Is this a real Labor Budget?

above: Treasurer Wayne Swan thinks he has the economic policy settings right

In this latest 'Left Focus' article Tristan Ewins asks:  What are the high and low points of Federal Labor's 2011-12 Budget?   Labor seems to be prioritising return to surplus, and containing inflation. But has social justice been lost in the process?

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Federal Labor’s 2011-12 Budget is framed by a variety of political and economic imperatives: fear of being outflanked by the Conservatives on the populist right with welfare and refugees; fears of inflation and increased interest rates as the economy picks up; and the symbolic drive for a surplus by 2013 – regardless of natural disasters at home and abroad which have impacted upon our economy. I intend to consider the high points and low points of the budget, with some views on how it may have been improved, and what progressives ought be aiming to achieve in the future.

Firstly, the high points

The $1.5 billion in new initiatives for mental health is both welcome and necessary. ‘The Age’ has observed there are an estimated 600,000 Australians “with debilitating mental illness”, with the most severely affected second only to indigenous Australians in mortality rates. (presumably including suicide) http://www.theage.com.au/business/federal-budget/new-services-to-benefit-mentally-ill-20110510-1ehin.html

The emphasis on ‘early intervention’ for young people is notable – as surely prevention is better than cure – most importantly in terms of preventing human suffering, but also for the budget bottom-line. Though more resources should be devoted to improving social participation and reducing social isolation.

Meanwhile some of Labor’s savings make good sense. The practice of parents using children for purposes of ‘income splitting’ in relation to the low income tax offset on unearned income will be cut back severely to $416 per annum. Tighter superannuation contribution caps for the over-50s demographic comprise an attempt to stem an effective tax-minimisation strategy, and reduced concessionary arrangements for upfront payment of HECS debt by students will save $480 million over four years, affecting mainly higher income groups. http://www.news.com.au/money/federal-budget/the-budget-what-it-means-for-you/story-fn84fgcm-1226053524859

Also very notable was the government’s announcement that it intends to enact separate legislation to means test the Private Health Insurance Rebate. http://news.ninemsn.com.au/mobile/article.aspx?id=8247906&_sp=2045&noid=6303&_s=eb0745b1-ffdd-4839-b584-91e50ee86c21

These savings are targeted for fairness, and are welcome insofar as the alternative may have involved further cuts to health, welfare, education, or crucial infrastructure. They are welcome in providing the scope to increase income support for families with teenagers in study aged 16-19, as well as ‘bringing forward’ the Low Income Tax Offset to apply to workers’ weekly pay instead of being accessible only with their end-of-year tax return. http://www.abc.net.au/news/stories/2011/05/09/3210940.htm

In relation to the government’s skills policy Treasurer, Wayne Swan had observed that: “skills shortages could constrain our economic growth and mean missed opportunities for Australians". http://www.smartcompany.com.au/economy/20110510-federal-budget-2011-3-billion-workforce-training-and-participation-projects-to-combat-skills-shortages.html

In this context the government has committed $3 billion in new money over six years including a National Workforce Development Fund (industry-based training with 130,000 places over four years), support for new apprenticeships, and incorporating a renewed commitment to skilled migration. This is the Budget’s true centre-piece. http://www.smartcompany.com.au/economy/20110510-federal-budget-2011-3-billion-workforce-training-and-participation-projects-to-combat-skills-shortages.html

There are also some bright spots amidst a largely disappointing welfare agenda. Employer subsidies aimed at helping the long-term unemployed and the disabled to re-enter the workforce are welcome: as is a restructuring of Disability Support Pension eligibility enabling the retention of some payment up to a maximum of 30 hours a week. For some disability pensioners – for instance those suffering mental illnesses – this is welcome on the basis that such peoples’ capacity to work fluctuates irregularly. http://www.jennymacklin.fahcsia.gov.au/mediareleases/2011/Pages/b05_10052011.aspx

Single Parents will also face incentives to work, with an easing of means tests. http://www.theage.com.au/business/federal-budget/tough-love-work-rules-20110510-1ehi8.html

Finally, a record $4.3 billion is being provided for the regions, targeting areas like health, infrastructure, and vocational and higher education. And an emphasis on skilled migration - with 16 000 places allocated to the Regional Sponsored Migration Scheme - will prove crucial to regions facing critical skills shortages in areas such as health services. http://www.minister.immi.gov.au/media/cb/2011/cb165287.htm

The commitment to regional Australia illustrates that where country-independent MPs hold leverage over a minority Labor government they will be in a position to ‘deliver the goods’. A mutually beneficial move could be for these independent MPs to enter into a ‘pact’ with Labor now, foreshadowing the possibility of another minority government, involving guarantees of a continued flow of resources for regional Australia. This could even provide a spur for additional independent contenders: and at least in theory provide impetus for a new party. Emphasis on consolidating regional population centres could ultimately be crucial in ameliorating the effects of urban sprawl in the major cities.

But Tony Windsor must reconsider his demand that Carbon Tax money be diverted from compensation for affected groups to investment in renewable energy programs. If there is to be new investment here it needs to be funded separately. Overcompensation and support for trade-exposed industries are just too crucial for Labor in ‘selling’ the Carbon Tax and achieving re-election. And despite talk of ‘cash churning’ the resulting market signals should still provide the desired effect.

Disappointments

Perhaps the most glaring disappointment is the government’s capitulation regarding the never-ending campaign of vilification against the unemployed, single parents and to some extent disability pensioners.
Disability Support Pension (DSP) recipients under 35 will face a more stringent “impairment test” . They will also be compelled to attend regular interviews (every three months) reassessing their capacity to work. This will apply to those “assessed as having a work capacity of at least eight hours a week.” http://www.jennymacklin.fahcsia.gov.au/mediareleases/2011/Pages/b05_10052011.aspx

With regard to ‘NewStart’, the unemployment benefit: long-term unemployed will now be compelled to ‘work for the dole’ 11 months of the year, two days a week. http://thecourierpigeon.com.au/government-gets-tough-on-the-unemployed/851664/

And unemployed 21 year olds will be shifted to the ‘Youth Allowance’. (at a rate $43 a week less than the poverty-level Newstart allowance). The targeting of this demographic seems largely arbitrary, and hence unfair. Many people will be of this age upon completion of tertiary study. For young people thrown into unemployment, and yet struggling to pay rent and bills, search for work, and feed themselves – this is a cruel blow. Perhaps some of the costs will simply be passed on to parents.

And yet Single Parents will be shifted on to Newstart Allowance (a $56/week reduction) when their child/children reach the age of 12. (down from 16) http://www.businessspectator.com.au/bs.nsf/Article/Groups-question-tough-love-welfare-GQGNM?opendocument&src=rss

One wonders whether the politicians, who expect these women (and some men) to raise a young family, and balance this task with paid work, understand the pressures and demands of raising a family alone. Do they really suppose a 12 year old child is in a position to care for themselves? The stresses of these new arrangements will undoubtedly also ‘flow through’ to young dependents in the form of emotional pressures and academic disadvantage.

The unemployed and single parents comprise ‘soft targets’, the vilification of whom is regularly beat up in the dominant right-populist monopoly media. And even still, expectations that savings can be made by targeting ‘rorting’ of the Disability Support Pension betray a lack of understanding of how debilitating some conditions – for example, mental illness - can be.

It warrants the question: does Labor accept the logic of its own policies, or is this a ‘sacrifice’ to placate those looking for scapegoats? Already Abbott is claiming so-called ‘tough love’ measures do not go far enough. So if Labor’s policies do comprise some strategic ‘sacrifice’ – then will this logic of retreat know any end??

Yet even amongst these attacks upon the most disadvantaged, ‘The Australian’ and Tony Abbott are talking of ‘class war’ against ‘middle Australia’ with some welfare cutbacks for households on $150,000/year and more. http://www.theaustralian.com.au/national-affairs/budgets/thats-not-a-knife-wayne-swan-as-budget-cuts-middle-class-welfare-but-increases-jobs/story-fn8gf1nz-1226053971008

Assaults upon the rights of pensioners, the introduction of regressive user-pays principles for everything from roads to schools, the gradual abandonment of progressive distributive mechanisms – these are considered ‘objectively sound policy’. But any attempt to achieve a modicum of distributive justice involving a greater proportionate burden upon the upper middle class is branded by the Conservatives a ‘war on middle Australia’.

Labor needs to press home the argument that someone must pay for health, education, infrastructure and the social security safety net. And if those on relatively high incomes do not pay their share then who will pay instead? Also while the very rich should pay their fair share, the tax system needs a broad enough base to fund the social necessities provided by government.

