Australia: New Chapter or Missed Opportunity?

The conservative legacy


The Australian Federal election of 2007 brought to an end what many people have come to consider a dark chapter in that country’s history.  


Since 1996, under the leadership of John Howard, Australia’s conservative parties engaged in wave after wave of ‘reform’.   Amongst the more notable – and reprehensible – examples here, were in the field of industrial relations.  The process of ‘reform’ took place in stages – but the most radical was that set of reforms introduced under the banner of ‘WorkChoices’.


Age-old protections for Australian workers were stripped back – as the ‘Australian model’ of Industrial Relations was smashed after a lifespan of over 100 years.  


Australia’s ‘Australian Industrial Relations Commission’ (AIRC) was effectively left a ‘toothless tiger’, with the removal of more comprehensive minimums in wages and conditions. 


Employees in the construction and waterfront sectors were targeted especially in attempts to break the organisational and bargaining power of trade unions.  Such efforts were aided by new restrictions on workers’ right to strike, and union right of entry into workplaces.


Union practices of ‘pattern bargaining’ – where successful precedents in enterprise bargaining are taken as a template for broader industries – were outlawed.   In the absence of industry-wide solidarity, workers faced the spectre of a ‘race to the bottom’.


And laws against unfair dismissal – previously introduced by a Labor government – were revoked by a government totally behest to the whims and will of the business lobby.


New laws were passed removing the ‘no disadvantage test’ in enterprise bargaining.  That test had previously assured Australian workers of receiving due compensation in regard to wages and conditions, should such Award entitlements be ‘traded away’ through enterprise bargaining.  


Meanwhile, a new regime of ‘individual contracts’ was introduced – with the intention of undermining the rights of workers to bargain collectively. 


The fault of the conservative Australian government, however, reached further than industrial relations.


Lack of investment in education during the Howard years also saw the development of skills shortages.  Only with the aforementioned repressive labour laws were the claims of better organised workers resisted. 


And a shortage of investment in infrastructure also saw the development of ‘bottlenecks’: especially in areas such as roads, transport, ports, water and communications.


A ‘two-tiered’ health system arose with the introduction of a ‘Private Health Insurance Rebate’; and human rights were seen as the loser with the establishment of detention camps for many seeking refugee status.


Finally, the conservatives’ support for war in Iraq caused for many Australians a sense of shame: that their country had involved itself in a pre-emptive war: a war of aggression whose human cost seems to know no end.




The Labor victory


Dissatisfaction in the Australian community with the incumbent conservative government came to a head on Saturday November 24th  2007.   The Australian Labor Party  was brought to power in a landslide: which even found former Prime Minister, John Howard losing his own seat. 


Labor took power with a clear mandate to ‘tear up’ the conservatives’  ‘WorkChoices’ legislation: and to introduce what it called an ‘Education Revolution’.    


Nevertheless, this program to provide computers to schools remains not fully implemented.


And the initiative never involved serious moves to rectify Australia’s ‘two-tiered’ education system.   Where some private schools comprise bastions of privilege – nevertheless receiving millions in funding – poorer schools, including the public schooling sector – remain under-resourced and under-staffed.

During the 2007 election campaign, Rudd Labor largely succumbed to corporate pressure, echoing the Conservatives in critical fields.  Thus Labor went to the polls refusing to recognise any right to political strike action; enforcing ballots before any industrial action; limiting union access to workplaces; and refusing the right of workers to engage in pattern bargaining strategies. 


Now the new government is under further pressure to limit unfair dismissal laws; and to prohibit content in enterprise agreements.  (including, payroll deductions, health and safety training and union training)


Overwhelmingly, the Australian labour movement’s campaign against the extreme conservative government’s ‘WorkChoices’ laws is recognised as being the central element in the 2007 ALP electoral win. 


And yet this factor is not translating into policy influence.   Indeed – the Australian Council of Trade Unions finds itself compelled to campaign for the ALP to implement the reforms it embraced before the election.  


That reform agenda had many failings, and did not restore the breadth of protection previously enjoyed by Australian workers.  Many basic conditions, however, were established – and certainly this has still been a victory of sorts.


Furthermore, there are a number of crises confronted by Labor that, as yet, have not been adequately addressed.


