liking’ it at our Facebook group – and that support will be noted for purposes of our campaign.

see: https://www.facebook.com/ALPequalanddemocratic?focus_composer=true

We may also see if we can promote this cause via the ‘Megaphone’ Petition Platform to mobilise further support ahead of Conference.

As supporters of this Program we endorse the incorporation of the following into the ALP Platform for 2018:

a) ALP Core Mission:  We believe that the ALP exists for the purpose of improving fairness, democracy and equity. We support the promotion of a robust civil society characterised by informed and active citizenship ; and civil rights and liberties (including industrial rights and liberties), as well as preservation of the natural environment upon which human survival itself depends. Also we support separation of church and state - amidst freedom of faith and worship.  We support the advancement of ‘political’, ‘social’ and ‘economic’ citizenship; That includes the defence of civil and democratic rights and liberties; the provision of social wage and welfare rights; and finally the pursuit of a ‘democratic mixed economy’.

  

b) A Democratic Mixed Economy:  We support a variety of strategies for a ‘democratic mixed economy’. That includes a mixture of public and co-operative ownership and control (including but not necessarily limited to public ownership of critical infrastructure and natural public monopolies, and strategic Government Business Enterprises), as well as mutualism, 'union-friendly' co-determination and other related strategies; and also crucially including ‘democratic collective capital formation. (‘collective capital formation’ was a term used by Swedish social democrats to describe their Meidner Wage Earner Funds ; but might also be applied to superannuation for instance). Specifically we support a stronger role for producers and consumers co-operatives in the Australian economy on both a large and a small scale. For instance, government co-investment may be required to help co-operative enterprise increase its scale so as to remain competitive and hence viable. We support very significant but initially-capped aid to co-operatives via cheap credit, tax concessions and free advice/economic counselling - with co-operative enterprise supported in a variety of spheres, including credit unions, insurance, child care and aged care, manufacturing; as well as co-operative small and medium businesses. (for example in hospitality) 

c) Reform Tax to Extend Social Investment and Expenditure: We have as a medium term objective the goal of meeting the OECD average regarding our Tax to GDP Ratio. That means an increase in the Tax to GDP ratio by 5% ideally over as long as three terms of Labor Government. Specifically this translates to an increase of $80 billion/year in today’s terms. 


d) Specific Revenue Measures: To fund these new commitments we support measures including but not necessarily limited to the following:


· very significant strategic and equitable rescission of superannuation tax concessions (perhaps $10 billion/year or even more)

· Progressive expansion of the Medicare Levy

· restoration of a robust Mining Super Profits Tax

· the establishment of a progressively structured Aged Care Levy.

· Progressively restructure the income tax mix, and thereafter fully index the bottom three thresholds.

· Restoration of Company Tax and strong measures on Corporate Tax Evasion ; network with like-minded parties to create a global shift against the ‘race to the bottom’ on corporate tax

· Halving the rate of Dividend Imputation (perhaps $10 billion/year)

· An inheritance tax on inheritances valued over $2 million and over. (indexed)

· Consider stronger measures further limiting Negative Gearing for investors holding portfolios including several properties.


The total measures implemented must provide for the aforementioned increases in social expenditure, and very significantly add to rather than detract from the progressive nature of the overall tax and spending mix.


e) Specific social expenditure/infrastructure measures we support for implementation in the first term of an incoming Federal Labor Government include: 

• a progressively-funded National Aged Care Insurance Scheme providing a broad range of high quality aged care services for all those aged 65 and over with the need (including high intensity care, low intensity care , and ‘ageing at home’) – and without forcing disadvantaged and working class families to sell or take equity against the family home to achieve the highest quality care. Also mandate a nursing skills mix in every aged care facility that includes a Registered Nurse on-site 24 hours a day.
  
  · Robust and progressively applied increases in state school funding; including improvements in funding formulae as proposed in ‘Gonski 1.0’ ; over the longer term we aim to improve the quality of state education (including infrastructure and student to teacher ratios) to the point where demand for private schooling is very significantly reduced.  The point is to achieve true equality of opportunity in education.
  
  · Completion of the National Broadband Network – publicly owned and with Fibre to the Premises (FTTP) technology; as well as other public-funded and owned infrastructure in areas such as transport, communications, water and energy; keep it public and provide as a social and economic good – not just ‘to realise a profit’.
  
  
  · Construction of ‘East Coast Fast Rail’ and State-Owned Centralised Renewable Power Generation
  
  · greater public support and funding for pure and applied scientific research via the CSIRO.
  
  · A review of existing job network services; considering the possibility of re-consolidation of a single provider in the public sector (Centrelink); And regardless of this ensuring an emphasis on a more compassionate, patient and understanding approach to case management; especially considering the special needs of the long term unemployed, the under-employed, disability pensioners, those with differing skill types and levels; and for older job-seekers,
  
  f) Welfare Reform: We reject the ‘blame the victim’ and ‘blame the vulnerable’ mentality promoted by the Conservatives. Along with that we reject all forms of ‘Punitive Welfare’. Specifically we propose raising the Aged and Disability Pensions, Youth Allowance, Austudy, ABStudy by a minimum $50/week. (then indexed)  Newstart to be raised by $75/week (also fully indexed).  We also support a more generous Carers’ Allowance ; and reject effective labour conscription for ‘Work for the Dole’ , as well as rejecting waiting periods for Newstart which force vulnerable Australians to exhaust their personal savings.  (or even drive some into homelessness) We understand that many pensioners – for instance the disabled – require flexibility which existing labour markets do not provide. To overcome ‘poverty traps’ we support ‘positive incentives’ and ‘flexible work’ without loss of pensions. FINALLY: We believe the ALP should consider – and conduct research into – the replacement of NewStart with a Guaranteed Minimum Income. (GMI)
  
  g) Retirement Age: We are committed to maintaining a retirement age of 65 instead of raising it to 67 or 70. Indeed we are also open to the possibility of reducing the retirement age below 65 into the future. Specifically we support reducing the retirement age for those who have suffered physical debilitation as a consequence of demanding work. (eg: manual labourers)
  
  h) Industrial/labour rights: We support a legislated real increase in the minimum wage as well as pattern bargaining rights for unions.  As well as stronger re-regulation of the lower end of the labour market more generally. And we support effective subsidies for some of the most exploited and underpaid workers (including in child care, cleaning, aged care and elsewhere)– whether through direct subsidies, tax concessions, enhanced social wage provision and other effective measures. We also support the industrial rights and liberties of workers; including a right to withdraw labour ‘in good faith’ (including political strike action), and including a right to secondary boycott when ‘in good faith’ in solidarity with ‘industrially weak’ workers
  
  i) Further Educational Reform

• Curricula for ‘active/critical citizenship’: We are committed to reform of school curricula for the purposes of promoting ‘active and critical citizenship’. Without bias, the point of such reform would be to impart balanced and inclusive understandings of political values, movements and ideas, and social interests. We believe active and informed citizenship means a stronger pluralist democracy.
  