Chris Lewis, writing for ‘Online Opinion’ and quoting The Household, Income and Labor Dynamics in Australia Survey points out that restricting welfare payments to households on incomes of $150,000 and more “will [only] exclude about 15 per cent of income groups.” http://www.theaustralian.com.au/national-affairs/budgets/were-not-rich-but-wealthier-than-most-sydney-family/story-fn8gf1nz-1226054297260

Class interest is an unavoidable factor of political and economic life -although the Conservatives attempt to obscure the issue with false appeals to the principle of ‘classlessness’; where distributive justice is labelled ‘class war’ but assaults upon the most vulnerable are unquestioned. At other times fears about refugees and resentment against marginal groups are beaten up as a ‘wedge’. Finally there is appeal to ‘competence’ on ‘economic management’: usually constructed as adherence to the dominant neo-liberal ideology.

Many a radical in the 19th and early 20th Century imagined an in-built working-class majority would make transition to socialism inevitable in the context of universal suffrage. Since then, however, the class homogenisation imagined by Karl Marx was replaced by many layers of differentiation within the working class. The idea of a (predominantly white collar) middle class self-identity has long since impeded working class solidarity. Essentially, though, the Conservatives are still afraid of a Labor Party which appeals consistently, unashamedly and unambiguously to the class interests of the majority; a move which could reconsolidate Labor’s ‘natural base’.

Conclusions

This Budget – including its welfare and training provisions - is about pushing the economy to full capacity – anticipating a reinvigorated mining boom . There is the accompanying goal of containing inflation and hence interest rates and cost of living pressures. Greater participation should also ‘increase the size of the pie’ from which a larger and proportionate investment in infrastructure and social services could spring.

Labor governments of times past would attempt to contain inflation by working with the trade unions. But with the lack of such arrangements so-called ‘tough love’ measures on welfare aim to increase labour market participation by ‘any and all’ means necessary. Apparently this includes labour conscription, pressures upon the disabled and vulnerable single mothers, and continued relegation of the unemployed to dire poverty. By expanding a ‘reserve army’ at the bottom end of the labour market, Swan supposes he can contain the inflation genie.

It is conceded that labour market participation can ameliorate social isolation; though this can be pursued without the punitive elements contained in this Budget. As suggested, there are better ways of promoting growth and containing inflation than these. (ie: via agreements with organised labour which nonetheless do not erode real wages; but also through tax measures targeting consumption at the upper end to reduce inflationary pressures in the most equitable manner possible)

Despite this it is notable that Gillard Labor has broken with a long tradition amongst both Labor and Liberal governments of delivering income tax cuts ‘as a matter of course’. The political pressure to return to surplus by 2012-13, and pressures to maintain some modicum of social justice have ensured that.

Yet a higher and progressively-structured flood levy could have stemmed pressures to enact austerity. And delivering on an unnecessary and costly cut in Company Tax simply put the government under more pressure. However, a National Disability Insurance Scheme could have seen Labor ‘on the front foot’ – pursuing a big ticket reform agenda re-establishing Labor’s ‘can-do’ credentials. A ‘NDIS’ especially could have been crucial in expanding by billions real funding for disability services and income support to meet the true level of human need.

Instead the government is ‘dying a death of a thousand cuts’, depicted as indecisive, and victim to a deceptive fear campaign on the Carbon Tax.

The question that arises, therefore, is: ‘where to now’ for the government?.

Harsh ‘Work for the Dole’ provisions could actually spur public sympathy for reform of Newstart. The best could be made of a bad situation by tying these provisions to significant across-the-board increases in the Newstart pension (perhaps $50 a week), and signficantly greater increases for those directly involved in the program. Its severity could also be diluted with time; with more ‘carrots’ and less ‘sticks’. The Greens should demand such compromise through the negotiation process.

It is also crucial for Labor to drop its commitment to restrain proportionate growth in public expenditure ‘no matter what’. A NDIS must deliver significant NEW funds into the system. And in addition to existing shortfalls for services, welfare and infrastructure, sooner or later Labor must address in a progressive manner the pressures of an ageing population and a growing population.

Tens of billions are needed for aged care, health, medium-high density social housing, and transport infrastructure. This expansion cannot go on forever, but a reasonable goal for the time being would be to increase the tax base progressively by 1.5% of GDP per term of government. As this author has argued before, Labor should consider restructure of income tax or dividend imputation, a wealth tax, or a National Disability Insurance Scheme - or a mix of these options. And following a broader restructure and indexation of the bottom two income tax brackets, Labor could also let bracket creep ‘do some of the work’.

Only by meaningfully grappling with these issues can Labor overcome the impression of indecisiveness; reclaiming its status as a real electoral contender; as a government of vision, social conscience, and active social and economic reform.

Budget Austerity and Small Government not the Answer – A response to Wayne Swan

above:  Australian Treasurer and Deputy Prime Minister Wayne Swan

The following essay is a response to Australian Treasurer, Wayne Swan - who has recently written a Fabian Essay - whose obvious significance concerns the coming Australian Federal Budget for 2011-12.  While the author is highly sympathetic with the Treasurer's defence of Labor's record fighting the Global Financial Crisis (GFC), he nonetheless insists that - with the recovery - 'small government' is not the answer.  Tristan Ewins responds that rather, a government committed to human need - and facing the consequences of an expanding and ageing population - should further reform tax, invest in necessary infrastructure and incrementally expand the social wage...

By Tristan Ewins
23/04/2011

In a recent Fabian Essay, ‘Keynesians in the Recovery’, Australian Treasurer and Deputy Prime Minister, Wayne Swan, has defended the Labor Federal government’s legacy in preventing recession at home, and contributing to a global recovery in the wake of the Global Financial Crisis. (GFC) It is a crucial narrative for Labor to contest: restoring a practical Keynesian orthodoxy in striving towards an implicit social-democratic consensus, and achieving generational change in perceptions of Labor on economic management.

And it is all the more important in wake of other policy failures and forced back-downs which have harmed the government, and left behind an impression which obscures and detracts from Labor’s very significant achievements.

With the Resource Super Profits Tax (RSPT) Labor had ‘bitten off more than it could chew’: taking on the mining giants close to an election. Combined with Labor’s back-down on its original CPRS (Carbon Pollution Reduction Scheme), these presented an impression of a government in retreat. That on its own shook – and continues to shake - public confidence.

And while compared with the scale of other major initiatives the real level of waste in the government’s home insulation rebate program was minor, nothing can make good the loss of life which followed the lack of sufficient regulatory oversight.

But where would Australia have been had the Conservatives been in government with the onset of the Global Financial Crisis? (GFC) Most likely a Conservative government would have implemented deflationary policies which would have sent the economy into freefall, with an ever-escalating toll of human misery.

In 2008 the world teetered upon the precipice of a potential economic Depression. In his Fabian Essay
Swan refects upon Australia’s position at the time as follows:

“It is too easy to forget just how exposed Australia was to the crisis. Eight out of ten of our major trading partners went into recession. Our banks faced dislocated global capital markets and calls from bank customers flowed into my office. The decline in production, investment and exports affected jobs, with unemployment rising by 175,000 within months. Our economy contracted by almost 1 per cent in the final three months of 2008.” (p 5)

In the face of this looming catastrophe, Swan defends the government’s response:

“Underpinning our policy response were the principles of fiscal and monetary action to boost aggregate demand set out by Keynes in his General Theory and his activist publications of the Great Depression era: immediate stimulus measures to boost consumer spending and confidence; useful public works to create employment; lower interest rates to boost investment and spending; and concerted international action to strengthen the world financial system.” (p 5)

“Labor, guided by Keynes, is driven by a morality that regards unemployment, ruined businesses, foreclosed mortgages and myriad other signs of economic distress not as part of an inevitable and desirable cleansing process for the economy, but as the symptoms of a recession that should and can be avoided with the necessary will. (p 8)

How the government gets this message out to the public is a different matter, though. How can Labor contest and ultimately determine the narrative – that is, ‘popular wisdom’ - on its response to the Global Financial Crisis?

Part of the answer is rebuilding Labor as a social movement; a mass party which promotes the activity and real policy influence of its members; and so remobilising its base, places itself on a permanent campaign footing on a wide variety of fronts.

But there’s another side to the story Swan is trying to sell on the economy. With the 2011-2012 Federal Budget about to be passed, it seems he’s preparing us for austerity.

Swan writes of the importance of being “Keynesians in recovery” as well as in the downturn.

“With private demand strengthening, unemployment falling and our economy pushing towards capacity, we need to restrain public spending, and stay the course back to budget surpluses. Just as it was the right thing to step in and support demand during the GFC, the right thing to do is to take a step back as private activity recovers.” (p 1)


[This means] “making room for the private sector when economic growth is strong.” (p 1)

And he takes the argument further:

“[The very] phrase ‘counter- cyclical’’….implies the opposite of the critics’ claim that Keynesian policies constitute a recipe for ever-increasing rates of public spending as a proportion of GDP. (p 7)


“[While] governments have a responsibility to increase public spending going into a recession, once growth and prosperity have been restored, they have an equal responsibility to restrain public expenditure, budget for surpluses and reduce debt in climbing out.” (p 7)

Finally Swan indicates his preference, now, to promote:

“reforms to strengthen and broaden our economy by cutting business taxes, investing in infrastructure and boosting national savings.” (p 8)

While Swan’s message on counter-cyclical demand management is crucial to Labor’s intellectual armoury, and its credibility on the economy, there are other aspects of his account that need to be challenged. This is regardless of Swan’s (correct) assertion that ‘big government’ is not the necessary or inevitable counterpart to Keynesian counter-cyclical demand management.

