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Saturday, July 6, 2013

Observations in the wake of the Rudd Restoration

Above: Gillard Leaves an Important Legacy and Lessons for Labor... 

Tristan Ewins

i) A Retrospective on the  Gillard Leadership

Much is to be treasured from the Gillard Leadership: and Rudd’s motives more complex than recognised by some Feminist critics

Recently I read an article claiming that the core issue behind Julia Gillard’s loss of the Labor leadership was a ‘boy’s club mentality’; that is put simply: patriarchy re-asserting itself…  (See: )

I think, though, that things are more complex than the author of that article acknowledges. I agree that Rudd took advantage of the ‘blue tie factor’ in response to the Gillard speech. Responding to male resentment following Gillard’s recent speech on the threat to women’s participation in public life, it was a clever ploy – underscoring impressions Gillard was being divisive, and appealing to a mass male demographic which felt threatened by Gillard’s stand.  I agree this was a form of destabilization – and even if effective, it was the [ethically] wrong ‘symbolic tactic’. And I agree there have been men – powerful right-wing men – who have subjected Gillard to constant mockery in order to weaken her authority and credibility – and sometimes in the most debased and sexist form.   And that sexism still comprises a problem in parts of the broader electorate as well.

But this was also personal vindication for Rudd in a way that goes way beyond gender… If Rudd had been ‘done in’ by another man his bitterness was have been just as palpable. Arguably, there was also bitterness in the 'Rudd camp' because it appears Rudd as PM was removed at the behest of Australia’s powerful mining industry – after he had attempted to introduce a Mining Super Profits Tax to spread the benefits of our mining boom… As I’ve said before – both ‘camps’ in Labor tried to set a precedent.  Each side attempted a ‘political scorched earth’ strategy against the other – and that only escalated the division and crisis. That an accommodation and reconciliation was not achieved earlier led us to this point – with the caucus elevating Rudd as their ‘only hope’ due to his consistent ascendancy in the polls.

Importantly – the monopoly mass media in this country (largely controlled by Rinehart, Murdoch etc) exploited the internal conflict to destabilise the ALP.  But now that Rudd has returned he is enjoying a ‘honeymoon’ courtesy of previous ‘oxygen’ he was provided by that very media establishment… But will the media continue to ‘give Labor a fair go’ now?  Some are talking of Rudd reforming the compromise mining tax we ended up with – But what chance of this with Rinehart dominating the traditionally (and still relatively) liberal Fairfax media assets?

IN the final analysis, though, Gillard deserves credit for pursuing education reform, implementing disability insurance, promoting a better deal for low paid workers (mainly women) in the community services sector and elsewhere, and improving diplomatic relations with China. Though there were bad policies too: Sole Parent Pensions reduced; Disability Pension eligibility narrowed etc… Recognition of all this is part of the answer for future healing in the ALP – for the same reason that the former Labor leaderships’ past attempts to ‘airbrush’ the Rudd governmentt’s prior achievements only escalated and deepened the internal conflict… And in any case Gillard DESERVES recognition for her policy achievements under the most difficult circumstances of minority government…

Here’s hoping Labor now has a chance of fending off the prospect of an Abbott Liberal Government – which could be the most right-wing government we have had in decades should it come to pass…

ii)  Conclusions: Last Chance for Rudd Policy Fixes as the Election Draws Near

above: Policy leadership necessary for Rudd now as the Election grows near

Superannuation Concessions Reform to pay for ETS reversions: and Tax Breaks to pay for wage cuts flowing from Superannuation Increases

To go early? Or go later and maybe reconvene parliament?

I believe it would just be good for Rudd to "get some reforms under his belt" before the election if possible; including restructuring the tax and spending mix in such a way as to pre-empt Abbott... (For example: if we remove superannuation concessions from the wealthy and the upper middle class to pay for winding back the carbon tax to an ETS...)  If we don't do this and Abbott wins - he can use fiscal pressures as a rationale to wind back social expenditure and welfare. So if possible we should get the reforms in place while taking away the Abbott excuse/rationale for austerity. Getting 'reforms under his belt' could also give Rudd more credibility - a concrete indicator of the direction he intends to take Labor should he win the election.

Not to mention we should have an interest in distributive justice for low and middle income Australia regardless of pragmatics. In 2012 Dr Richard Denniss of the Australia Institute argued that removing superannuation concessions from the top 5% would save over $10 billion.   (See: )

Meanwhile, today that figure would be significantly higher: and targeting the top 10% demographic would presumably bring in much more.  