  · We support restoration and expansion of tertiary education funding; including for universities and the TAFE sector; with an expansion of tertiary education placements on the basis of an understanding of education as a modern social right, and not an exclusive privilege.
  
  · We also support the humanities and social sciences for the sake of effective pluralism in the Australian public sphere. And we support provision for tertiary academics’ participation as ‘public intellectuals’ and not only on the basis of the bulk of published academic works.
  
  · Furthermore we support progressive reform of the HECS system: reversing any fee deregulation, and with real increases in the repayment threshold significantly above Average Weekly Earnings; and forgiveness of debts of those who have a good reason for not being able to benefit from the prior education. (eg: because of disability)  Over the medium to longer term we support reversion to free tertiary education.
  
  · Gender equality: Finally, here, we support and strive for equal participation, and on-average equal achievement - between men and women in higher education, and greater participation and opportunity for those from disadvantaged and working class families.
  
  
  j) Treaty and a Republic: We are committed to beginning formal dialogue with representatives from the entire range of indigenous peoples with the aim of negotiating a Treaty. We support an incoming ALP government initiating such a process in its first term. Also we support the realisation of an Australian Republic at such a time that public opinion is such as to achieve the change.
  
  
  k) Environment: We are committed to increasing the proportion of renewable energy sources so as to achieve a real reduction of emissions even as the economy and population grow. Specifically we aspire to reduce Australia’s greenhouse gas emissions by 25% below 2000 levels by 2025. To this end we support large scale public investment in renewables, as well as generous subsidies for lower income households to acquire micro-renewable energy systems; and incentives for landlords to invest in micro-renewable energy. In further environmental reforms we are committed to sustainable land use and water management, achieving ‘world’s best practice’ in food production.
  
  We also support an Emissions Intensity Scheme that would set an emissions intensity benchmark for the whole electricity sector, which will reduce in line with emissions reduction targets; 50% by 2030. To ensure that this mechanism would successfully reduce emissions, benchmarks will be set five years in advance as recommended by the Grattan Institute, and revised as the need for greater emissions reduction appears. The EIS would be accompanied by the maintenance of the Renewable Energy Target, and large scale investment in renewable energy through reverse auctions, provided the assets are held in public ownership at the end of construction. We also support providing microgeneration grants to households and businesses to promote uptake of renewable generation technologies, and reform of feed-in tariffs so consumers producing their own energy are paid an appropriate amount when selling the excess back into the grid.
  
  l) Humanitarian Migration: We support a very significant expansion of Australia’s humanitarian migrant intake. Additionally, we want for an ALP government to pursue diplomatic channels to encourage other prosperous countries in the region to also increase their humanitarian intake very significantly. For asylum seekers we support humane onshore community-based processing.  (that means close detention centres including in Nauru)
  
  m) ABC and SBS: We support continued (and extended) funding of the ABC and SBS – and the pursuit of ‘participatory media’ principles and strategies through these channels. We support a role for the ABC and SBS in pursuing an ‘authentic’ public sphere, and an inclusive pluralism. (with the exception of not providing a platform for the far right) And we support representative ‘popular’ participation on the ABC and SBS boards of management

n) Public and Social Housing: We support very substantial new investment in high quality public housing (a minimum ‘surge’ of $10 billion) facilitated through tied Federal grants to the States, and also social housing where it is more cost-effective - to increase supply, and hence also affordability. (combined with the necessary public investment in local infrastructure in emerging suburbs) That includes expansion of ( largely ‘non-clustered’) public housing stock to at least 10% of total stock over perhaps three terms of Labor Government. Where appropriate we support a mix of low, medium and high density stock. Further: High density housing development in capital CBDs, and amongst strategic activity/transport hubs - should not be left ‘only to the private sector’ ; and public developments could include more generous provision of space, and high quality amenities such as common rooms, gyms, pools, parks and gardens. Planning laws should also be rigorous to ensure a viable spread of amenities and services where-ever housing developments occur.

o) Internal Reform:  We support internal democratic reform of the ALP; including a direct role for union members in supporting particular policies and platform items; as well as direct election for ALP National Conference delegates; actual adherence to State and National Platforms; and a ‘mixed model’ for election of the Party Leader which may include rank and file, Parliamentary Labor and trade union components. We also support the establishment of a ‘progressive public sphere’ in this country, including (for our part) ALP related forums, and policy and ideas conferences and publications which are inclusive, authentic, progressive, and which accommodate difficult debates.

p) Strategic industry policy: We support an active industry policy aimed at the maintenance of ‘strategic industries’ with ‘strategic capacities’ in Australia; including through automotive production and shipping-construction. This means a public investment rather than a public subsidy or handout.  And it could create the basis for a more-independent foreign policy as well. Said industries can also involve high wage, high skill labour. And there are a variety of potential models, including joint multi-stakeholder co-operative-state ventures – involving workers, regions and government. This ought also be supported by attempts to emulate Denmark's success in related Education and Training.

q) Multilateral Disarmament and Peace: At the same time we support a policy of realistic multilateral disarmament with the aim of freeing resources for purposes which meaningfully improve peoples’ material; quality of life


r) On Health Care we support the following:

· provision of comprehensive Medicare Dental – with a wide array of dental services provided at minimal cost and promptly for pensioners and low income groups; The main aim here must be to radically slash waiting lists which currently can be in the vicinity of two years unless in the case of a ‘dental emergency!’ This means that vulnerable people are denied help until things reach ‘the critical point’. With new funding and resources public dental waiting periods must be no more than six months.


· Also increase investment in the Pharmaceutical Benefits Scheme to extend its coverage

· Improve the rate of Bulk Billing

· Tighten means tests for ‘Lifetime Health Cover’ in order to pay for the removal of penalties for low income individuals (including pensioners) who let their policies lapse; Over the longer term we aim to improve the quality of public health to such an extent as to significantly reduce demand for private health insurance. During the interim we also support the growth of Health Insurance Mutual Associations as alternatives to Private Health Insurance.

· Also extend Medicare to cover physio, optometry (including glasses or contact lenses), speech therapy, podiatry, psychology; provision of hearing aids where necessary; and also cosmetic surgery for those in extreme need (for instance as a consequence of physical injury)

· Improvement of and substantial new investment in mental health services to ‘close the gap’ regarding the life expectancy of those with mental illness; as well as to improve productivity and quality of life.  (for example there are in the vicinity of 200,000 to 300,000 Australians with Schizophrenia who on average live 25 years less than the general population)


s) ‘Physical and virtual commons’ ; ‘Public Space for Public Use’ ; We believe that ‘physical and virtual commons’ are necessary to provide support for a strong, participatory and democratic civil society’ ; In part this means decoupling public space from any strict and/or exclusive relation to consumption. Local communities must have centrally-located meeting and gathering spaces – and this requires a significant public investment, and associated regulations. In part this can also be supported with dedicated space in local business districts – including in shopping malls. Such developments should be dependent upon the provision of ‘community kiosks’ which would provide comprehensive information on how to become active in community organisations and clubs, social movements, political parties and so on. But excluding the far-right. Once-off public meetings and gatherings could also be promoted via these ‘community kiosks’ ; and citizens could ‘sign up’ for mail outs and/or emails regarding ‘what is going on’ in communities on a month-to-month basis.

t) A Comprehensive Bill of Modern Human Rights: Finally: We support a comprehensive ‘Bill of Rights’ in this country, supporting liberal and civil rights of suffrage, speech, assembly, association, faith, conscience. As well we support ‘social rights’ including education and health, a guaranteed minimum income; housing; access to communications and information technology; access to transport; access to fulfilling employment with a remission of exploitation; social inclusion including opportunity for recreation and participatory citizenship; respect and human dignity.