Rudd Labor prioritised the fight against inflation: but even modest increases in official interest rates helped contribute to dire consequences – compounding the housing affordability crisis in tandem with a vicious “bubble” of speculation.  This bubble had been exacerbated by  the existence of generous first home buyer’s grants.


Whereas the prior Conservative government could have ‘cooled’ the market by expanding public housing supply – in effect it did nothing.


This crisis worsened as a consequence of a tight buyer’s and rental market.   Over 100,000 Australians are now classified as homeless on any given night.   http://www.missionaustralia.com.au/component/content/article/385


The National Centre for Social and Economic Modelling (NATSEM), has provided research claiming that over a million Australian households “are spending about one-third of their gross income on rent or the mortgage.”   http://www.wsws.org/articles/2008/mar2008/hous-m21.shtml


The research group claims this as the traditional benchmark of ‘housing stress’. 


And for many the situation is even worse.


This crisis in the cost of living has been compounded by the spiralling cost of fuel and its flow-on through the transport economy: and through that to the broader economy.  Other areas of concern included the rising price of dairy products, bread, poultry, electricity and bank fees.   http://www.money-au.com.au/news/Loans/Inflation-clobbers-Australian-cost-of-living_18701049.php




Meanwhile, expensive new infrastructure projects (including ‘public-private’ toll roads, communications and water desalination plans): are seeing massive increases in the cost of basic utilities.  Proposed new communications infrastructure (a fibre-optic network), in particular, are set to comprise a part-private monopoly. 


It is obviously a cause for concern: that any private or part-private monopoly interest be given this kind of market power.


To tackle poverty, and the cost-of-living crisis, there are a number of responses the Australian Labor government must now consider.



Responding to the crisis: ideas for Labor…



Having committed to hold down taxation as a proportion of GDP (Gross Domestic Product), Rudd Labor now finds itself in a difficult position: unable to pursue major reform in Health, Education, infrastructure and welfare without going beyond its mandate.


Remaining true to an established mandate is an important ideal for all democratic government to aspire to.  But there must be flexibility also – in the event of contingencies unforseen: especially those involving powerful practical and moral imperatives.


Here, the global meltdown in financial markets – and its consequences – must be considered.


Importantly: given the certainty now that US financial woes – including a severe liquidity crisis – lead to a global  recession , there will be flow-on effects for the world economy. 


Australia’s ‘Resource Boom’ depends largely on the Chinese market, and has fed a massive increase in company tax receipts.  It is only this surge that has made possible the regressive restructuring and lowering of tax elsewhere – under both Rudd Labor and the previous Liberal/National Coalition government.  


Ken Davidson, writing for ‘The Age’, supposes that China will continue strong growth, insulated with the expansion of its own domestic markets, and by a well-regulated banking system.   http://www.theage.com.au/opinion/our-economic-saviour-lies-in-the-east-20081008-4wpo.html?page=-1


But even if this remains the case, Australia cannot avoid the flow-on-effect of recession in the American, Japanese and other markets.


And despite Davidson’s confidence, there are some who predict a slowing of Chinese growth: with predictions that iron ore shipments will slow and that “iron ore and coal prices could fall by 20 per cent next year.”   http://www.brisbanetimes.com.au/news/business/jitters-as-china-hit-by-metals-fatigue/2008/10/10/1223145582166.html


In the context of a global recession impacting on Australia’s key export markets, Company Tax receipts will suffer: and Rudd’s promise to hold down tax rates: and to maintain a budget surplus of over $20 billion, simply will not remain either sensible – or viable.  .   http://www.theaustralian.news.com.au/story/0,25197,24272735-5013592,00.html


Again, in such circumstances flexibility is essential. All governments must face the prospect of unplanned-for contingencies.


And under conditions of global recession, budget surpluses simply do not make sense.


In order to maintain programs and fund nation-building projects: which in of themselves provide a counter-cyclical ‘boost’, the Australian government has signalled its intentions to ‘fast-track’ such initiatives.  Specifically, there is talk of drawing upon the ‘Building Australia Fund’ – to bring forward $20 billion in infrastructure investment.  http://www.theaustralian.news.com.au/story/0,25197,24439161-643,00.html


Importantly, Labor must not use the current crisis as an excuse to implement austerity, or fail in its duty of care to vulnerable and struggling Australians.  In the face of a rising cost-of-living, the question of pensions has loomed large in public debate. 


And there is a further and most dire need for a broadening and deepening of protections and minimum conditions for vulnerable workers. 


