Will Labor offer voters a real choice? Labor should grasp the nettle and focus on the key challenges facing Australia – climate change and inequality. Tomorrow, I will discuss the budget consequences of this policy agenda, as this is essential to Labor’s credibility.
It is early days, but the signs are there that we might not have much of a choice in policies between Labor and Liberal at the next election.
What will the Coalition offer
It seems pretty clear that the Coalition will go to the election claiming success in managing the health and the economic consequences of the Covid pandemic.
However, before Covid, the Coalition’s record was signally unimpressive over its previous seven years in government. As Labor MP Julian Hill has recently pointed out Australia has gone backwards under the Liberals, with:
- Real wages 0.7% lower in 2019 compared to 2013
- Productivity falling by 0.3% – the fifth worst performance in the OECD
- Household debt now 119.4% of GDP – the second highest of 43 developed countries
- Housing affordability has worsened with Australia having the third most unaffordable housing market and home ownership is falling
- Australia’s rate of greenhouse gas emissions per capita has been the highest in the world
- Australian children’s educational outcomes have slipped in national and international terms.
Even Scotty from marketing has admitted the road out of the Covid recession cannot be a return to business as usual. As he put it: “The policy framework we had prior to election will need to be reconsidered on the other side to ensure we can achieve the growth to get people back to work.”
Accordingly, last May Morrison announced his reform agenda – which included the JobMaker Plan – all designed to enable businesses to grow faster. The main elements were:
- improving the availability of skilled labour,
- affordable and reliable energy,
- research and access to technology,
- investment capital and finance,
- overseas market access,
- economic infrastructure,
- government regulation,
- business taxation, and of course
- industrial relations.
As I have previously discussed some of the elements were poorly chosen, and second, little has been or will be achieved.
Don’t scare the horses: Morrison’s business-friendly reforms change little
Thus, the evidence is that the Morrison Government has failed to meet the policy requirements that the PM himself set.
What will Labor offer
After Labor’s apparent failure to sell its policies at the last election, some have been counselling that Labor should avoid controversy and minimise the changes from the Government’s agenda in the run-up to the election.
Indeed, it is being reported that shadow ministers have been asked to find off-setting savings for all new proposals. That may be a useful starting point for policy development, but if adhered to will lock in minimal change.
Instead, given the Coalition’s abysmal track record over the past several years, Labor should grasp the nettle and pursue a more ambitious policy agenda than a continuation of Morrison’s policy vacuum. Right now Labor has everything to gain by offering to do better than simply promising to do more of the same.
As the Labor Party President, Wayne Swan, said in his contribution to Tanya Plibersek’s book, Upturn: “For Labor to win the next election, this is the time to be optimistic and idealistic.”
Labor should build a vision and narrative around the two most important issues for domestic policy:
1. climate change, and
2. inequality and low wage growth.
Climate change
Although both the Coalition and Labor parties seem riven by internal division over tackling climate change, it is now time to recognise that reducing carbon emissions is not a cost to the economy, but an opportunity for economic development and jobs creation. While the Coalition seems reluctant to act based on ideological grounds, this leaves the field wide open for Labor to take it up to the Coalition.
The cost of renewable energy is already less than the fossil-fuel driven energy, and the price of batteries is coming down sufficiently to ensure reliable energy supplies. As Ross Garnaut has demonstrated in his book Superpower, Australia has a comparative advantage in the production of renewable energy and we should be using it to develop new export industries, not just in energy, but also in making steel and aluminium.
Labor’s leaders should grasp this opportunity to show how new jobs can be created by redirecting infrastructure investment, and then how jobs for the displaced workers in coal mining and carbon-based electricity production can be created in the new fields.
Inequality and low wage growth
Low wage growth and the rise in inequality has been the main reason for the economic stagnation experienced since 2013. The shift in the distribution of income from workers to the rich has resulted in an increase in savings; demand has therefore stagnated, affecting investment and over time reducing the growth of productive capacity.
Furthermore, inequality has not only risen in incomes and wealth, but is also reflected in more spatial inequality, for example, more segregation in schooling and more unequal schooling.
The only two major policy initiatives announced so far by Labor – childcare and industrial relations – will help a little.