What the Trump Victory means about 'Political Correctness', 'Anti-Political Correctness' and the American Working Class

above: An Exhausted Hillary Clinton after the Shock Donald Trump Presidential Victory

'Political Correctness' is a common bogey deployed by the Right in order to wedge the Left ; But here 'Anti-Political-Correctness' is the much bigger problem when viewed in perspective ; As effectively argued by former Keating speech writer, Don Watson.  At the same time the Left needs to 'return to class' ; and engage with opinions we don't like.  The 'political pressure cooker' alternative may blow up in our faces...

Dr Tristan Ewins

In response to the surprise Trump victory in the US Presidential election

  I’ve written a couple of letters to Australian newspapers : though neither published yet.  Before engaging in a broader examination of ‘political correctness’ and ‘anti-political correctness’  (which I thought I’d deal with in response to some negative commentary) – here are the letters in their original form.

First to ‘The Age’:

Hard as it may be to believe there’s a silver lining to the US Election result. Instead of being taken for granted one way or another, both Republicans and Democrats will now have to take account of the needs of the US working class. Bipartisan support for the neo-liberal interpretation of globalisation will need to be re-thought. In the mid-West and elsewhere the industrial working class and its sons and daughters have long suffered a deindustrialisation which robbed them of social and economic security and identity. The Right also increasingly uses narratives of ‘Left elites’ and ‘political correctness’ to drive a wedge against the progressive Left. An unambiguous return to class politics could sweep the rug from under that strategy. The old Left made the mistake of taking working class support for granted. Some in today’s US Democrats make the opposite mistake of ‘writing white male workers off’. What we need is a strategy to build a multi-faceted electoral bloc based on a politics of solidarity, mutual respect, and mutual liberation.

And also to the ‘Herald Sun’ ( a counter to Andrew Bolt):

Andrew Bolt calls the Trump election victory “a revolt against the Left’s arrogance” (10/11). But reality is more complex than this. A neo-liberal consensus - a particular INTERPRETATION of ‘globalisation’ - has prevailed around much of the world, facilitated by BOTH the parties of the Right and of the ostensible Centre-Left. Working class people who had lost their identity, as well as their economic and social security with the destruction of their jobs – gravitated towards a promise to restore America’s industrial base. Trump’s old school protectionism might not be the answer, but Nordic-style, targeted industry policy might serve better. Policies which promote high value-added manufacturing alongside Research and Development, and promotion of information and communications technology industrial development. Instead of taking their orientation for granted, the US Left needs to actively court the working class – including white males – with policies that offer the respect and security which could be key to building a broad electoral bloc, and rolling back Trump’s support base.

After I had posted one of these at Facebook I got the response from one reader:

“I see, so white males are the most important in all of this are they?”

I was surprised at this as I thought many on the Australian Left could see the problems with US politics ; that is – the lack of a clear class perspective; and hence the political alienation of a great many American workers.  Great swathes of the American working class have been co-opted by Conservative interests who play ‘divide and conquer’.   This is similar to the situation in Australia.  For instance where certain media outlets play the working poor off against some of the most vulnerable welfare recipients.  

That strategy is detestable ; but has proven quite effective.

The best response it to build solidarity – and promote the rights and interests of both those on benefits AND the working poor.   More robust labour market regulation and social wage provision for the ‘working poor’ is a crucial strategy in response to those Conservative ‘wedge strategies’ in Australia.

In the US, however, the Democrats have allowed themselves to be wedged by propaganda which emphasizes themes of  ‘political correctness’ , ‘Left cultural elites’ and so on.  (also similar to Australia) What’s more, modern identity politics has paved the way for this strategy’s success.  The class perspective was abandoned.   There has been an emphasis on the privileges of white men – but where class just never comes into the picture.   At its most vulgar and simplistic this is interpreted by some as suggesting there is something just ‘essentially bad’ with white male identity, sexuality and status.  

Race and gender no doubt need to be seriously taken into account when constructing a critique of privilege and power in modern capitalist societies.  They are a big part of the overall picture.  We need greater equality in the labour market, the public sphere, sport, the home, and so on.  We need a women’s movement which demands these – and more.

But as former Keating speech writer Don Watson effectively argued on QandA recently (I paraphrase) : ‘political correctness can be bad’ ; although ‘anti-political correctness is much worse!’.   

The lack of tolerance for real engagement with more conservative social perspectives : indeed the tendency to supress debate for fear of being vilified or shamed – actually plays into the Right’s hands.  It can create a ‘pressure cooker’ environment which can finally explode with the rise of a Trump-like character.  And if people are already disengaged because no-one is speaking to their economic and social interests ; and because they are prejudged as ‘red-necks’ – that just facilitates the Conservative agenda.   (not that Trump is ‘traditional Conservative’)

But sure  - the monopoly mass media does the same thing – but in reverse.  Mostly it fails to engage with progressive perspectives.  Systemically excludes them on any significant scale. Often it facilitates that strategy of ‘divide and conquer’.  It facilitates intolerance, fear, ‘downward envy’ and so on.  Often it is intellectually dishonest.

Compared with so-called ‘political correctness’ the ‘anti-PC’ movement  is so frightening as it could facilitate a full-on political and social Reaction : perhaps even fascism in some instances.   There is a disposition to wind back past gains: social security and welfare ; affirmative action and women’s right to choose ; the welfare state and social wage. Civil and industrial liberties are mocked, belittled and trivialised.

Here I had chosen in one of my letters to mention white working class men specifically because of their strategic importance ; but also because they matter as human beings ; and should just not be ‘written off’.  Karl Marx argued for the human liberation of ALL working people.  Facilitating the fullest possible human development of all working people ; and the amelioration (and finally abolition) of alienating forms of human labour under conditions of material abundance.  That is: Marx critiqued physically and/or mentally punishing labour with people treated people like ‘cogs in the machine’.  Where labour was for subsistence ; and its fruits are taken by capitalists in the form of a surplus.  So emphasising peoples’ class interests could be ‘the foot in the door’ – to gain peoples’ trust for a broader strategy of mutual solidarity ; and of building an unbeatable electoral bloc. 

I like to think of the strategy I propose as one of ‘mutual liberation’.  The aim, here, is not to write off or humiliate those demographics who are considered ‘problematic’.  But rather to suggest that the liberation of each is interconnected with the liberation of all. This should involve a real conversation: about democracy, and about class, race, sexuality, liberal rights, education and civic activism, and gender.   