In the face of rising living costs, the question of pensions has loomed large in public debate. After originally prevaricating on the issue of pensions, Rudd Labor is now set to make a significant intervention in favour of these people..


A $10.4 billion stimulus package has been unveiled.   Although action is necessary immediately, most pensioners will nevertheless be glad to receive a single payment of $1400 as of December 8th.   http://business.theage.com.au/business/rudd-unveils-104b-stimulus-plan-20081014-50a6.html


Pensioner couples, meanwhile, will receive $2100


Following initial confusion, it now appears that this program will include aged pensioners, disability pensioners, carers, Veteran Affairs pensioners, and eligible self-funded retirees holding a Commonwealth Senior Health Card. http://www.smh.com.au/news/national/rudd-pumps-in-10b/2008/10/14/1223749999940.html?page=2



Such initiatives have been accompanied by promises to provide 75% of families with dependent children $1000 per child.    http://www.theage.com.au/national/10bn-jolt-to-boost-economy-20081014-50qi.html?page=-1


In further initiatives, a temporary expansion of first home buyer grants shall provide $14,000 for established houses – $21,000 if the house is new.


This will only apply until June 2009 – and might be supposed to be a ‘stop gap’ measure – to stimulate the economy until the effects of infrastructure construction ‘flow through’. http://www.theage.com.au/national/10bn-jolt-to-boost-economy-20081014-50qi.html?page=-1


There are dangers, here, of sparking another dangerous housing market bubble.


Whereas these outlays will provide much-needed respite for many, the more cynical-minded might simply conclude that since job seekers, single parents, students and the low-paid have not enjoyed the same public profile as aged pensioners, that neither the Government nor the Opposition felt compelled to regard their plight as being of the same order.   (or as being so ‘electorally sensitive’)


ACOSS (the Australian Council of Social Service), in particular, has ‘honed in’ on the government’s failure to provide support the unemployed – whose ranks look set to swell over the coming year.   The peak welfare body notes:

A single person on unemployment benefits struggles to live on just $219 per week, which is $50 less than the single pension…”  http://www.acoss.org.au/News.aspx?displayID=99&articleID=5203


The outlays will provide much-needed respite for many: although vulnerable workers on lower incomes will be waiting for greater detail.  Some pensioners – and some vulnerable workers – will be left wondering why they received less generous relief.


The call must go out now – amongst the ranks of both Government and Opposition – as well as from the Greens, Family First and independents –  that double standards are not acceptable.

As to whether or not a more ambitious plan as ‘affordable’,  a sense of proportion should be maintained.  After all, the broader Australian economy is valued at over

$AUS 1 Trillion. 


Expanding the social wage could provide ‘a helping hand’ to those in need, while providing greater buoyancy to the broader economy.


Increasing the tax base, here, could provide a windfall for pensions, services in Health, Aged Care, community child care, Education, Housing; and in the construction of  transport, communications and other infrastructure.   


With an increase in public expenditure as a proportion of GDP of between 1% and 3%, the annual commitment, here, could be of the order of $AUS 10 Billion – AUS $30 Billion – depending on the real and underlying need for social security, infrastructure and services.


To support vulnerable workers – as well as pensioners – reform could include the progressive restructuring of the tax mix.  This could include the introduction of wealth and inheritance taxes; altering the brackets and rates of PAYG income tax-  including indexation of the tax-free threshold; raising Company Tax by as much as 5% ; halving dividend imputation (tax credits for investors); and introducing tax credits for low income earners. 


Progressive and systemic restructure of the broader tax system is also a definite must to offset negative consequences for equity with the implementation a carbon emissions trading system.


Proceeds of tax reform could prove necessary for counter-cyclical purposes; as well as ameliorating unemployment levels, and funding the development of desperately-needed services and infrastructure. 


Over the longer term, more permanent reform of  full pensions is necessary. Here, we include – the Aged Pension, Disability Support Pension, Single Parents pension, Carer’s Allowance, Newstart and Austudy.  All full pensions should be raised to at least 30% of Male Average Weekly Earnings. (MAWE)   (up by 5% of MAWE or more – to $AUS 646.16 in total.)





Whatever the final process, the aim must be to eliminate poverty in a real and meaningful sense.  All Australians must have access to quality social goods and services as discussed in this paper: as well as access to affordable energy and water, and a varied and healthy diet.