Specifically: Swan’s concern to keep taxes low – and hence ‘government’ ‘small’ has real-life consequences. His call to government to ‘make room’ for the private sector seems reminiscent of old Conservative claims that the welfare state and social wage were ‘crowding out’ private economic activity. But the services in the firing line are so often in the realm of social necessity, and are most efficiently provided through the public sector or other forms of collective consumption in any case.

Meanwhile the investment in infrastructure that Swan champions is difficult to achieve except in the context of maintaining and expanding the tax base. A growing population, and an ageing population will mean increased pressures on transport infrastructure, housing and health services now and into the future.

Even considering the current (modest) correction in the housing market, thousands of families experience housing stress, which is a drain upon their incomes and other areas of the economy. The situation is exacerbated by rapidly growing populations – such as in Melbourne – where young families are driven to the urban fringe; but once there have inadequate access to public transport. There is a cost to the economy in terms of transit expenses including petrol. But there is a hidden social cost also, including to families, where transit times detract from time for recreation, including time with spouses and children. Less time for recreation resulting in obesity and ill health could flow on to the Health sector over the long term as well.

More investment in social housing and transport infrastructure – including urban consolidation - is essential for economic and quality of life purposes; but requires a commitment of resources inconsistent with ‘small government’.

The ‘ageing population’ also demands a rethink by policy makers, including by Wayne Swan, on the theme of Aged Care and welfare, and how this relates to restraining the size of government – partly for Ideological purposes.

Social democrats once stood indignantly against demands under capitalism that workers continue in sometimes alienating, monotonous or physically demanding jobs practically until their grave, or to physical and mental ruination. (whichever came first)

A key social-democratic tenet was the placing of real life quality for workers ahead of the abstract-economic; ahead of profits outside the context of real social benefit. Yet now in pursuit of ever lower taxes, less welfare and ‘smaller government’, Labor seems itself resigned to raising the age of retirement, and in so doing denying older Australians the opportunity for fulfilment with cultural participation, civic activism, education for life, and time with family and community. This at a time in people’s lives where ‘every year’ of relative good health can feel precious.

What is worse, the Productivity Commission is promoting a user-pays agenda for the Aged Care sector: a move which Ben Spies-Butcher, a lecturer in sociology at Macquarie University, argues will actually deter the less-wealthy from accessing services for which they may have an acute need. And Charmaine Crowe of the Combined Pensioners and Superannuant’s Association (CPSA) has pointed out that Australia already only spends only 0.8 per cent of GDP on Aged Care compared to 3.5 per cent in the Netherlands and 3.6 per cent in Sweden. http://www.agedcareinsite.com.au/pages/section/article.php?s=News&idArticle=19979

This cannot fail to have a devastating impact on the quality of life of our most vulnerable Australians. We are a wealthy nation and can afford to do better. It is a matter of priorities.

As a basic question of humanity we must make the necessary commitment to ameliorate suffering as much as possible, and provide opportunities for life quality. This must include outings, pleasant surrounds including gardens, opportunities for personal and social interaction; provision for privacy and personal space, access to medical (including dental) care, air conditioning and heating, and into the future access to information technology including internet.

And as this author has argued elsewhere: quality aged care must involve sufficient nurse to patient ratios, and decent conditions for aged care staff. (this dovetails with the Australian Services Union campaign for fair wages – mainly for women – in the sector) Many residents need acute care whether for showering, dressing, eating, being turned regularly to prevent bed sores, or using the toilet. For many such circumstances will continue for years, and it simply is not good enough to ‘let the market sort us out’.

Even for less-robust ‘Third Way’ interpretations of social democracy such standards for inclusion and protection of the vulnerable are core. And by comparison with progressive funding, ‘user pays’ would act like a regressive flat inheritance tax anyway, hitting overwhelmingly low and middle income families, while eschewing a more direct and formal inheritance or wealth tax - which would affect the more affluent.

To improve quality of service – and quality of life – requires a commitment of resources. And to meet the scope of commitment made by the Netherlands and Sweden would require new money (perhaps an extra twenty billion a year) out of an economy valued somewhere over $1.2 Trillion This has to start somewhere.

Meanwhile increased demand upon the Disability Support Pension (DSP) is partly the consequence of a genuine mental health crisis, and also cannot be addressed in the context of small government. And in light of recent debate it is worth noting that extensive and punitive active labour market policies already exist for Newstart recipients. The DSP and other pensions remain in need of extension to meet a rising cost of living without further ‘punishing the victim’.

For the chronically-ill, and for their carers - especially those without any prospect of steady, decent-paying employment – there must be provision for a decent material quality of life. Easing of income/means tests for recipients, and introduction of incentives for employers – without effective discrimination against the disabled themselves on wages and conditions – could be part of a constructive government response. And a National Disability Insurance Scheme (NDIS) which provided significant new money to address these and other areas of concern - could also secure support from a public not only on compassionate grounds - but with the realisation potentially every individual and every family can be vulnerable.

So where should Labor start in addressing these issues in the process of framing the 2011-12 Federal Budget?

As noted at this blog recently - The Greens have already provided research demonstrating “that at 30 per cent, the current company tax rate is still below the Organisation for Economic Co-operation and Development's (OECD's) "weighted average" of 36 per cent.” Where business stands to share in the gain from necessary infrastructure investment (eg: transport) surely it should continue to ‘pay its fair share’. The 1% Company Tax cut has to go. http://au.news.yahoo.com/thewest/business/a/-/national/9091822/greens-want-to-restrict-company-tax-cut-to-small-business/

Apart from this, Gillard Labor could aim to increase social expenditure in the critical fields mentioned in this essay by around 1 per cent to 1.5 per cent of GDP (not including Carbon Tax compensation) over the course of the current term. (the first step of a long-term plan for reform)  In the context of an economy valued at over $1.2 Trillion, this would provide a starting pool of approximately $12-$18 billion annually which could be gained via reform of income tax or dividend imputation, a wealth tax, or a National Disability Insurance Scheme.  (or a mix of these options)

If the government still has to find savings over the relative-short term, with a new Senate it could realistically implement means-testing of the existing private health insurance rebate. This could be combined with means testing child care rebates to exclude families with combined incomes over $150,000 – which despite complaints is a threshold beyond what most families can aspire to.

Meanwhile national savings should be promoted through democratic collective capital formation amongst the great mass of citizens and workers - rather than further ‘incentives’ for the wealthy in Superannuation and elsewhere. Further tax reform could also help fill any void left by removing superannuation concessions for the wealthy, redirecting monies into a public pension fund.

To be competitive at the next Federal election Labor needs to restore its status as a ‘can do’ government after successive retreats on several fronts. National Broadband Network (NBN) rollout and Carbon Tax ‘overcompensation’ could form part of this picture, but funds for social housing, transport, welfare and aged care could finally establish solid credentials for Gillard Labor as a government of genuine reform.

There is a particularly noteworthy quote from Swan’s recent ‘Fabian Essay’ that is worth reproducing here to put in an interesting context.

Swan writes:

“…in contrast to our opponents – we understand that economic policy must bend to the needs of the times, not the other way around.” (p 4)

This could be interpreted in the sense that the economy must serve human interests first: not some abstract logic or goal. In this sense attacking pensioners or neglecting the aged, the mentally ill, or the disabled in pursuit of a surplus reminds the author of the Vietnam War-era statement that it was ‘necessary to destroy the village in order to save it’.

There are political reasons for pursuing a record-fast return to surplus - hence the scepticism of some with regard to the government's amitions here.   Although allowing deficits to consistently spiral out of control over the course of the entire economic cycle will bring ruin in the end.  But if we are pursuing the kind of economy that serves truly human needs and purposes, surely a narrow and timid Ideology of ‘small government’ is not the answer.


Nb: The full version of Wayne Swan’s essay can be found at the URL below:
http://www.fabian.org.au/1140.asp

Tristan Ewins is a freelance writer and grassroots Labor activist based in Melbourne, Australia. He maintains and publishes the 'Left Focus' blog



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Labor and the Greens on the Carbon Tax debate

above: Less tumultuous times for PM Julia Gillard and Greens leader Bob Brown

The following article evaluates the debate on Carbon Tax reform in Australia, but also divisons between the Greens and ALP government on Company Tax and with the Minerals Resource Rent Tax (MRRT).  Starting with a preference for distributive justice and social wage expansion, the author - Tristan Ewins - tries to chart some kind of way forward for the Gillard government and its allies.
..