In Australia right now it could be argued we’re wrapped up in veritable ‘cultural revolution’ with regard to gender and sexuality.   Broadly this revolution is a good thing.  But arguably sometimes ‘the Left’ gets it wrong.  Privilege can be conceived of in a overly-simplistic way: not only neglecting social class , but also age, disability, body image and so on.  What is more: real privilege is complex.   If we are to employ an approach of ‘intersectionality’ (ie: the various forms of privilege and the ways in which they intersect) we need to use those more complex variations on that framework : which look to specific experiences.  Not ONLY the large scale social relations of inequality and oppression ; but ALSO the highly individualised experiences.   When we accept this we can see that we ought not judge any person until we fully understand their individual circumstances.  Without accepting this we are left in the position of unnecessarily alienating some people: people who might otherwise be convinced if there was a strategy of respectful engagement.  

But where the project of liberation is subverted into becoming a project of ‘turning the tables’ this also can fuel a political and social reaction.  It can ‘blow up in our faces’ with exactly the opposite consequences to what we aspired towards.

So the Trump electoral result is a real wake-up call for the broad American Left.  ‘Class’ has to return to the front and centre of progressive American politics.  Promotion of working class interests is a good thing in itself ; but also ‘a foot in the door’ for a broader engagement on the project of mutual human liberation. 

Active and targeted industry policy is a desirable strategy to engage with the needs and aspirations of the traditional industrial working class.  To achieve full employment ; and the creation of secure, well paid jobs.  The movement for a $15/hour minimum wage needs to be fully embraced – and even updated to account for inflation and a rising cost of living. Industrial rights and liberties are paramount.   The neo-liberal interpretation of free trade and globalisation needs to be re-thought in a way which does not undermine popular sovereignty.  While nonetheless encouraging nations to take advantage of each others’ specialisations and comparative advantages.   And making the most of everyone’s  ‘skill sets’ ; not leaving them on ‘the labour market scrapheap’. And the benefits of the social wage and welfare state need to be sold to layers of the working class which used to enjoy such benefits provided through the private sector.

Finally I should mention the fact that despite being slaughtered in the electoral college vote, Hillary Clinton won a clear majority of the popular vote.   In this scenario the ‘industrial rust belt’ really was critical to the Trump ‘electoral college landslide’.  That’s the sense in which we have ‘a silver lining’.  That those displaced by a decades-long process of deindustrialisation must finally be taken seriously.  That workers’ interests more broadly will be embraced as being of real strategic value.  That the working class will no longer be practically ‘invisible’ in American politics.

The question of Trump’s ‘mandate’, however - and the ‘mandate’ of the Republicans more broadly – needs to be viewed in this context.  Also it is cause to apply a critical eye to the US electoral system.  It demands constitutional reform.

Finally: although Bernie Sanders will not likely re-emerge as a Presidential candidate in four years time, nonetheless the movement he helped create is far from exhausted. If anything it may gain momentum if Trump’s failure to deliver disillusions parts of his base.  Economically Left: they are in a position to appeal to workers’ interests.

Hillary Clinton has not ‘shattered the glass ceiling’.  And indeed while her victory would have been of great symbolic importance – it is actually POLICY and how it affects specific groups which matters most.  Clinton will not likely return ‘for another shot’ in four years’ time.   But also it really is only a matter of time before a woman ‘takes the top job’.  Also she was the first woman candidate to run in a US Presidential election.  And she won the popular vote.  Regardless of her flaws: that will go down as history.

Trump Economic Policy not 'Business as Usual' for Neo-Liberalism - But Clinton offers real change for the Working Poor

above:  The Economic Policy Contest between Clinton and Trump is more interesting than a first glance may suggest

Dr Tristan Ewins

This week I begin my blog post with a correction.  In an earlier article I described Donald Trump as ‘a neo-liberal’.  Based on corporate welfare policies – such as cutting corporate tax by more than half , as well as cutting other taxes affecting corporations  – this may have appeared accurate.  But upon closer inspection this election is more interesting than it first appears.

Yes, Trump wants to hold minimum wages down to the existing miserly rate of $7.25 an hour.  Yet Democrats are campaigning for an increase to $15 an hour. For the American working poor this could prove to be a real watershed.  Though Clinton has only absolutely committed to a rise to $12/hour she will be under significant moral and political pressure to go further.  That could result in a defining moment for social justice in the workplace at ‘at the lower end’ in America.  But the centre-piece of Trump’s economic policy is a reversion to protectionist policies.  He has talked about a 25% tariff on Chinese goods and a 35% tariff on Mexican goods.  Hence Trump's position is actually NOT 'business as usual for neo-liberalism'. But the immediate effect of this may well be to shore up some American jobs ; but there’s the prospect of economic retaliation as well.  If that happens it could hurt everyone.

Trump is assuming massive growth in jobs and investment – and that revenue from tariffs will pay for the massive tax cuts ; as well, perhaps, as reductions in some military expenditure – pressuring NATO allies, and East Asian allies such as Japan and South Korea to invest more into their own defence.  Hence Australian commentators such as Paul Kelly suggest (I paraphrase here)  a ‘US withdrawal from the world stage’ , and the end of the US as ‘world’s policeman’, ‘enforcing a liberal political model’, including in our region.  (though In reality the US was often concerned with its diplomatic and economic hegemony more-so than ‘enforcing liberalism’)  Conservative commentators such as Greg Sheridan fear US partial withdrawal from the region and what it might mean for Australia. (eg: pressures for a big increase in Australia's Defence budget)

Hillary Clinton’s economic policies contrast quite starkly with Trump’s economic policies.  She is proposing  big investments in infrastructure, child care,  and in boosting women’s economic participation.  Also borrowed from Bernie Sanders – she is proposing policies to cut back student debt and hence make tertiary study more accessible.  Further she supports profit sharing with workers, collective bargaining rights for organised labour, and investment in the broader education system – both academic and vocational training.   She’s also supporting longer-term investment by taxing short term investment more severely than long term investment .

Other authors are also pointing to the malaise amongst layers of the US working class – still scarred by the process of deindustrialisation which took effect from the 1970s to the 1980s and 1990s.  Authors observe the loss of certainty and security.  Often there have been much lower wages.  Losses of health benefits.  Loss of respect, working class identity, organisation and social networks.  And where the US Democrats have increasingly pitched their message to ‘the middle’ , working class Americans are sometimes left to wonder ‘if they really matter anymore’.  Many modern middle class liberals have a lot to say about the privileges of being white and male, but have had little to say about the working class ; or about class more generally.   These ‘blind-spots’ have left many working class Americans disoriented ; and at least Trump was speaking to their experiences, fears and insecurities.  Even if his ‘solutions’ are dubious.  Sometimes working class Americans even feel patronised by a ‘middle class liberal establishment’ which hasn’t taken class seriously enough ; which sometimes have disrespected or misunderstood them, or subjected them to caricature.