The childcare policies will assist more mothers to work more hours of paid employment. This will enhance family incomes and should help counteract the impact of low wage growth to some extent.
The changes to the industrial relations framework recently announced by Labor are principally directed to making insecure work a bit more secure. This is only fair and if it comes at a price to employers and/or customers it is a price we can and should be prepared to pay.
More generally, the proposed changes to the IR framework should also help the bargaining power of labour, and to that extent may help increase the rate of wage growth.
But I doubt that Labor’s proposed changes to childcare and the IR framework on their own will be sufficient to achieve the target rate of wage growth.
As Stephen Bell and I argued in our book, Fair Share, the principal reason for low wage growth and increasing inequality has been the impact of technological change. The reduction in inequality of earnings means people must be assisted so they can better adapt to such change. In short, increased funding for education and skills development should be a key feature of Labor’s policies.
However, these take time to bear fruit. Right now there is a very good case, almost universally acknowledged, for an increase in income support for the most disadvantaged members of our society, through a significant increase in unemployment and rental assistance, and substantially more than the pathetic increase of $25 per week in the JobSeeker allowance just announced by the Morrison Government.
Obviously, policies to improve equality and household incomes will involve an increase in government expenditures. Such policies will have to compete with demands for extra funding for so many other essential services.
A comprehensive Labor vision for social and economic development would add up all these legitimate demands and then tackle how to pay for them. This will be discussed tomorrow.
Michael Keating is a former Secretary of the Departments of Prime Minister and Cabinet, Finance and Employment, and Industrial Relations. He is presently a visiting fellow at the Australian National University.
Comments
14 responses to “Liberal and Liberal-lite: a Hobson’s choice for voters at next election? Part 1”
I respect the facts that you assert (courtesy of Julian Hill, MP) and I trust your assertions.
My problem is ever so simple: how does one “sell” these facts to the Australian electorate so persuasively that they are sufficient to displace the Government which caused them?
I believe that this is the heritage problem residing from the 2019 election.
Thanks about time more was not written about this !
Both Parties were hunting for surpluses before the Pandemic instead of spending into the real economy!
Using their spending power to cover any shortfalls in growth left by the private sector, to support as much employment as possible and boost growth has been lost for 4+ decades.
Today, a generation of Australians may have learned to think budget deficits are synonymous with economic mismanagement, but deficit spending, historically, has been both a Liberal and Labor platform!
What changed it all the neoliberal disease! Sure they are doing some spending especially in the last 10 years but predominately into the financialised economy not the real one!
After the war both parties embraced the concept of Look after unemployment, and the budget looks after itself.!
Now we just throw everyone to those who dominate the marketplace with all the negative leverage that creates and no governance for the consequences.
Both parties are supporting increases in military spending. The 12 new subs operational in 15 years will be obsolete and the F 35 flying armchair for Morrison to park his fat arse are just colossal waste. And what of the fourth industrial revolution and where do the check out supermarket workers and truck drivers find jobs? The fourth industrial revolution without state planning and effective labour market strategies will devastate jobs and living standards dependent on the even now obsolete wages system. Sorry i forgot the subs will be rolling off the Adelaide production line when the autonomous vehicle and IT revolution will eliminate a big percentage of the existing jobs. So thats fixed. This country is led by morons. And that includes the battler Chico, whose Mum lived in a housing commission flat. So he understands our pain.
Skilts – I’d like you to tell me what you think can be done to reduce (if not eliminate) the devastation of jobs and living standards. What is this ‘fourth industrial revolution’ you speak of?
Sorry Charles i put my modest proposal on your earlier post. Its down the field. I ran over the mark.
“…Labor should build a vision and narrative around the two most important issues for domestic policy: 1. climate change, and 2. inequality and low wage growth…”
You overlooked genuine full employment – not the phony NAIRU calculation- REAL full employment can deliver on both those issues and much more.