Debate on Company Tax cuts is beginning to gain momentum in Canberra with Gillard Labor, independents and the Greens at odds over what comprises the best policy. That debate is more broadly framed in the context of the Minerals Resource Rent Tax (MRRT), and a declared intent by Labor to direct new revenue into corporate tax cuts and infrastructure (especially in the ‘mining states’ of WA and Queensland), and in the process to provide room for an increase in superannuation contributions by business.

Therefore it’s probably best to explain the background of the MRRT before going into the debates that hinge on the treatment of revenue thus gained - and how all this relates to the other crucial debate on Carbon Tax reform.

During the 2010 debate David Richardson – writing for On Line Opinion – explained that the real effective rate paid by the miners in 2010 was 19 per cent, as opposed to 24 per cent for the corporate sector more broadly. To correct this the originally-proposed tax on ‘super profits’ aimed to affect profits above the government bond rate – then at 5.8 per cent. http://www.onlineopinion.com.au/view.asp?article=10469

The aim was to garner a fair share of profits from the sector for ordinary Australians who collectively own the non-renewable resources which the mining companies profit from.

But elements of the mining industry spent an estimated $22 million on advertisements undermining Rudd Labor in an effort that effectively brought down a Prime Minister. Mining concerns would have remained viable and profitable. But the scare campaign: threatening disinvestment and job losses – found its mark.

While the original tax was to be levied at 40 per cent, the heavily diluted version negotiated by Gillard will apply at 30 per cent on profits over the long-term government bond rate plus 7 per cent. http://www.abc.net.au/news/stories/2011/03/29/3176405.htm

Allowances and concessions will see an “effective statutory tax rate [of] 22.5%.” http://en.wikipedia.org/wiki/Mineral_Resource_Rent_Tax

And the newer version will also only apply to coal and iron ore, excluding other minerals including gold, nickel and uranium.

The original Resource Super Profits Tax would have raised approximately $12 billion over its first two years. http://www.theaustralian.com.au/national-affairs/greens-join-mining-tax-deal-revolt/story-fn59niix-1226027728392

But the revised Minerals Resource Rent Tax will see a significant reduction in revenue compared to the original proposal.

To be more specific: In 2010 Gillard Labor estimated the compromise would cost $1.5 billion less over the first two years than under the original package. http://www.news.com.au/business/the-great-mining-tax-battle-at-a-glance/story-e6frfm1i-1225888848317

But Treasury estimates suppose a gap in the vicinity of $60 billion over ten years; with some others projecting that the shortfall could be closer to $100 billion. http://www.perthnow.com.au/business/minerals-resource-rent-tax-to-regain-spotlight/story-e6frg2r3-1226025450249

It is in this context that Labor has downgraded its original promises to cut Company Tax. Instead of cutting the rate from 30% to 28%, now the government is proposing a cut of only one per cent. (ie: to a rate of 29%)

However Greens leader Bob Brown has argued that even a cut of one per cent would return half of new revenue taken back to the miners. Instead Brown is proposing a ‘two-tiered’ approach to Company Tax which would see only companies enjoying profits of less than $250 million enjoying the tax discount. This would hit ‘the big end of town’: including the major banks and mining giants – while sparing small business. For Brown the money thus saved would be better spent improving wages and conditions for aged care workers, funding national dental health care, or increasing Newstart, the youth allowance, Austudy and Abstudy," http://www.abc.net.au/news/stories/2011/03/29/3176405.htm

As against claims lower Company Tax is needed to allow for greater competitiveness, research commissioned by the Greens shows that the current rate of 30 per cent is still very significantly below the OECD “weighted average” of 36 per cent. The same research estimates a 1 per cent cut would cost $18 billion by 2021. http://au.news.yahoo.com/thewest/business/a/-/national/9091822/greens-want-to-restrict-company-tax-cut-to-small-business/

Such a pool of money could also be critical for infrastructure, education, and mental health and aged care services. http://www.businessday.com.au/business/mining-tax-tax-cuts-are-linked--swan-20110329-1ce3v.html

But there are potential issues for Labor in drifting away further from the platform it took on these issues to the 2010 Federal election.

To begin: it is important for Labor to honour any agreements in order to retain credibility as a partner for negotiation into the future. This means that if Labor has any kind of ‘agreement’ it is a practical necessity at least that the government ought enter into fresh negotiations if seeking to change its position on resource taxation during the current term. Either that or take such action as to make the consequences ‘neutral’ for those concerned. This could boil down to a choice between either increases in corporate superannuation contributions for low income workers, or abandoning the Company Tax cut, diverting the proceeds to other crucial priorities as Brown suggests.

Further: if the government goes down the path of increasing superannuation contributions for low income earners it would be best to also ease Aged Pension means tests for such groups to enhance any real effective gain.

It is equally compelling as a matter of public interest, however, that the electorate be made aware of the scope of any agreement Gillard made with the big miners, including BHP and Rio Tinto, and corporate Australia more broadly, in the run up to the 2010 poll. Negotiations with the most powerful corporate interests ‘behind closed doors’ is anathema to democracy.

Unfortunately, the political power of the miners, and the corporate sector more broadly, is not going to disappear any time soon, no matter how it skews democratic processes, overshadowing the voices of ordinary citizens. So maintaining credibility in negotiations with those interests is crucial no matter how problematic their power may be.

However it is also most definitely legitimate for Labor to seek a fresh mandate at the next Federal election to effectively increase and widen the scope of the Minerals Resource Rent Tax; and to start canvassing support for any such move now. Given the past defeat, though, Labor would need to adopt a cautious approach.

Yet there could be a difficulty with such a move as well if not handled properly. Labor might not want to ‘muddy the waters’ by pursuing too many distinct major debates on tax reform at once for fear of leaving some voters overwhelmed.

Climate Minister Greg Combet is anticipating a “long debate” suggesting any Carbon Tax will not be implemented until July 2012. http://au.news.yahoo.com/a/-/latest/9001318/carbon-tax-will-be-a-long-debate-combet/

In that context a ‘tax summit’ (Wayne Swan prefers the word ‘forum’) is planned for October this year. http://www.theage.com.au/national/key-tax-plans-before-summit-20110320-1c2bm.html

But without putting public fears to rest – as early implementation could achieve – the debate may become a ‘running sore’ distracting from any further reform agenda.

If the Gillard government could resolve the shape of Carbon Tax reform and see the tax implemented late this year (2011), though, fear and scepticism could be put to rest well before the next election. Crucially: this could provide the necessary time and ‘breathing room’ to pursue a debate on further significant progressive tax reform.

Taking that into consideration, the tax ‘summit’ or ‘forum’ could do to be brought forward somewhat – perhaps by a couple of months.

Openness to future reform is also crucial given the scenario of profit levels in the industry waning somewhat - to the point where the government will need to consider additional changes simply to maintain revenue, and fair returns on the natural resources that belong properly to all Australians.

All this considered, what is the best move for Labor in pursuing social justice objectives, while fostering co-operation with its independent and Green partners?

The key could be in the implementation of any Carbon Tax.

In 2010 the Greens were proposing a Carbon Tax of $24/Tonne, including assistance to ‘trade exposed’ industries. http://www.greenleft.org.au/node/43138

Without some form of assistance exports and import-competing jobs might simply be lost overseas without any real reduction in emissions.

Professor Ross Garnaut, meanwhile (responsible for the Rudd Labor ‘Climate Change Review’), has argued for a tax somewhere in the range of $20-$30 a tonne. http://www.smh.com.au/opinion/politics/garnauts-carbon-tax-plan-can-kill-two-big-reforms-in-one-hit-20110317-1by5o.html?comments=148

Garnaut has furthermore estimated that a carbon tax at a rate of $26/tonne would bring in $11.5 billion in the first year alone. http://au.news.yahoo.com/thewest/a/-/breaking/9032850/garnaut-ties-income-tax-cuts-to-carbon-tax/

Assuming these levels of revenue, it is the structure of compensation that is crucial: and which provides opportunities for fairer wealth distribution.

Firstly, compensation should take the form of direct payments for low and middle income groups, and increases in welfare – including the Aged Pension, Disability Support Pension, Austudy and Newstart. Income tax cuts, by comparison, are a clumsy instrument which would compensate high income groups who do not need the assistance.

Secondly: Compensation should exclude the top 30%-35% income demographic to provide sufficient scope to increase welfare and significantly improve the final financial position of low and middle income groups and individuals.

Thirdly: In this context - by returning all such revenue gained via a carbon tax taxpayers in the form of cash payments to low and middle income groups, including welfare recipients, Labor could actually expand and consolidate its electoral support base. This could very effectively undercut Abbott’s appeal to ‘battlers’ on ‘cost-of-living’ issues.