On the other hand Clinton’s policies do offer more social mobility through greater access to tertiary education.  And while she won’t restore the industrial working class jobs which many look back to as representing a kind of ‘heyday’ ; some working poor Americans could see close to a doubling of their hourly wages rate.   Some jobs might go ; but others will be created by the increase in consumption power.  Clinton has some good economic policies – obscured by the never-ending mud-slinging ; the constant emphasis on ‘dirt’ and ‘denigration of character’.  (which has become the defining feature of the campaign for both sides)

That said Clinton needed to do more and say more to win over great swathes of working class America. 

US industrial working class music icon, Bruce Springsteen has called Trump a ‘conman’ with ‘glib’ and ‘superficial’ ‘answers’ to a problem which has spanned over several decades.  Massive tariffs on China and Mexico are a very blunt instrument.  Again, they may provoke retaliation which ends up hurting everyone.  What jobs are created will possibly pale in comparison to the collapse in corporate tax revenue , with a loss of public sector jobs.   

But a more nuanced industry policy – such as the Nordics have experimented with over the decades - should not be considered ‘out of the question’.   The age of retirement must not rise – either in America or in Australia – in order to buoy the economy.  That’s the wrong approach – which depresses rather than improves real living standards. (ie: with a ‘work/life balance’)  Neither should labour market deregulation aim to ‘clear the labour market’.  

Strategic economic intervention makes more sense.  Targeted education and training linked with job creation for existing/sympathetic skill sets.  More extensive retraining where necessary for those deemed capable.  Perhaps even government support for workers co-operatives – providing tax breaks and co-investment to help maintain jobs, and improve economies of scale without dependence on take-over capital. 

The US government needs a PLAN for a far more balanced and equitable labour market and economy.   Clinton’s increase in the minimum wage is a good start ; as are her plans for accessible education and greater economic and social mobility.  But depressed regions cannot just be left ‘to carry the can’.  Durable jobs need to be created and maintained over the long term.  And communities need to be reinforced around the necessary social infrastructure.   Where the loss of well-paying working class jobs in manufacturing and heavy industry saw the loss of private sector benefits in areas like health – the State needs to step in and fill the gap.  The social wage is potentially the answer for both middle income and lower income Americans.   And the working class needs to return to ‘the front and centre’ of Democrats policy and rhetoric.

The real danger now is that Trump is gathering enough momentum to deny the Democrats control of BOTH Houses ; ie: the House of Representatives AND the US Senate.  SOME of the truly progressive policies emanating from Hillary Clinton have been derived from Bernie Sanders ; and enshrined in the Democratic Platform.  With control of both houses and massive political and moral pressure to implement that platform – we could see some truly meaningful gains under a Clinton Presidency.  But failure to speak to the fears and insecurities of the US working class – including recognition of the dignity of labour – have undermined the Democrats position ; and left these people exposed to Trump’s demagogic posturing on the home front.   

Even on parts of the Left some are also fearful that Clinton may prove to be too ‘Hawkish’ on the foreign policy front.  Trump is seen by some as ‘the lesser evil’.   Julian Assange will likely never forgive the US Administration’s pursuit of him under Obama.  L.B.Johnson implemented ground-breaking ‘Great Society’ social and welfare policies – but will be remembered by most as pursuing the war in Vietnam.  We need a United States which doesn’t just ‘roll over’ in the face of aggression.   But which at the same time goes to extraordinary lengths to preserve peace as well.  And which appreciates the concerns of other Great Powers where they are legitimate.  Yet a vacuum from any US withdrawal within our own region could create more instability, not less. (though no I am not making excuses for past US policies, such as support for the Suharto regime)

The US Presidential Election is almost upon us.  Let’s hope for a Clinton victory.  But also for a reformed Democratic Party which speaks to – and shows clear respect for – the United States’ working class.

https://www.thebalance.com/hillary-clinton-2016-economic-plan-3305767

http://money.cnn.com/2015/07/28/news/economy/donald-trump-polls-taxes-wages/index.html

http://money.cnn.com/2011/04/17/news/economy/trump_china_trade_war/index.htm

http://money.cnn.com/2016/09/15/news/economy/trump-tariff-ford-mexico/index.html

http://www.salon.com/2016/08/19/the-half-life-of-deind_partner/

Debating an Australia-China Free Trade Agreement

above:  Chinese Vice Premier Li Keqiang (R) shakes hands with Deputy Prime Minister of Australia Julia Gillard at the airport in Sydney, Australia, Oct. 29, 2009. Li Keqiang began his official visit to Australia on Thursday.(Xinhua/Liu Jiansheng)

Post Accord- Trade or Industry Policy?

A Progress Report on Prospects for Manufacturing

 By Sarah Howe, February 7th 2010

nb: the following essay, by Australian labour movement activist and thinker Sarah Howe, explores the issues surrounding manufacturing policy in Australia.  More specifically, this is considered in light of moves to establish an Australia-China free trade agreement.  Howe argues in favour of a more assertive stance by Australian negotiators than we have seen so far under Rudd Labor, and refers to the experience of previous Labor governments.

This paper seeks to consider the progress of the current Australia-China Free Trade Agreement (FTA) negotiations in investigating whether the Australian Government could best secure the future of the manufacturing industry through the mechanism of trade or industry policy.

In global terms, Australia’s manufacturing industry currently operates on a small scale and occupies a relatively vulnerable position in global supply chains. This makes Australia position in the world vulnerable with many commentators observing that a robust manufacturing industry is critical to not only economic success, but also its success is crucially important on social and environmental grounds.

Economically, China is the world’s sixth largest economy, fourth largest trader and Australia’s largest export market. Australia mainly exports primary commodities to China, while China mainly exports labour intensive, value-added manufactured products to Australia. Better relativities in the trade relationship between Australia and China must be achieved if Australia is to continue to develop as a balanced and knowledge-based economy and is to avoid an ongoing mounting and unsustainable current account deficit. In social terms, the manufacturing industry provides stable, full time and largely well paid jobs for over one million Australians (9.3% of all jobs in Australia). And in environmental terms, it is argued that we need to start thinking about the impact of export of export of coal and uranium without concern for the impact on global warning.

In the light of these challenges, does trade policy (and instruments such as FTA negotiations) present a possible policy path to encouraging the growth of a sophisticated export orientated manufacturing industry as opposed to industry policy? It will be argued that since the Accord policy period in the 1980s, industry policy in Australia has fallen away and is now not achieving the much needed capacity building in high technology manufacturing that is required to ensure its required growth and sustainability in global terms. Trade policy becomes a crucial instrument, for the Australian Government in positioning the manufacturing industry strategically to the meet economic, social and environmental challenges that face the industry.

In trade policy, bilateral trade agreements are again a force in Australian trade policy post the Howard years (they briefly disappeared from view after Rudd was first elected in November 2007 and initially vowed to focus instead on the multilateral trade rounds). While Rudd’s initial position was that Australia did not have the size, influence and power to secure significant trade deals with major trading partners at the expense of other countries- which is the inherent feature of bilateral preferential trade agreements-the global take up of bilateral agreements encouraged the Rudd Government to take a policy shift back to favouring preferential trade agreements in response to the development that in recent years they are the preferred instrument of trade policy for all of Australia’s major trade partners.