I suggest Labor get back to serving its erstwhile core constituency – the working classes – with policies structured to deliver REAL full employment with a livable wage – remember when both unemployment and inflation averaged < 2% for the 3 decades post WW2? That was not an accident of history - it was driven by fundamentally good policy. Labor should stop trying to be win votes by putting a 'more friendly face' on neoliberal monetarism. If Labor is to survive it must return to true Labor ideals as set out in Curtin/Chifley/Coombs 1945 White Paper. See: http://www.billmitchell.org/White_Paper_1945/index.html
“…Full employment is a fundamental aim of the Commonwealth Government. The Government believes that the people of Australia will demand and are entitled to expect full employment,… It is true that war-time full
employment has been accompanied by efforts and sacrifices and a curtailment of individual liberties which only the supreme emergency of war could justify; but it has shown up the wastes of unemployment in pre-war years, and it has taught us valuable lessons which we can apply to the problems of peace-time, when full employment must be achieved in ways consistent with a free society.”
We now face an existential climate crisis – a supreme emergency akin to WW2 – it is time for radical remedial action.
“…the principal reason for low wage growth and increasing inequality has been the impact of technological change.”
That line could well have been written in the early 1900’s when motor vehicles replaced horses. Technology provides efficiencies that release workers to carry out other more socially productive work – a Govts. task is to steer such positive change to benefit citizenry – not to enhance the wealth of elites.
The principal reason for low wage growth and increasing inequality is not technological change, but the concerted growth of rapacious neoliberalism – an ideology which unfortunately has been embraced post 1975 by Labor. Labor, positioning as ‘Liberal-lite’ will continue to lose elections – neoliberalism has demonstrably failed to deliver for us citizens – one’s vote for the lesser of two evils is still a vote supporting evil.
Spot on mate.
“People of Australia, your rooftops tell us, you get it, about fossil fuels. But Labor now understands, that Garnaut lectures on Net Zero Economic Superpower aren’t the same thing as industry policy. Also, we’ve come to realise, our 15-year addiction to Big Australia is electoral cyanide, crushing wages and increasing inequality.
Accepting the limitations of open borders and market liberalism, our revised industry policies are…”
Hello Michael: I hope on “the Monday morning”, Albo or the drover’s dog, invite you into the PM’s office for advice on your worthy social agenda. Before then, getting the dog there is the problem. With your article I got as for as “Labor’s apparent failure to sell its policies at the last election”. I am not going to critique this sentence; Richard and Mercurial already have. Besides, you’ll take no notice anyhow. Let me suggest a living experience. Do a term as a fill-in teacher at a state school where We, the inattentive People, live. You can teach social policy. A friend, an old-school women’s liberationist has for decades. They call her “the Communist”. But if you really want to get a feel, try an Ivanhoe Grammar-type school. Try teaching the inequality of negative gearing. What do you think the students or their mums and dads will call you?
A communist bastard.
So we have to be able to successfully argue, to the P. & C. Committee of Ivanhoe Grammar, for two realities. First – that it is actually unfair that such discrepancy between rich and poor exists. And that such unfairness has adverse behavioural social and individual consequence. Second, that it is not just in the interests of the poor but also in the interests of the rich that such discrepancies are eliminated. When they are, both rich and poor become wealthier. Not least because the poor welcome – behaviourally – the elimination of the unfair discrepancy.
The sad fact is an insufficient number of electors in marginal seats read and consider P+I. The choice will be between which party seems to offer the biggest tax cuts.
Labor has always had a social contract. That means that their policies in general benefit most if not all Australians. On the other hand, the Liberals continue their unrelenting attacks on the standard of living, inequality and wages as they have for the last 25 years, if their industrial relations record is any guide.
Labor needs to plan an orderly future redistribution of income and wealth from those who gain theirs from investment, to those who gain theirs from labour and intellectual contribution.
But the political and international competition imperatives need to be managed carefully. Capita finds its way to the jurisdictions that return the highest income. The conservative side of politics has a polished ability to spread fear of losing jobs and lifestyle from any changes to the 20th century status quo and tax increases. The post covid-19 financial crisis will require either a reduction in support and services, or an increase in taxes (revenue), or an acceptance of modern monetary theory of printing more money.
Job creation in low carbon industries is the foundation stone of political, environmental and climate survival. As has been suggested, exploiting our renewable energy opportunities in powering green steel, aluminium, hydrogen etc is blue sky opportunity for creating new jobs and exports, as well as replacing fossil fuel jobs that are producing our carbon emissions.