Fourth: A carbon tax rate at what Labor considers ‘the upper end’ of the scale (including the Garnaut proposal) could actually provide greater scope to assist low and middle income groups via compensation and effective redistribution. Hence it makes electoral sense in shoring up Labor’s support base.

Finally:  The only real problem in this scheme of things is that of what happens when the transition to a lower-emissions economy is actually achieved.  The problem being that at this point carbon tax or ETS revenue may 'dry up'.  For the long term, therefore, an alternative funding mechanism will be necessary to compensate low and middle income groups.  Hopefully, though, innovation in the renewable energy sector will also drive down cost structures.  Solar Paint, developed in Australia, looks particularly promising. See: http://www.abc.net.au/tv/newinventors/txt/s3008638.htm   and also: http://www.greenlivingpedia.org/Solar_paint

As for right-wing commentators such as Miranda Devine who seem to think distributive justice measures via tax comprise some malign ‘social engineering’: do they suppose the same is true in the case of most tax 'reforms' – including the gradual ‘flattening’ of income tax – which historically have redistributed wealth from low and middle income groups to the wealthy? The double-standards are palpable.

This leaves us with the concerns of Bob Brown and the Greens more broadly that emphasis on Company Tax cuts will leave crucial areas of the welfare state and social wage under-funded and exposed. While Labor cannot be seen to be simply ‘dancing to the Greens’ tune’, minority government necessarily involves compromise. And indeed, given their significant electoral support base, the positions of the Greens ought be considered seriously regardless.

As already alluded to – early implementation of a carbon tax could provide ‘breathing room’ for further debate and further reform before the next election.

In 2009 ‘Lateral Economics’ informed the Henry Tax review that ‘axing’ dividend imputation could save the Federal government $20 billion a year. http://www.businessday.com.au/business/dividend-imputation-wont-be-cut-says-henry-20090821-etwn.html

Dividend imputation is meant to stop so-called ‘double taxation’ of profits: providing credits to shareholders to compenstate for Company Tax already paid.  This was supposed to provide an incentive for investment. But the reform – first implemented under Keating Labor – provided a windfall for the most wealthy Australians, with a massive cost to the budget bottom line, and less money for crucial social programs and infrastructure.

Without fully removing the measure, shifting to half dividend imputation – as once suggested by progressive economist John Quiggin - would be a substantial equity measure, and provide over $10 billion/year much of which could be directed to crucial social programs in aged care, mental health and education, and for social housing and infrastructure.

Such reform would mainly hit millionaires who own so much invested wealth in this country: but small investors may resent the change as well. The benefit from social investment would need to be clear before the next Federal election. And while a means test could provide fairness to small investors, using some of the money to further improve the Aged Pension could be a smart move in the context of ‘winning over' such people as well.

Furthermore: to maintain investment in the Australian economy in that context, some of the money could be diverted to a public pension fund. (to be invested locally) Not only could this support ongoing job creation: it could also sustain the Aged Pension in the context of an ageing population.

A compromise between the Greens, independents and Labor – with early implementation of a Carbon Tax, and a trade-off for half-dividend imputation in return for agreement on Company Tax – could be in the interests of Labor’s core constituency. Appealing to the material interests of most voters, it would also consolidate Labor’s electoral support base, while being well in keeping with Labor ideals.

Tristan Ewins is a freelance writer and grassroots Labor activist based in Melbourne, Australia. He maintains and publishes the 'Left Focus' blog

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The ‘Bigger Picture’ in the Middle East and the War in Libya

above: Many Libyan rebels and their supporters question intervention

In this article Tristan Ewins explores the complexities of the crisis in Libya, and the broader strategic issues that are driving 'great powers' in the Middle East, North Africa and elsewhere. Debate at Left Focus is welcome as always.

By Tristan Ewins, March 21st 2011

A week can make a great deal of difference in international politics. Whereas only a short time ago world leaders were ruling out any kind of direct intervention in Libya now ‘it’s on’: not only a flight exclusion zone, but cruise missiles and who knows what else…

World leaders behind the intervention are reminding us – as might be expected – that this is a violent and repressive government. Amnesty International in its 2010 report on Libya noted suppression of freedom of speech, and a great many “unresolved” “disappearances” going back to the 1970s, 1980s and 1990s”. Dissidents have been imprisoned, and corporal punishment has been enforced against women having sexual relations out of wedlock. http://www.amnesty.org/en/region/libya/report-2010

Many also feel strongly that the Lockerbie bombing of 1988 – with the deaths of 270 people - is an out-standing atrocity for which ultimately there was not justice.

Those of us with good memories, however, might also recall the litany of crimes of which Saddam Hussein was accused of; gross human rights abuses, war and mass murder -which were put forward as a rationale for war. Opponents of war questioned this rationale for intervention then; and we should be looking more deeply now also.

It’s interesting that the case for intervention against Libya is being made at the same time as severe repression in Bahrain and Yemen; with Saudi intervention in Bahrain to prop up minority Sunni rule (mainly the Bahraini royal family), and a massacre of at least 40 protestors in Yemen – with some claiming more. http://globalvoicesonline.org/2011/03/19/yemen-friday-massacre-in-sanaa/

And yet there is no call for Western intervention in defence of human rights for either Yemen or Bahrain.

To understand what motivates the ‘Great Powers’ – and why there is support for rebels in Libya but not elsewhere - it’s probably appropriate to consider the realities of geo-politics; and the broader strategic outlook in the region.

The US government is making the necessary noises about democracy and human rights with Yemen and Bahrain to maintain legitimacy - just as occurred with Egypt.

But behind the scenes there is desperate and ruthless geo-politics on all sides. The US and its allies such as Saudi Arabia and the Yemeni government are concerned about Al Qaeda influence in Yemen; or the prospect that human rights for the Shia majority in Bahrain could lead to co-operation with the Shia-dominated Iranian theocracy – threatening the status of the US 5th Fleet based there.

Strategists will be considering the possible future scenario of war with Iran and other countries. They will be considering the importance of possible sea-lane ‘chokepoints’ such as the Straits of Hormuz; the Suez Canal in Egypt; and the Bab of Mandeb – a strategically crucial strait located between Yemen and the Arabian peninsula.

Even Afghanistan has been mooted as a possible future ‘transport and logistical hub’; and apart from the poppy trade the mountainous country is highly defendable in the sense of a conventional conflict. Afghanistan also borders Iran and could provide access to Russia via Central Asia. In a future war Afghanistan could be crucial – as the Russians realised in the 1980s.

After Kosovo’s secession from Slavic-dominated Serbia was recognised by much of what is referred to as ‘the international community’ largely Slavic Russia was appalled at this move against what it sees as a ‘natural ally’. Then in 2008 Russia invaded Georgia; ostensibly to achieve self-determination for the Ossetian minority.

In the ‘global game’ it is within the realm of reasonable conjecture to suppose that –in part – Russian intervention against Western-allied Georgia was a ‘tit-for-tat’ reprisal for the Kosovo secession and Western recognition thereof. (although in the context of acting upon a genuine sentiment amongst Ossetians in the region; as was the case with NATO intervention in Kosovo as well) 

It’s also within the realm of reasonable speculation that Russian arms trade with Iran may have been a ‘bargaining chip’ in the context of the implementation of the proposed ‘missile defence shield’ in Eastern Europe; and Russia’s fear of a downgrading of its own nuclear deterrent.

A similar logic may be at play in the Middle-East and North Africa today with the demise of Western-friendly authoritarian governments in Egypt and elsewhere. But the strategic significance of Egypt, Bahrain and Yemen in particular means a lot more is at stake than many realise.

The Iranians are certainly sceptical about the justification for intervention in Libya being made by the Americans, British, French and others under the banner of UN Security Council support.
Kaveh L. Afrasiabi from ‘Iran Review’ has observed that:

“ There is a growing sentiment in Tehran that the West's real intention in Libya is to capitalize on Gaddafi's repressive gains over the opposition to generate a region-wide counter-momentum vis-a-vis the popular upsurge throughout the Arab world that has destabilized the US-backed status quo.” http://www.iranreview.org/content/Documents/Iran_in_a_Dilemma_over_Libya.htm

There may be some truth in this. Importantly, though, Gaddafi and the Egyptian 'Muslim Brotherhood' - which rose to prominence with the struggle in Egypt - don’t seem to see ‘eye to eye’. Gaddafi has repressed the organisation in Libya in the past, and leading Muslim Brotherhood ClericYusuf al-Qaradawi has called for Gaddafi to be shot: put to death. http://news.yahoo.com/s/afp/20110221/wl_mideast_afp/libyapoliticsunrestfatwa_20110221212046

So what’s going on in Libya specifically doesn’t look like ‘retaliation’ in that context. But again – lack of US and UN intervention in Bahrain and Yemen show that strategic questions are taking precedence over immediate issues of human rights.