Australia must take an offensive strategy in current FTA negotiations with China to further the interests of the manufacturing sector to assist with the building of a high value added export orientated manufacturing industry. In the absence of a Rudd Government led heavy state orientated industry policy (as the Accord promised to be), our focus turns to trade policy and we pin our hopes on our Australian negotiators and their capacity to extract concessions from the Chinese to assist in boosting the export potential of the manufacturing industry, as well as protecting the existing industry through protective measures. We imagine that this may be able to be achieved by exploiting or capitalising on the insatiable Chinese demand for our iron and coal.

Trade and Industry policy experts argue a strong position for manufacturing can be achieved by taking a defensive protectionist stance via pursuit of concessions in the area of non tariff barriers. This is not about creating infrastructure for the manufacture and logistics of adding value to our iron ore (it is argued by commentator Martin Feil that we missed that boat in 1976 when it was determined we would instead just export blooms, billets and slabs of iron and steel). Rather, it is about Australian negotiators taking a hard line position on many of the key non tariff barriers that have impacted on trade for the manufacturing industry; stronger anti dumping measures, greater intellectual property protection, greater transparency in legal and financial systems, and stronger rules of origin clauses.

It is argued that by Australia toughening up our stance on non tariff barriers, negotiators will assist in Australian manufacturers in building capacity in our export manufacturing industry, so as to position us better to build a sustainable, innovative and socially just manufacturing policy. In this way, Australia will depart from a trade policy that reinforces us as a ‘quarry and farm economy’- a mere source of cheap raw materials for the rest of the world’s economies.

The Economic Imperative- The Current Account Deficit

A stable and growth orientated manufacturing sector is critical for a nation’s economic success. However, Australia’s trade and industry policy strategy since the 1970’s has not positioned Australia well in relation to building a strong export orientated, high value added manufacturing sector. In recent times, the AMWU has lamented Australia’s lack of energy in pursuing a high growth future for the manufacturing industry in various submissions to Commonwealth trade and industry policy consultations;

‘at a time when developing nations are building information technology industries from the ground up, Australia must do better than relying in trade and industry policies aimed at encouraging the exportation of low value added products. In terms of exporting high and medium-high technology goods, the only OECD economies that Australia performs better than are Turkey, Greece, New Zealand and Iceland. This is not a formula for a high wage-high growth economy of the future’

The early development of Australia’s manufacturing sector depended heavily on protection for its growth reflecting the aim of Australia’s trade policies post Federation as to diversify the economy by reducing the dominance of trade in primary products. This development strategy took a dramatic turn in the early 1970s, when with the onset of severe economic difficulties marked by slow economic growth, high inflation and rising unemployment from late 1974, pressures for structural adjustment of domestic manufacturing industry increased as the competitive problems of the sector were more starkly revealed.

Worldwide economic pressures bought a dramatic end to ‘fortress Australia’ and the protected nature of the manufacturing sector. The 1970s and 80s presented a critical re-adjustment phase for the Australian manufacturing industry. It was felt that Australia could not compete with low-wage manufactured exports from newly industrialising countries, and that we now had to factor in the increasing technological sophistication of manufacturing in leading industrial economies.

Pressure was brought to bear for Australia to liberalise its trading relationships with the Pacific region- which involved allowing for greater imports of low wage manufactured goods, in order to open up markets for agricultural and resource exports. By the end of the 1970s, the Australian Government determined to replace its ‘post war import substitution manufacturing strategy’ with a new approach that would be about focusing efforts to develop a mature high wage industrial economy with a manufacturing base that was specialised, competitive and export orientated. In moving away from its labour intensive industrial base of the motor-vehicle and TCF industries, Australia needed a strategic approach to develop a more specialised industrial structure that reflected Australia’s comparative advantages, particularly in capital, knowledge and resource-intensive manufacturing industries and in developing greater export development and orientation of the Australian manufacturing industry.

A state led industry policy would have enabled such a transition from Australia adopting a ‘defensive industry policy’ to instead an offensive industry policy- the need for ‘a shift in emphasis of the debate on assistance to manufacturing industry away from complete concentration of the tariff towards consideration of how in a tariff distorted environment, manufacturers could be positively encouraged to become more outward looking and export orientated. However, in the absence of a current account deficit at the time, the Government did not have a great impetus to reach the goal of encouraging a new ‘more specialized industrial structure’ of the sort that was needed to replace the light industry associated with the textiles and motor vehicle industries and notes that this kind of goal required massive state oversight and intervention.

In the 1970s and 80s, the Australian Government instead adopted a policy approach that was about merging free trade policies at a foreign policy level, with relatively minor interventionist policy approaches at a state level. Unfortunately, positive interventionist policies in this era remained partial and poorly implemented, reflecting weak bureaucratic capabilities, conflict over the role of the state in industry and the limited commitment of key policy makers to notions of a positive state role in industrial restructuring. This policy malaise in industrial restructuring as reflecting a lack of political will behind the manufacturing industry restructure in Government. Instead the prevailing view in Government at this time was that the resources boom of the late 1970s and early 1980s would be the key driver of national wealth creation, with the services sector providing a key area of employment growth; with manufacturing increasingly seen as an oversized and inefficient product of post-war protectionism.

Increasingly a widespread view developed within the state and the wider society that the manufacturing sector’s call on productive resources and on state assistance had become a burden on the rest of the economy and a drag on national development aspiration – it was felt from a balance of trade perspective, that the significant exports generated by the resources boom, could allow for the increase of imports of manufactured goods. Australia’s strategy at this time was therefore to continue to trade with our resources, to the expense of our manufactured goods, with little commitment to the implementation of a state based manufacturing industry plan based on industrial restructuring towards high end manufacturing growth. At the same time, countries like Japan, were implementing an economic policy strategy with the development of the manufacturing industry at the centrepiece of plans.

Finally by the mid 1980s, alarm bells began to ring on this approach to trade and industry policy at Parliament House, with Australia’s reliance on rural and commodity exports in a world increasingly dominated by lucrative manufactures trade, showing up an dramatically increased current account deficit, prompting Treasurer Paul Keating’s famous statement of 1986 about the prospect of Australia becoming a ‘banana republic’. In response, the Hawke Government quickly adopted a ‘quasi corporatist’ industry policy, which built on the embryonic positive assistance measures already in place.

The Accord policy of 1987 emphasised state centric approaches to development (based on the Swedish and Japanese models) with steel, heavy motor vehicle, engineering and TCF plans being developed as well as developing new industries where we were seen to have a comparative advantage such as resource processing and in the information and generic technology industries. The Hawke Government believed that the Accord policy, coupled with the depreciated Australian dollar would combine to generate the industrial restructuring that was required in the Australian economy to boost exports and limit imports- to correct Australia’s trading problems. This policy direction is often remembered as achieving ‘too little-too late”- a move in the right direction but requiring massive state resources to enable it to turn the manufacturing industry into a high value export orientated industrial base. The Accord period generated a lot of excitement amongst social democratic thinkers, who thought it would set us on the path of the successful social democratic economies such as Sweden.

