What the campaign has avoided
An economic agenda for a re-elected social-democratic government
A re-elected Labor government has a great opportunity to push ahead with a social-democratic agenda. Will it take it, or will it revert to its old practice of tearing itself apart/ Allowing a factional struggle to sack two well-respected, competent and experienced ministers is an ominous sign.
As the election approached, because the opinion polls were pointing the wrong way the government persisted with a cautious, incremental approach to policy reform. But the outcome was a Parliamentary majority that most governments would see as an opportunity for extensive reform.
Election campaigns tend to focus on a limited number of issues, and even the two dominant issues – the cost of living and housing – were covered only in terms of their present manifestations, rather than the long-term structural failures that have contributed to problems in these areas.
There are calls for the government to make up ground lost over a long period in which the economy rode along on the reforms of the Hawke-Keating government and high commodity prices. The lack of reform over that period is manifest in low productivity and structural rigidity.
Saul Eslake is one who says that Labor should use its second victory as a platform for ambitious reform. He lists the reform challenges faced by the government in one paragraph:
Those challenges include budget deficits and rising debt for at least another decade; an increasingly inefficient and inequitable tax system, and one which is increasingly incapable of generating the revenue required to pay for the spending which the public clearly expects; a dysfunctional system of federal-state financial relations; a housing system which is unable to meet the aspirations or needs of a rapidly-rising proportion of the Australian population; the declining performance of our education system; an abysmal productivity performance, both in the recent past and in prospect; on-going falls in Australia's terms of trade and hence in the windfall national income and tax revenue gains which have flowed from previously elevated global prices for our commodity exports; the on-going, and thanks to Donald Trump, an accelerating fragmentation of the international trading system which has been so crucial to Australia's prosperity; and an array of challenges to our national security arising both from China's increasing geo-political ambitions and our obvious inability, now and for the foreseeable future, to rely on the United States as a trusted defence and security partner.
To this long list Karen Barlow, in her pre-election comment in the Saturday Paper – The issues missing in this election campaign – adds integrity, electoral reform, domestic violence and inequality.
The ABC’s Peter Martin interviews Aruna Sathanapally of the Grattan Institute, and his colleague Michale Janda, who outline what Albanese could do now to raise living standards, on the The economy stupid program.
Sathanapally refers to the Grattan Institute’s Orange book of policy priorities for the federal government, put to the parties before the election, which classifies reforms into “quick wins”, “major reforms” and “preparing the ground”.
Unsurprisingly Sathanapally’s priorities relate to dealing with climate change, including the establishment of a carbon price. The discussion moves on to tax reform, including bracket creep, resource taxes, wealth taxes, and a super profits tax. They also discuss needed reforms in the interaction of tax and transfer systems.
The enthusiasm with which the business spokespeople have greeted the prospect of a government likely to enjoy two more terms – even if it is a Labor government – suggests that we are ready to consider lengthening the federal parliamentary term to four years. That reform should be on the table.
In the runup to the election there were many calls for gambling reform (covered in last week’s roundup).
The election itself has thrown up a new challenge for this government in the form of a heightened urban-rural division. The government has been elected by the two-thirds of Australians who live in capital cities, while the weakened and conflicted opposition represents the other third – the third of the population that is poorer and who haven’t shared many of the benefits of economic growth. (The numbers are in the other part of this roundup.) This could set the scene for the political divisions we have seen in the USA.
The government’s work to restore bulk billing for GP visits has been welcomed by the community, but there is still a great deal of unfinished business in health care. Our health care is still provided under a fragmented set of arrangements that don’t come together as a single system. And a half-century after the Whitlam government ran a double dissolution election to establish a taxpayer-funded health care system, there is still the distortion of private health insurance adding to costs and misallocating scarce resources, and dentistry still isn’t covered in Medicare.
There has to be a serious public discussion about immigration. It is clear from the election campaign that people are confused about immigration. We have done well to date – it’s an area where Australia can congratulate itself on a standout success in an area that has caused so much grief in other countries. But it seems that we are only now realising that we have to integrate our immigration policies with other economic policies: if we are to have high immigration we will have to accept a higher level of government borrowing to provide housing and infrastructure for a growing population, and should develop spatial policies that prevent the growth of regional disparities.
No one need remind the government that housing remains a major challenge, and the government is properly focussing on the supply side of housing. But there also needs to be an attitudinal shift, because if housing is to be available and affordable to everyone, we have to get back to seeing housing as a basic right, as shelter, as the building blocks of community, rather than as an investment. Here is where the Greens should be able to exert pressure in the Senate – pressure that goes beyond needed changes in tax arrangements. It’s about re-defining the way we see housing. We will know housing has been restored to its proper place when people have lost interest in the market price of their houses and have become more interested in their house’s amenity and connection to community.
Another area of damage needing repair is the economic wreckage wrought by privatization, resulting from cronyism and from governments’ unjustified fear of public borrowing, in defiance of sound economic practice. There are many assets including electricity transmission lines, toll roads, government buildings, that should never have been privatized. Bringing them back into public ownership will be difficult.
A huge issue the government has been ducking for 18 months is the Uluru Statement from the Heart. Its authors are patient: the issue isn’t going away.
It will be difficult for the government to move from its pattern of slow, incremental reform, particularly when it has promoted its conservatism and adherence to promises as political assets. It would be wise therefore for the government to keep independent and Green Senators and members of Parliament alongside, by bringing them into policy considerations and ensuring they are well-resourced. It can be wise political strategy to let others introduce hard issues.
These are all challenges for the government, but when it comes to its plans for renewable energy it should see a clear path ahead. Up to now its plans have been retarded by an opposition promising to resurrect coal-fired stations and to build a nuclear system whose financial viability relies on returning to a “base load” power model. No wonder investors were turned off.
Investors should now be able to invest with confidence in renewable energy, assured that the Coalition’s silly ideas are off the table – even if a few deluded survivors of the rout are still pushing them. As Wesley Morgan and Ben Newell of the University of Sydney write in The Conversation, Australia is set to be a renewables nation. After Labor’s win, there’s no turning back. In the same vein Giles Parkinson and Sophie Vorrath of Renew Economy have a post Thirteen things on Labor’s climate and energy must-do list to change the systemurging the government to get a move-on in clearing away some obstacles hindering the energy transition.
For other party members – think about your values and principles
Members of the Parliamentary Liberal, National and LNP parties would be well advised to dissolve themselves, shred their platforms, and start again, probably re-constituting themselves as two parties, and abandoning formal coalition arrangements.
There is probably room on the political spectrum for a party that’s conservative but not reactionary, tending to favour individual choice over state paternalism, and favouring the operation of markets while rejecting the neoliberal doctrine of “small government” as an end in itself.
A government in an overwhelmingly dominant position needs to be kept in check by strong and constructive opposition parties rather than a right-wing rabble.
The Greens’ task is no less challenging. Their values are reasonably clear, but they must choose a broad political strategy. Do they seek to achieve progress in incremental steps or do they hold out for the best? And do they embrace or reject accelerationism – the revolutionary tactic of favouring parties on the far right so as to bring issues to a head? (It doesn’t work.)
For independents
Keep up the good work.