As to the question what strategically is at stake in Libya: It accounts for 12% of EU oil imports, and 27% of oil imports for Italy. Sustained instability could be costly for Europe, but removal of Gaddafi could provide some long term advantage.. http://www.ekemeuroenergy.org/en/index.php?option=com_content&view=article&id=175:strategic-destabilization-the-arab-revolt-reaches-opecs-largest-african-producer&catid=35:analyses&Itemid=57

More detail on Libya specifically…

From a position where military intervention was ruled out just a short time ago, at this point events in Libya are developing rapidly, and is there is no telling where the intervention may lead..
On March 13th ‘NineMSN’ reported on the Arab League’s decision to recognise the rebel movement as the true representatives of the Libyan people, calling on Gaddafi to “relinquish power immediately”. http://news.ninemsn.com.au/world/8223169/gaddafi-steps-up-attacks-on-rebels

Syria opposed this stance, perhaps fearing intervention against its own interests in the future. http://www.allvoices.com/contributed-news/8463407-syria-rejects-the-decision-of-the-arab-about-preventing-fly-to-libya

And the United Nations Security Council has more recently supported a ‘No Fly Zone’ and intervention in the civil war. http://www.smh.com.au/world/military-strikes-on-libya-within-hours-20110318-1bzii.html

Finally, on March 18th

“the UN Security Council passed a vote calling for "all necessary measures" against forces loyal to the Libyan leader”; “with abstentions from Russia, China, Brazil, Germany and India.” http://www.smh.com.au/world/military-strikes-on-libya-within-hours-20110318-1bzii.html

Earlier on in the crisis the US government and others were reluctant to use the term ‘civil war’ to describe what was going on in Libya. The conflict was depicted as nothing but pure aggression by the Libyan government and armed forces against its own defenceless civilians. While the Libyan government’s repression and violence against its own people is part of the picture, though, it is not the entire picture. As events have progressed it has became clear that civil war and revolution are the context of the Libyan crisis.

Two positions on this question are emerging on the Australian Left.

Recently at ‘Left Focus’, Benjamin Solah from ‘Socialist Alternative’ expressed no doubt that the Libyan government was using “helicopters and fighter jets to bomb and mow down demonstrators”. But regardless of this, Solah argued against intervention on the grounds it would make matters worse. (along the lines of the Iraq war and occupation; with the terror, underground power struggle and strife which followed) Similar positions are held by many on the Australian revolutionary-Marxist Left; although it would probably be incorrect to suppose this outlook is homogenous amongst those of that disposition. http://leftfocus.blogspot.com/2011/03/libya-why-western-intervention-is.html

Meanwhile Guy Rundle at ‘Crikey’ contends there has arisen on what he calls the “Anti-Imperialist Left’ “an utter contradiction…between solidarity and anti-imperialism” where “what is unquestionably a revolution is [portrayed as] asking for ‘imperial’ support.” Rundle also notes the Bolsheviks’ dealing with the Germans during the First World War as proof anti-Imperialist politics have never been simple. http://blogs.crikey.com.au/thestump/2011/03/17/libya-and-the-anti-imperialist-left-2-ideology-audacity-and-revolution/

In light of such arguments, should we be for or against intervention?

To begin with, considering the stakes, how much do we know about the conflict?;

In the author’s home country Australia it seems there has been little or no detailed treatment of who the Libyan rebels really are. Looking elsewhere, such information was also hard to find.

Eventually the author found a passage in the New York Times depicting the rebel leadership as “a council of opposition leaders made up of lawyers, academics, judges and other prominent figures”. http://www.nytimes.com/2011/03/02/world/africa/02libya.html?_r=1

Another writer mentions an organisation called the “Libyan National Council” which is organising resistance in the east. http://search.japantimes.co.jp/cgi-bin/eo20110316gd.html

George Joffe - writing for the BBC - mentions opposition from “Tribal leaders from the Sa'adi tribes, traditionally hostile to the Gaddafi regime” as well as defection from army units. http://www.bbc.co.uk/news/mobile/world-africa-12612169

Finally of interest is a website belonging to a group calling itself the ‘Libyan Youth Movement’. http://feb17.info/editorials/gaddafi-war-crimes-his-propaganda-our-media-dictator-games-repeat/

Further questions include how the rebels have organised and prepared for this day. Weapons and training appear to have been provided by defecting military units. Were the rebels receiving outside help, and if so from who? And if agreements were made in that context: to what effect?

As Rundle’s mention of Bolshevik dealings with the German government in World War One shows, revolutionary politics – and politics more generally – is a messy business. Outside support on its own does not invalidate an uprising. But these questions highlight issues of what kind of consequences may ensue should the rebels succeed, or should Gaddafi prevail.

There’s also been very little (perhaps nothing?) in the way of footage of the recent atrocities Gaddafi and his forces are accused of. It’s argued there was a media blackout. And lack of footage is not to say the alleged atrocities against peaceful demonstrators did not occur. The ‘outside world’, after all, knew nothing of Nazi death camps for years. But with the Iraq conflict, and the lies systemically and deliberately told there to provide a rationale for war, it’s difficult to simply take claims of atrocities in Libya purely at face-value without an element of doubt. The lesson for Western powers: Do not be loose with the truth as events such as may be taking place today underscore the importance of keeping the trust and good faith of the public: that there is not such doubt when action genuinely needs to be taken.

Importantly, one website noted that:

“Groups including Amnesty International and Human Rights Watch have been gathering evidence of human rights abuses, citing sudden arrests, disappearances and deliberate killings of people who joined anti-Gaddafi protests as well as casual onlookers and migrant workers.” http://www.bulawayo24.com/index-id-news-sc-national-byo-2105-article-Benghazi+at+great+risk+%5Batrocities%5D,+if+recaptured+by+Muammar+Gaddafi's+troops.html

But in the context of war – with governments acting in our name - we need specifics, and we need them now.

In the author’s home country, Australia, much of the media has moved to mobilise public opinion against the Libyan government and in favour of intervention. It is reasonable to assume the same is the case in the United States and elsewhere as well.

Generally it is assumed that western liberal democracies benefit from pluralism and liberty; and that in the public sphere these influences provide ‘checks and balances’ that help ensure expression of different views, and scrutiny of untruths. While this is theoretically and practically possible – and more the case in liberal democracies than in fascist, authoritarian or Stalinist regimes - this is not to say there is not widespread manipulation of the media in liberal democracies. The power of figures such as Murdoch and Berlusconi illustrate the point; as does the power of figures such as James Packer and Kerry Stokes in Australia.

It is proper for the media in Australia and elsewhere to be pursuing questions of massacres and human rights abuses in Libya. But this does not mean the media should forsake standards, inclusive and contextual representation of viewpoints, and accuracy and objectivity - on the basis of ‘the ends justifying the means’. And where there is lack of competition and real diversity in the mass media ‘mobilisation of public opinion’ is especially problematic. Once the precedent is set, loss of such standards in the mass media becomes a vicious and self-perpetuating circle which undermines the very foundations – and hence legitimacy and meaningful practice- of liberal and pluralist democracy.

In any intervention many lives will be lost. The bottom line is that when our governments act in our name in support of military intervention it is appropriate that we be given the full truth: that we have all the knowledge we need to make a fully-informed choice what policies we support as citizens.

We should be demanding consistency elsewhere as well – with human rights abuses in Bahrain and Yemen. And even if strategic considerations are real, we should nonetheless be demanding the true and full story when it comes to Western interventions in Afghanistan, the Middle East, North Africa and elsewhere. At this point it does not appear that the United States and other Western powers are even attempting to balance and reconcile strategic and human rights questions in Bahrain, Yemen and elsewhere.

The choices we are faced with

Assuming we were in possession of all the relevant information, though, that’s not to say everyone would be agreed as to what course of action was right.

In this context of ‘specific likely consequences’ a ‘general law’ against intervention ‘anywhere’ or ‘ever’ doesn’t make sense. The bottom-line has to be a realistic and thorough consideration of what the likely consequences of intervening really are – as opposed to the consequences of not intervening.

Should Gaddafi be overthrown, is it likely we will see another ‘dirty war’ with retribution and counter-retribution? Perhaps we should consider the sectarian strife in post-war Iraq. Although it’s notable that
Libya is overwhelmingly Sunni, so it is a significantly different situation.

And should intervention be withdrawn and the rebels fail - what kind of reprisals will the Libyan government make?

Further: if the United States and/or other powers become involved on the ground, what is the threat of ‘mission creep’ derailing the rebels’ objectives anyway? (See: Tom Bramble, also from ‘Socialist Alternative’: http://www.sa.org.au/index.php?option=com_content&view=article&id=3144:a-response-to-guy-rundle-all-the-way-with-the-usa&catid=216:imperialism-and-war&Itemid=219 )

And if the rebels do succeed is it likely the cause of human rights and liberty will be advanced?; Or over the long term - will one authoritarian government be replaced with another? In the context of an ensuing underground ‘dirty war’ is any other outcome possible?