Economist Ross Garnaut argues that the Accord policy in fact did make an impact on export figures, and maintains that throughout in this policy period (between 1983-84 and 1989-90) that the manufacturing sector expanded its total share of exports and production However, on alternative figures, it is argued that since this period we have been steadily losing market share in Asian markets on our exports. Bell argues that in 1980, Australia supplied 6.2% of all Asian imports and by 1987, this figure had declined to 3.5%, including all sectors, including food. Importantly, since the Accord period, an offensive Australian policy direction on manufacturing industry policy have been further marred by a lack of policy co-ordination (for example tax and financial deregulation policies have worked against productive investment) a lack of a clear industrial vision, and a lack of integrated policy development that takes into account ‘triple bottom line’ policy considerations (economic, environmental and social issues). While the Accord model was a good start in state centred industry policy development, it petered out by the 1990s and neo-liberal policy prescriptions again took precedence.

Contemporary current account deficit

As the Australian Industry Group report in their submission on the Australia-China FTA to DFAT, the latest annual trade figures show that in 2005, China exported $21.4 billion worth of goods to Australia, the bulk of which were manufactured products such as clothing, computers, toys, games and sporting goods, and telecommunications equipment. Commodities such as iron ore, wool, copper and coal dominated the $16.1 billion worth of Australian exports to China in 2005. This $5.3 billion merchandise trade deficit with China was only partially offset by a $1.3 billion services trade surplus in our favour, still leaving Australia with an overall trade deficit of $4 billion with China.

Australia’s trade deficit with China is having a growing impact on Australia’s rapidly deteriorating and unsustainable current account deficit. However, as the AMWU contend- it is not only is the rate of growth of Australia’s trade deficit with China an increasing cause of concern, so too is the composition of the trade deficit. Australia’s exports to China are overwhelmingly dominated by primary products. Of Australia’s top ten exports to China, seven of them are primary products. Two of the remaining exports inside the top ten (aluminium and pig iron) are simply transformed manufactures with little value added.

Many economists argue that the current account deficit and foreign debt levels are an unsustainable economic situation for Australia. While China’s demand for resources from Australia is currently providing a ‘boom for some parts of the Australian economy’, the successful economies of the future will not be sustained on the exportation of resources. It is argued that Australia must do more to encourage the growth of strategic high value added manufacturing. Ross Garnaut has also argued that Australia cannot go on running a persistently large current account deficit, arguing that our current account deficit (one of the largest in the Western world) places Australia in an increasingly unsustainable precarious position and dependant on foreign markets rolling over debt.

Ken Henry, the current Department Secretary of Treasury, argues that Australia, structurally, has no choice but to keep borrowing and running current account deficits far into the future. Henry argues that Australia cannot afford the high investment associated with building manufacturing capacity and argues that Australia’s population is ‘too small to be able to adequately fund an abundance of investment opportunities’.

Given that this is the current ethos of the Rudd Government as well (there are no signs that Australia is going to return to the Accord style policies of the 1980s, in building state capacity in the high value added end of the manufacturing industry to improve our balance of trade position) what could be a possible role of trade policy in providing a solution to the malaise facing manufacturing exports?

The glaring social and environmental imperative for a new approach to manufacturing policy also underpins the urgent need for policy review at a Commonwealth level. At the end of 2009, 50,000 manufacturing jobs were lost in that year. Manufacturing jobs tend to be well paid, stable, full time and skilled jobs- the decline of the manufacturing sector has led to Economist Bob Gregory to note in the Australian context, as in the US- evidence of a 'hollowing out' of the wage/employment structure – the growth of low paid jobs and high paid jobs with a 'disappearing middle' in the distribution of work and living standards. This trend is often associated with the decline of the manufacturing sector.

In environmental terms, Tim Flannery has argued that Australia needs to take more responsibility for the environmental, social and political impact across the globe of exporting coal and uranium-moving away from a current approach of ‘buyer beware’ in our export policy. He also argues that with the resources and agricultural sectors so entrenched in Australian politics and economy, we are missing the opportunity to turn to manufacturing and exporting renewable energy technologies that can reduce greenhouse gas emissions.

It is therefore crucial from not only an economic standpoint, but also a social and environmental perspective, that a strong position is taken in the Australia-China FTA negotiations so that trade policy may provide the policy platform for a new look manufacturing policy for Australia.

Australia-China FTA negotiations

Against this policy backdrop, in April 2005, formal negotiations commenced between China and Australia in negotiating an Australia-China Free Trade Agreement. Australia’s official position was that it felt that it may be able make some ground on ‘new’ trade issues, such as investment, intellectual property rights, competition policy, government procurement, mobility of natural persons, labour and environmental clauses, scientific and technical co-operation and e-commerce. Given that the average import tariff levels have gradually fallen over time, especially on manufactured goods, it was felt that broad band elements may compensate in presenting additional areas where FTA parties are looking to open up and integrate their economies close together.

Australia had traditionally adopted a defeatist position on ‘broad band’ non tariff barrier issues, lacking the leverage to extract significant concessions in these areas. Thus, under Howard FTA negotiations did not proclaim to be offensive in economic terms and instead were focused on a combination of political motives (broader foreign policy and strategic interests) and defensive economic objectives that were about preserving existing market access for our existing export trade, such as in the case of the Gulf CC negotiation where the aim of the Australian Government was to protect our export market for passenger motor vehicles.

Under Rudd, and with the lesser emphasis upon the multilateral process, what have been the prospects for Australia to take a more offensive economic position of bargaining for the manufacturing industry under the new bilateral regime, in the context of the Australia-China PTA? Given Australia’s low level of tariffs and open economy, it is placed in a weak position at the outset to pursue offensive interests on behalf of the manufacturing industry (for instance in overcoming many of the non trade barriers identified by manufacturing industry interests in submissions to DFAT).

It is argued that Australia has lost much of its bargaining power and started off on a weak footing in negotiations, with Australia awarding China market economy status prior to negotiations starting. Australia departed from the European Union and the United States who did not accede to China’s request to be granted market economy status.

The Australian manufacturing industry had pinned its hopes on Australia taking a hard line position on many of the key non tariff barriers that affected trade for the manufacturing industry such as ensuring stronger anti dumping measures, cracking down on IP rights infringement by Chinese companies, ensuring transparency in legal and financial systems and simplifying the now complex multitude of conflicting rules of origin clauses, that are complex and costly for exporters. However, Australia’s capacity for a hard line position in negotiations with China on broad band issues and non tariff barriers has already proven difficult given early concessions made by the Australian negotiators.

This was a disappointing development, as China had two major agenda items for negotiations with Australia; to lock in supply of energy resources and raw materials from Australia at relatively stable prices and to request market economy status from Australia and subsequently to use this to request to the EU and US to follow suit, which would ease the disadvantaged position of China as an economy in transition for fifteen years in anti-dumping cases under the WTO .