And a modern program to eliminate poverty must also consider the need for social activity, and inclusion with regard to the ‘digital age’ – in pace with ever advancing standards and means of communication.  


Vulnerable Australians ought not be made to carry a burden of austerity in response to the economic crisis.   Nor should the financial meltdown serve as an excuse for inaction when these people are desperate for help – not just any time but NOW.  


Recent initiatives by Rudd Labor are welcome – but nevertheless there is more to do.



In conclusion



Even if such moves as suggested in this essay go beyond Labor’s mandate, there is a moral imperative for immediate action on minimum wages, the social wage, job creation, infrastructure, and welfare.   Particularly, there is an urgent need to expand public housing supply: to correct the market, provide for the homeless, and make housing affordable for all Australians. 


The conservative Coalition Opposition has been vociferous in its condemnation of pensions failing to keep pace with a spiralling cost-of-living.  Such a stand as this, however, must be taken with a grain of salt.  After all, it was they who slashed the Disability Support Pension  while in government: and who have unambiguously supported regressive tax cuts and systemic restructure of the tax system– regardless of the effect this has on social services in Health, Education and elsewhere.   


Senator Steve Fielding, from the Christian ‘Family First’ party, has at least been principled in his support for pension reform: but in other instances has voted in a manner less palatable for social liberals and progressives.  ( for instance his support for ‘Voluntary Student Unionism’: measures to crush student associations, and the sometimes-radical advocacy and representation they provide) 


Organised Christians, however, need not ‘naturally’ gravitate towards the political Right – as evidenced by the ‘historic compromise’ between Communists and Christian Democrats in Italy through the 1970s.  Engagement is central as part of the process of building a political and electoral bloc necessary for the implementation of compassionate and just social and economic policy.


On the question of infrastructure: while ‘Public Private Partnerships’ as embraced by Labor governments Australia-wide can lead to waste and potentially even corruption, the correct response to a global downturn would be to accelerate investment in critically needed public infrastructure.  Public investment here could help give the Australian economy relative buoyancy – to resist any world-wide recessionary trend. 


The worldwide meltdown brings to the fore the debate concerning the legitimacy of neo-liberal ideology and the much-vaunted ‘free market’.   Foreign debt, dependence on credit, and reckless lending standards had long since reached critical levels. 


Nor can Australia’s effectively private retirement savings initiative (superannuation), provide the country’s citizens with security. The scheme cannot be depended upon to channel investment into critically-needed infrastructure, and exposes people to unnecessary risk.  The fundamentals of a system which greatly magnifies social inequality among retirees – must also be called into question.  This again raises the prospect of an equitable, secure and guaranteed public pension fund.


To conclude: in Australia – and worldwide – socialization of risk and of losses should not prop up the private profits of rapacious, unaccountable corporations.


Should government intervene to protect the savings of investors, then clearly there needs to be a just and equitable public benefit as well. 

Australia’s ‘SEARCH Foundation’ (ie: Social Education and Research Concerning Humanity)  – a progressive organisation formed after the dissolution of the Communist Party of Australia – is discussing a proposal that urges the world to:


embrace the pragmatic process now underway to nationalise banks and insurance companies…throwing away the idea of a free market in finance altogether, because it is just too dangerous.


And further:  “Any public funds used to stabilise a bank or finance agency should be offset with public equity, board positions, and in many cases by full public ownership.”  


The full statement can be found here:   http://www.search.org.au/archives/584



Indeed, moves to socialise sectors of the finance and banking systems could lead to better standards of prudential regulation, provision of banking services on the basis of need, diversion of profits into progressive social programs; and availability of credit for nation-building infrastructure projects and the like.


Importantly though: while there should be scope for a significant public banking and finance sector, this ought occur alongside other democratic enterprises in this field.  (eg: credit unions)  After all – such power ought not be too concentrated, lest it be subject to abuse.

There is much more that is worthy of discussion: but unfortunately it is beyond the means of this paper to explore all such issues in depth.   


In closing, though, it is enough to say: the new Labor government in Australia has been handed a golden opportunity to break with the neglect and abuse-of-power of its predecessors. 


The Australian Greens and the Family First party, meanwhile, have a chance to apply leverage to ensure real justice and compassion in the process of tax and welfare reform, and expansion of the social wage.


It is an opportunity that all concerned would be best advised not to waste.

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