Finally: Even if Gaddafi is a despot and a murderer: can more innocent lives be saved in the long term through compromise rather than war? If Gaddafi anticipates that compromise or defeat will ultimately see him and his inner circle at the Hague – or executed like Saddam Hussein - it’s likely he won’t be of a mind to negotiate. But a compromise solution could aim for inclusion of all the various tribes and other interests in Libyan society.

If we can avoid a descent in Libya into terror and dirty war, we need to act in the genuine interests of the Libyan people. But the first step in making such a decision is for the United States and its European and Arab allies – as well as for the mass media - to be open, upfront and thorough in presenting us with the facts. And arguments for war or intervention need be tested in the context of presentation of diverse viewpoints. So far that has not happened.

Tristan Ewins is a freelance writer and liberal socialist based in Melbourne, Australia. He maintains and publishes the 'Left Focus' blog

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The mining tax could have paid for the ASU community sector wage claim

In this week's contribution labour movement activist Sarah Howe considers the claim by the ASU (Australian Services Union) for fair pay in the community services sector.  The sector involves mainly women workers, and the union is arguing underpayment is effectively discrimination.   Many are pointing to the potential cost of implementing equal pay, but Howe argues that if the 'Resource Super Profits Tax' (RSPT) had been implemented in its original form - money would not have been a problem.

By Sarah Howe, March 9th 2011

As the media has widely reported, the Australian Services Union is currently running a test case through Fair Work Australia seeking pay rises of between 14 and 50 per cent for about 200,000 mostly women workers in the social and community services sector.

The union wage claim is well deserved-with the media and submissions to Fair Work Australia pointing out that professional front line workers such as non-profit housing support workers are often receiving as little as $18 for extremely qualified and stressful jobs. The importance of the community sector to the health of Australian society and economy can’t be emphasized enough.

The ASU campaign for equal pay for community sector workers (and the growing significance of the sector to the economy) should be seen in the context of the move by Australian government to adopt the UK Blair government model of implementing more engaged, ‘joined up’ and networked approaches to governance and policy-making in recent years- particularly in relation to social policy. This trend has led to planning and service delivery increasingly being devolved to the so called ‘third sector’ (or the community sector). This sector is made up of organizations that are not-for-profit and non-government in diverse industry sectors and is increasingly doing the work traditionally done by government departments and authorities.

In Victoria, the Bracks Governments core social policy document in 1995- A Fairer Victoria: Creating opportunity and addressing disadvantage - aimed to tackle poverty and disadvantage had a strong emphasis on ‘building stronger communities’(Victorian Government: 2005). The community building strategy in this policy often has given responsibility to the community sector to plan and implement social policy outcomes, for instance with urban renewal programs. This is certainly the case in the Carlton context, where I work overseeing an employment program assisting newly arrived refugees into jobs.

In practice today, the community sector now both plans place based social services as well as delivering services on the ground-sometimes with the help of Federal, State and Local Government grants. However, despite the responsibility given to the community sector, significant investment is now required.

The negative view of the Blair model argues that ‘local self help, volunteering and social entrepreneurship are no alternative to progressive state and national tax, income security, service delivery and labour market policies needed to create the conditions for broad and sustainable reductions in poverty, inequality and social exclusion’(quoted in Wiseman, J: 2006).

‘No amount of local community capacity building can substitute for long term investment in core public infrastructure of schools, hospitals, health centers, housing, transport, parks and meeting places that can provide the real foundations for resilient and healthy communities’ (Wiseman, J: 2006 ).

Social services are in high demand, but often woefully under-funded. In my work, I am currently establishing an occasional childcare service to support housing commission residents look for work in Carlton. Yesterday I inspected a similar service managed by a not for profit agency in Broadmeadows. The Broadmeadows service assists newly arrived migrants study English at a location close to their children.

The Manager of the service told me how difficult it was to run the childcare centre, off a low funding base - including paying the current award wages. As we walked to the childcare centre, she joked that they call it the Hawke building- it was paid for under the 1990’s Federal Government capital grants scheme. This scheme does not exist now. Many parents wish it did, as childcare shortages are legendary, and the Local Government and community sector are struggling to provide these vital social services to families in the community. These services are critical for women seeking to re-enter the workforce.

The Federal Government’s response to this investment shortfall is to continually reiterate its desire to ensure fiscal sustainability and return the budget to surplus. In relation to the ASU wage claim, the initial response by the Federal Government was to say that any additional wage costs would come at the expense of other government funded services (Commonwealth Government in The Australian: 2010).

However, in December 2010, the Federal Government at the instigation of the PM intervened to clarify that Fair Work Australia should not award or discount equal remuneration because of the potential impact on the Commonwealth - however despite this reassurance, not much detail was provided on how the wage claim or ongoing capital investment costs of the sector would be met in the future.

While the Federal Government clarification is a positive development for the wage claim, I agree with Kerryn Williams’s recent article in Green Left Weekly in arguing that mining company BHP Billiton’s $10.5 billion profit for the second half of 2010 ‘highlights the shameless greed of those making a fortune out of Australia’s valuable resources’ and underscores the loss for social policy associated with the enormous reduction in revenue associated with the watered down Minerals Resource Rent Tax (MRRT). Recent Treasury estimates indicate that the MRRT will reduce the original RSPT’s 40% tax to just 30%, and will bring in well under half the revenue (Williams: 2011).

“The original tax was supposed to raise about $99 billion starting from the 2012-13 financial year until 2020-21. But it now looks like this figure will be only $38.5 billion. That’s $60.5 billion that could have been spent on health care, education or the shift to renewable energy” (Williams: 2011).

We could add to Williams list of social policy funding needs- the costs of urgently needed community infrastructure and labor costs (the wages bill from the ASU case estimated conservatively to be worth Victorian tax payers $200 million and at the most $1.7 billion over four years). In the absence of reform of the taxation system, the phased in strategy for labor cost increases will have to suffice.

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References:

The Australian, ‘Government warns on women's pay rises’ November 19th, 2010

The Age, Equal pay case could cost Victoria $1.7bn, February 2, 2011

Wiseman, J. ‘Local Heroes: Learning from Recent Community Strengthening Initiatives in Victoria’, Australian Journal of Public Administration, Vol. 65, No. 2, June 2006, pp. 95-107

Williams, K, Mining profits reveal true greed, Green Left Weekly, March 6th, 2011.

Libya - Why Western Intervention is Counter to Democracy

above: full scale civil war is developing in Libya; But Benjamin Solah is against intervention...

In this week's submission to 'Left Focus' radical horror author Benjamin Solah gives his views on how Western intervention in Libya could actually worsen the plight of the Libyan people - rather than free them from oppression. As usual debate is welcome!

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The wave of revolution across the Arab world continues to spread faster than most of us can possibly keep up with, with protests continuing in Tunisia and Egypt as well as Libya, Bahrain, Oman, Saudi Arabia, Iran, Iraq, among other countries – and even beyond the Arab world. Even states in the US like Wisconsin are fighting their governments and citing inspiration from Egypt.

But one of the key fronts in the battle for mass democracy is Libya, where Gaddafi’s hold on power is being defended with some of the most extreme violence we’ve had reports of; he’s even used helicopters and fighter jets to bomb and mow down demonstrators, but it’s a testament to those who are fighting that not even this will stop them and it is their actions that will inevitably decide Gaddafi’s fate. It will be them, and not some outside force. I wanted to respond to some of the calls for US (or UN, Western, or any outside) intervention into Libya and why this would be a grave mistake for anyone who supports the Libyan revolution.

US Secretary of State (and no friend of mass democracy) Hilary Clinton has indicated that the US is leaving open a number of options in dealing with Libya as if it’s their fight, and the Navy have positioned aircraft carriers and other military vessels in the Red Sea and other locations around Libya. With sanctions now in place, the UN, NATO and other imperialist forces are discussing what to do. And I am opposed to any involvement from them whatsoever.

There are supporters of the revolts on Twitter that support intervention from these forces, but it is a grave mistake to support such things. Iraq is a clear example of what ‘democracy’ from the US means and it does not mean an end to violence. Have people forgotten about Iraq? Did they forget the millions killed by US troops? Did they forget that as soon as the US invaded it actually resulted in a surge of support for Saddam’s regime as people united against the US? There have even been protests in Iraq in the last few weeks that have been put down by US troops still stationed in the country, despite Obama’s façade of a withdrawal.

There is a very stark difference between ‘democracy’ in Iraq via the US military and democracy in Egypt by the masses of Egyptians themselves. It is only the masses that can liberate themselves. And an intervention from the West would not only destroy that, but also destroy more lives instead of saving them. Egypt proved that the people of the Arab world don’t need the US, that they can do it themselves, and do a damn better job. This is because of the power of mass struggle, as well as the working-class halting production, but also because their fight for democracy is genuine. The kind of democracy the US promises is a joke. The US has backed and continues to back dictators in the region such as Mubarak, have armed police and army forces trying to put down revolts, and only seem to remove their support when it looks like their ‘bastard’ is losing. When there are images of Egyptians holding tear gas canisters reading ‘Made in the USA’ you really have to wonder how anyone can think they’re a benevolent force in the region.