As already outlined, China has already made significant progress on the second of its key offensive issues; achieving market economy status, before negotiations had even commenced. This has significant implications for the Australian manufacturing industry, with a key reform that they were seeking (stronger anti-dumping measures) being now constrained by this concession. Furthermore, in relation to market economy status and energy resources, China does not have many strong offensive interests in the FTA with Australia, as it has already achieved a few major energy cooperation agreements outside the FTA framework and does not necessarily need to use the mechanism of an FTA to further these negotiations.

In the context of Australia’s low bargaining position, and China’ lack of offensive interests, negotiation’s have been marked by their ‘glacial pace’ and frustrations on the Australian side, in the lack of significant progress on any of its key non tariff barrier trade issues.

There has been lack of progress on non tariff barriers such as regulatory and behind the border issues such as China developing a legal system, lack of capacity, the relationship between central and provincial governments and in particular enforcement of intellectual property rights. For instance in relation to IPR, China prefers the intellectual property chapter to be minimalist and non binding, focused on general principles, co-operation and information exchange, and strongly resists going beyond its existing international commitments. Australian negotiators on the other hand argue that its manufacturers cannot benefit from the Chinese market because of the inadequate IPR protection in China. Negotiations have stalled on this important Australian agenda item.

With the recent announcement from Prime Minister Rudd that he seeks the conclusion of a free trade agreement with China to occur as "rapidly as possible" following talks in Canberra, and with may outstanding issues still on the table for an Australian offensive position, it would appear that the political and foreign policy considerations are again overshadowing commercial and trade issues in this agreement.

Australian industry policy agitators are already calling through the Australian media for alternative economic modelling to justify the expense of Australia entering into these kinds of agreements, which they argue (based on independent modelling) are not economically advantageous, but rather are about promoting other non-economic, diplomatic and regional interests.

Conclusion

There was clearly a strong economic, social and environmental imperative for the Federal Government to enter negotiations of the Australia-China FTA seeking trade policy solutions around promoting the growth of a strategic high value added manufacturing industry in the Australian context.

In reviewing Australia’s trade policies since the late 1970s to date, it becomes apparent that apart from the Accord policies of the mid 1980s, that little in the way of state industry assistance to building a sustainable high valued added manufacturing industry has occurred. This policy malaise has set the scene for Australia’s current economic difficulties as evidenced by an unsustainable current account deficit, of which the Australia- Chinese economic trade imbalance plays a big role in generating.

In examining the extent to which Australia may have been able to rectify this trade imbalance through the mechanism of a bilateral preferential trade agreement with China, it has been seen that Australia’s offensive positioning has been compromised by it granting China market economy status prior to negotiations even commencing, thus undermining the capacity for Australian negotiators to extract leverage over China’s need for stable prices of energy and raw exports. Thus, Australian reform agenda items on non tariff barriers, such as intellectual property protection, transparency in legal and financial systems, rule of origin clauses, have not gained traction in negotiations.

The Australia-China FTA will most probably ironically set back the manufacturing industries export growth, with if by Australia granting China’s market status- this enables greater ease in dumping cheap imports on the Australian market.

It would appear that Australia’s large trade deficit with China, and growth in its manufacturing sector will not be resolved through a bilateral process through the mechanism of an Australia-China FTA. The best prospects for the manufacturing industry are possibly best served by a shift in policy emphasis by the Commonwealth away from trade policy to micro management through an emphasis on innovation policy, investment in major infrastructure, further liberalisation of Australia’s investment regime, and measures to enhance Australia’s capacity to participate in global supply chains (picture a revamped Accord with triple bottom line planning on a massive scale). This would entail a reallocation of public resources away from Trade to other portfolios such as Industry and Innovation, with DFAT becoming further dominated by foreign policy agendas.

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Endnotes

AI Group, Australia-China Free Trade Agreement, Feasibility Study, DFAT, 2004



Australian Workers Union, Inquiry into Manufacturing in Australia, Victorian Parliament, August 2009


Flannery, T in Mark Lawrence- hhtp://marklawrence.blogspot.com/2006/09/quarry-and-farm.html


Capling, A, Preferential Trade Agreements as instruments of foreign policy: an Australia-Japan free trade agreement and its implications for the Asia-Pacific Region, Pacific Review, Vol. 1, No 1, March 2008


Feil, M, We Must Export More Than Fresh Air, The Age, Wednesday March 28th, 2008


Australian Manufacturing Workers Union, Submission to DFAT concerning a possible China-Australia Free Trade Agreement: June 2005


Bora and Pomfret, Policies Affecting Manufactruing, Australian Trade Policies, 1995


Bell, Australian Manufacturing and the State: The Politics of Industry Policy in the Post War Era, 1993


Bell, ibid, 1993


Bell, ibid, 1993


Bell, ibid, 1993


Bell, ibid, 1993


Bell, ibid, 1993


Bell, ibid, 1993


Bell, ibid, 1993


Ross Garnaut wrote an influential Report entitled Australia and the Northeast Asian Ascendancy : Report to the Prime Minister and Minister for Foreign Affairs and Trade, Commonwealth, 1989 – In the Report Garnaut argues that on ETMs (exports) we did very well, arguing a jump of 3%- 1982-3- 10 per cent to 13 % in 1990-91


Bell, ibid, 1993


Australian Industry Group, ‘Australian Manufacturing and China: Deepening Engagement’, August 2006


Australian Manufacturing Workers Union, Submission to DFAT concerning a possible China-Australia Free Trade Agreement: June 2005


xx AMWU, ibid


xxi Garnaut, in Colebatch, T, Balance of Power, The Age, October 24th, 2009






Henry in Colebatch, ibid, 2009


ABC, Manufacturing survey predicts further job losses, 2nd March, 2009


Gregory B in Belchamber, G, Disappearing Middle or Vanishing Bottom? A Comment on Gregory, Economic Record, Vol 72, 1996


Flannery in Lawrence, M Farm and Quarry at http://marklawrence.blogspot.com/2006/09/quarry-and-farm.html, September 8th, 2006


Ravenhill, J, ‘The new bilateralism in the Asia Pacific’, Third World Quarterly 24, 2 pp 219-317, 2003






Capling, ibid, 2008


Ravenhall, J, Preferential Trade Agreements and the Future of Australian Trade Policy, Australian Journal of International Affairs, Vol 62, No2, June 2008


Jiang, Australia-China FTA: China’s domestic politics and the roots of different approaches to FTAs, 2008


Jiang, ibid, 2008


Jiang, ibid, 2008


AAP, Australia, China seek free trade deal, 2009


Feil, M Martin Fiel argues that of the four FTAs that Australia is signatory to, currently in force a common feature has been their impact on trade flows. The feasibility study modelling claims that the benefits expected to accrue to Australia of a free trade agreement with China were in the vicinity of $24.4 billion over ten years. Yet, it has been suggested that the figures concerning service and investment are unreliable (and further have negative employment outcomes for Australian joins) that the gains for manufacturing are in further liberalisation of merchandise trade at the expense of strategic manufacturing industries such as in the automotive industry


Capling A, Australia’s trade policy dilemmas, Australian Journal of International Affairs, Vol. 62, No.2, pp 229-244, June 2008