So not only could this money pay for an early reversion to an ETS. (which is a very regrettable political imperative)  The removal of subsidies/concessions for the wealthy and upper middle class could pay for an expansion of the Clean Energy Fund. And it could also pay for improved welfare - and make room for tax cuts for low income groups to overcome the effect of the increase to 12% superannuation contributions for these already-struggling families.   

To clarify on superannuation: veteran Fairfax journalist Ken Davidson made the point in 2010 that those on low incomes cannot afford to lose disposable income.  And he has pointed out that the extra employer contributions will largely be ‘swallowed up’ as bosses hold back on wage increases.  (see: )

Davidson is right that today the superannuation industry comprises a private pension system – where risk is privatised – and within a highly inegalitarian framework.  While the Aged Pension was once a great leveler – in the future retirement income will be greatly stratified and effectively discriminate against women, and low income, part-time and casual workers.  The Aged Pension itself faces potential future marginalisation as a second-class, residual system. 

And as Davidson notes there is growing pressure for governments to privatise their remaining assets by selling them to the superannuation funds.   This is presented as saving governments from the need to invest in future infrastructure. But what would the ultimate consequence be?

There remain potential problems, here, even where those funds are union-controlled.  There is the potential that they may increasingly comprise ‘corporate interests’ – which pursue their own particular interest rather than the general interest. 

As the important socialist thinker Eduard Bernstein pointed out as far back as the 1890s - as the “mistress of a whole branch of production” even unions theoretically have the potential to  become “a monopolist productive association…antagonistic to socialism and democracy…”  Here,  “Associations against the community are as little socialism as the oligarchic government of the state.” (Bernstein; pp 114-119, pp 138-141)    Of course there is a difference between Bernstein’s example here, and that of Australian unions – but the theme of general versus particular interest is the same. (the answer, of course, is natural public monopolies where appropriate)

Referring to the Superannuation Industry,  Ken Davidson wrote for the Sydney Morning Herald in 2012:
“Specifically, the superannuation industry has its eye on existing water, road, rail and port assets, which are largely monopolies with assured income streams. To reveal what is at stake, assume that, as state monopolies, these assets earn 5 per cent on capital for the government and would be expected to earn 10 per cent on capital for private investors… This means that the assets worth $100 billion on the government's books, would only be worth $50 billion to the private operators if the prices for the services remained the same. The government might get $100 billion for the assets if it allowed the new owners to double prices for the services.”  (Read more: )

It is too late to substantially alter Labor’s 12% superannuation promise, and too difficult to sell Davidson’s complex message to the electorate on the eve of the election.   Especially when Labor has been selling this policy unequivocally for so long, and many of our supporters are convinced it is ‘free money’.

But the government has options in creating a more egalitarian system. 

Again this should involve cutting superannuation concessions for the wealthy and the upper middle class – which could bring in well over $10 billion. (I have no modeling beyond Richard Denniss’s figures ** – but extrapolating from that a minimum of $15 billion seems credible for 2014)  And using some of those proceeds, in addition to paying for an early reversion to an Emissions Trading Scheme, and an increased Clean Energy fund - it must also mean further restructuring of the tax mix.  Further, it should also involve easing of means tests for some partial self-funded retirees.  And what is more, this could involve another real increase in the Aged Pension, and improvements in social wage benefits for pensioners of all kinds. This should include improved cost-of-living subsidies (energy, water), and free or discounted access to the NBN and public transport.  Finally, here, the funds released by superannuation concession reform could be ploughed into infrastructure and completely bypass pressures for privatisation.

Concluding, though, the most industrially strong unions could attempt to hold onto their share (ie: the labour share) of the economic pie – even in the context of increasing superannuation contributions from employers - but also in the hope that this could occur in the context of a squeeze on profits, rather than a squeeze on consumers.  Whether or not this happens also depends on how profitable and how competitive the economic sectors in question are. Competitve sectors with lower profit margins would have little room to move.

The election is far from over; and neither are Labor’s policy options exhausted even at this late point in the electoral cycle.   Let us hope Rudd Labor governs and reforms in the interest of justice and equity for most of what remains of 2013 – and that the consequence is another reforming Labor government.


Allison Pearson from ‘The Telegraph”

Bernstein, Eduard  “Evolutionary Socialism”, Shocken Books, NewYork, 1961

Ken Davidson at ‘The Age’ and the SMH::

** Denniss argues removing superannuation concessions from the top 5% income demographic alone could bring in $10 billion in 2012; For my purposes I am assuming the top 10% should be targeted in the reforms I am suggesting.

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