And this applies to not only the US, but other Western powers like NATO and the UN as well. The colour of the helmet or the banner the troops fight under changes nothing about the role they play, and foreign troops will always go into a country based on the interests of those powers not the people they claim to be saving. The fact that America’s mission in the Middle East failed, but Egyptians got rid of a dictator in just over two weeks makes the US not only irrelevant but counter-productive to any progressive change in the region, and so any attempts to back or support revolts after changing sides is an attempt to restore the false image of the US as a force for good.

Rather than the US, a much stronger force to end the violence and bring down Gaddafi quickly, is the power of the working class. After the people occupied Tahrir Square for two weeks, it was the workers in Egypt that dealt Mubarak his final blow. After three days of striking and production grinding to a halt, Mubarak could not hold on any longer.

In Libya, moving the struggle into the workplaces could be decisive not only because it would halt the flow or profits to the regime, but suppressing the struggle becomes much harder. It’s easy for them to mow down demonstrators in the streets, but if the struggle is inside factories and infrastructure owned by the Libyan state critical to the running of the economy, Gaddafi can’t exactly just bomb those to the ground or he would hurt himself.

It is clear that the Libyan people do not want and also need no involvement from the outside. The people of the Middle want no such thing either. The US and its allies need to remove all support for dictators in the region and get out of region completely. This fight is not theirs: it is the fight of the people using the power of the masses to turn the world upside down. And the role of the working-class in the Arab world is the key to bringing down these tyrants quickly and in the least violent way possible.


Benjamin Solah is a self-described ‘Marxist Horror Writer’ combining his love of horror’s dark aesthetic and his world view of revolutionary socialism. This article was originally published at his personal blog, ‘Blood and Barricades’; see: http://www.benjaminsolah.com/index.php

Labor Culture at a Senior and a Student Level

above: what's wrong with ALP culture?

Nb: the following is an intervention regarding the culture of organised factions on the Left and Right of the Australian Labor Party. (ALP) It considers the perspective of student politics and the observances the author made when he was involved in that context many years ago. But all the observations are of relevance for the broader labour movement and ALP as well…

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By Tristan Ewins

Rivalry between the factions in the Australian Labor Party (ALP) often gets in the way of productive dialogue on issues, values and strategies. Early on young Labor activists are encouraged to become part of an almost 'tribal' culture. The result is entrenched and inflexible positions and rivalries; a lack of engagement.

But along the way in the 1980s and 90s Labor 'lost the plot'. Some leading parliamentary figures from the ALP Right painted a picture of the Left as stuck in a ‘state socialist rut’. According to this interpretation anything apart from the most minimalist position on the role of the state left one branded a ‘statist’. But in the 80s and 90s it was the traditions of mainstream social democracy that the party lost sight of. Privatisation and tax cuts became ‘the answer to everything’, and gradually – over many years – the party lost sight of its commitment to a mixed economy; a fair labour market & the dignity of labour; a fair tax system and social wage – based on principles of social justice, compassion and redistribution.

For my own part there is also today a commitment to economic democracy, participatory media, liberal education and active citizenship – But I want to focus here on the way Labor traditions and identity were ‘emptied out’ – including in the Left.

Today the Left is also losing sight of past values and traditions: and a mix of liberal multiculturalism and equal opportunity – while important – are not enough to fill the void. The electoral challenge posed by the Greens, and their mobilisation of an important part of Labor’s traditional membership and electoral support bases are making some sit up and take notice – but there is little recognition of the need to reclaim our traditions and values in response.

And yes Labor does need to balance an electoral support base involving more internal contradictions than do the Greens; but we have all but walked away from most issues of social and distributive justice, including the class interests of our core supporters.

ALP National Conference is still highly-stage-managed and considered non-binding, and there is little scope for real grassroots mobilisation and influence despite any rhetoric to the contrary. The Labor grassroots are withering as attempts to control the tenor of debate leave many disillusioned, sidelined, frustrated.

To begin, we might like to start making a changes at the level of student politics. Being a PhD student I think I’m in a position to put some positions based on past experience in the 1990s. So many people learn the ‘factional ropes’ of patronage and tribalism early on.  The intensity of the 'tribal' influence is used to discipline factional and sub-factional support bases.  This culture is fostered at the expense of grassroots activism and engagement on the level of ideas between ordinary members across factional lines.

To promote a shift in culture at the senior party level, at a grassroots and student level – across factional lines - we need to develop an activist culture; a culture of engagement; a culture which draws from Labor’s social democratic, social liberal and democratic socialist values and traditions. And we need a vision for social justice that is deeper than educational equal opportunity. (valid but on its own not enough) But by reproducing the culture of tribalism and patronage we instead often become part of the problem.

A good place to start bridging the gap between the factions is to encourage rigorous debate on values; but also a realistic appraisal of how such values might be applied in policy, and in various levels of mobilisation in the party, the broader labour movement, and other social movements.

The commitment of the Labor student Left to free education is often put forward as a defining distinction between they and Student Unity. (ie: the relatively right-wing faction) In terms of values – providing free education is an admirable objective. Education – after all - is more than a commodity.

Assuming the ambition of progressively broadening the tax base by as much as 1.5% of GDP over the course of each term of reforming Labor government, though – with the aim of improving the social wage – what are our priorities?; How much can we achieve, and how soon?

As well as free education, then, we have welfare reform for the unemployed, the aged and the disabled; a National Disability Insurance Scheme for both recipients and carers; provision of quality Aged Care for all with the need; investment in public primary and secondary education; investment in public housing with the aim of boosting supply and making home ownership affordable again…

Then there’s the need to make water and energy affordable for all. (possibly involving strategic re-socialisation) And there’s dental care, the mental health crisis, ‘closing the gap’ for indigenous peoples, and tackling climate change – including through investment in renewable energy and public transport, and through smart urban planning.

And there’s the claim by women unionists in the community services sector for fair pay, and against effective gender discrimination in the labour market. Reform here in the community and public sectors would involve a serious amount of money.

Even with an inflow of approximately $15 billion of new revenue every year (in the context of an economy worth well over $1 trillion) we couldn’t achieve all of this in one term of Labor government. We could only achieve all of this over the long term; with sustained reform of tax and the social wage. (Although there’s an awful lot we COULD achieve with that kind of money as well!!)

That said – assuming all these priorities – what kind of policies for reform in higher education are achievable – desirable in the ‘big picture’ of a medium to long term vision for reform? And where do we begin the journey – ‘right here and now’? When we consider competing priorities – for instance the indignity and suffering experienced by many in Aged Care – it is clear that some issues take precedence.

Instead of free education ‘right here’ ‘right now’ the Student/Youth Allowance is a critical area. The insufficient nature of the payment forces students to take up part-time work; and this can detract from studies – in which the community and individual students have made an investment. So increasing the Student Allowance is critical.

Then there’s HECS. HECS was originally introduced to finance a massive expansion of higher education. But since its original incarnation it has become ever more regressive. Repayment thresholds have gradually lowered in relative terms – and regardless of any real financial gain in the labour market. And the level of student contributions has also spiralled out of control beyond that imagined by those who originally established the policy.

On the other hand – HECS is like “a tax you have without having a tax”. Structured correctly, it could have the same effect as progressive taxation; while slow and strategic increases in progressive taxation elsewhere could fund other crucial priorities. So it’s the tiers, thresholds, and level of contributions that need reform for the here and now – rather than an absolute withdrawal of the entire policy.

These are the kind of areas where we need dialogue ‘across factional lines’. Movement on these fronts isn't likely without a change in party culture; and that means we need figures in Unity to take the lead in changing our agenda and culture as well as figures in the Left. And we need to start from the premises that we are all in that spectrum that ranges from Centre-Left to Left; and in this we have common purpose.

We also need recognise that electoralism alone is not sufficient. What is needed is ‘movement politics’: mobilising a cross section of social forces - unions, progressive parties, social movements and lobby groups -in support of a reform agenda.

So ‘right from the word go’ we need to recognise that back-room deals and back-stabbing are not going to deliver reform. A disciplined alliance of party activists, social movements, lobby groups and organised labour on the broad Left/Centre-Left need to co-ordinate their cultural and electoral efforts with a shared long-term plan for reform until all joint aims are achieved via mobilisation and solidarity.

Consider for a moment at the student-political level in Australia - What’s really most important in the big picture, then?: This cultural struggle or ‘who gets NUS (National Union of Students) President’? That I even have to pose that question is indicative of the problem that demands the attention of us all…

Tristan Ewins is a PhD student, freelance writer, and veteran ALP activist; He maintains this - the 'Left Focus' blog