POLICY DISCUSSION re: ‘Skills and Knowledge’ component of the ALP Platform’

Dear comrades ; what follows is a series of Ideas for reform of the Platform which I have developed.   This paper was originally developed for the Victorian Fabians Forum held on Feb 15^th 6.00  2017 till 8.00pm at the Blue Room in the Multicultural Hub, 506 Elizabeth Street. Thereafter it was revised and extended.

I am sharing it with comrades here to provide an opportunity for feedback before submitting it for consideration.

If comrades have ideas how the paper can be improved please comment and let me know your opinions.

Sincerely,

Dr Tristan Ewins

Skills and Knowledge

The following are excerpts from the existing platform:

Preamble

Education is Labor's number one priority. It's the bedrock of social justice and cohesion in our society and it will build our 21st Century economy.

Labor will increase investment in Victoria's greatest strength - its people - so they may enhance their development and their participation in work and society.

The following ought to be added to clarify Labor’s values in this area (see above):

ADD: “Not only must education provide for the needs of the labour market ; it must also provide opportunities for personal growth ; and education for informed and active citizenship - which are also highly important. ”

The following excerpt is from the existing document:

Schools  (from the existing document)

•     become active, well-balanced, knowledgeable citizens, able to participate fully in a democratic society

•     understand our democratic multicultural society, recognizing what should be conserved, changed or improved

The following ought be added to clarify Labor’s position on the  purpose of our schools:

• Develop political literacy ; an understanding of the social movements and political parties which contest the direction of economy and society ; and of both the interests, ideologies and values they represent ; and of the specific opportunities for active participation in a democracy

• Develop these understandings in a complex manner ; including but not restricted to the ‘linear left-right spectrum’ ;  including ideologies of egalitarianism and meritocracy and the ways they variously complement and clash with each other, as well as libertarian and authoritarian dispositions ;

• Develop understandings of society partly based upon but not limited to such differing notions as “conflict theory” and “functionalism”

• Develop these capacities through content specifically prepared for that purpose in the Humanities, Social Sciences, Economics and English ; Develop a ‘political economy’ facet to Secondary Economics which considers the values, ideologies and interests behind economic theories.

Commentary:  these are important to promote the SPECIFIC knowledge necessary for effective political and social participation.   And also to understand things in their complexity: because the left/right spectrum is no longer – perhaps never was – sufficient to explain differing political and social movements and ideologies.  It is also necessary to present ideas in their complexity to maximise understanding ; empowering students to respond to the nuances in social and political debates, and to be effective, active citizens.  It is also important to address specifics when it comes to active citizenship, and not only deal with those issues ‘in the abstract’.

Emphasis on literacy, numeracy, creativity, and environmental sustainability.

In this part of the platform (see above) we should add the following:

“Provide alternative pathways  for students with specific talents and potential who may not respond to the specifics of the VCE curriculum ; ie: learning/memorising the curriculum is not necessarily the only, or the most important indicator of talent or potential.  Indeed, at the Tertiary level often significantly different means of learning and grading students’ efforts are involved.”

Commentary:  Learning to the curriculum does not necessarily represent all talent and potential ; so there must be alternative pathways ; and VCE and Year 12 should not ‘decide everything’

Letting our Teachers Teach and our Principals be Educational Leaders.

Comment:  In this part of the platform (see above) we ought incorporate the following in some form as well: 

“teachers with limited numeracy skills should not be penalised if they perform well in their fields ; eg: Humanities, English etc.”

And consider the following part of the Platform also:

Funding Schools to Meet Students' Needs   (from the existing document)

Labor will:

•     Continue the student resource package (with base, per capita and disadvantage amounts)

•     Continue to fund non-government schools in accordance with the financial assistance  model

In this part of the Platform we should also add the following: 

 [Labor will] “Work to see that revenue shortfalls are addressed through progressive taxation mechanisms without depending on austerity elsewhere ; Labor recognizes that material and human resource shortfalls can only be fairly overcome through progressively structured taxation reform.  Gonski can only be fully and fairly  implemented through provision of the necessary resources without austerity elsewhere.

TAFE

We should add the following:  (nb: Lots of this has been reproduced from earlier in the document ; but it is as relevant here as it was before) :

Add the following:

TAFE must provide pathways for students in diverse fields, and that must include such areas as writing/journalism, liberal arts, music and so on.  The intrinsic value of these fields must be emphasised ; and should not be narrowly based on ‘maximising value in the labour market’;.  If viable Labor governments should ensure all these areas are geographically accessible to students across the state.

Labor will also endeavour to provide pathways and areas of focus emphasising political literacy and opportunities for active citizenship at the level of TAFE.  Again this should include:

·         Developing political literacy ; an understanding of the social movements and political parties which contest the direction of economy and society ; and of both the interests, ideologies and values they represent ; and of the specific opportunities for active participation in a democracy

·         Develop these understandings in a complex manner ; including but not restricted to the ‘linear left-right spectrum’ ;  including ideologies of egalitarianism and meritocracy and the ways they variously complement and clash with each other, as well as libertarian and authoritarian dispositions ;

·         Develop understandings of society partly based upon but not limited to such differing notions as “conflict theory” and “functionalism”

·         …. Explore ‘political economy’…considering the values, ideologies and interests behind economic theories.

Adult and Community Education

Comment:  Here we must apply the same provisions and priorities to Adult and Community Education as we have already discussed in the ‘TAFE’ section of this document. The same priorities and principles apply there as well.

Other issues relating to Skills and Education:

User Pays and Student Allowance in Higher Ed

User Pays in Higher Education has become more and more pronounced since the introduction of HECS with the Dawkins reforms of the 1980s.   The ALP has many priorities, and even if we do raise more tax revenue progressively (I would suggest by maybe 2 per cent of GDP upon taking Federal Government) –  even then we are limited. But we do have some room to move in rolling back user pays gradually, and making the mechanisms progressive and fair.  

I believe the following measures must be incorporated into the Platform:

·        Labor has a long term objective to restore ‘free education’, but is limited by other priorities, and the difficulties with raising the necessary revenue over the short term

·        Labor will increase the HECS repayment threshold so that it is significantly above Average Weekly Earnings

·        Labor will contain interest on HECS debts to no more than inflation for fairness ; and will make special provisions for those in a bad position to repay their debts (eg: upon acquiring a disability)

·        Labor will increase Austudy payments in real terms ; easing pressures for students to supplement their incomes with work ; because that can distract from study and increase the rate of students dropping out. That means an end result of wasted resources.

·        Labor will ease means tests for Austudy; again so students can study under conditions of financial security – and commit themselves fully to their study.  Hence Labor will also make Austudy more widely available ; providing it also for all tertiary students except those with very substantial means.

·        provide mechanisms for corporations to contribute more substantially to the skills development they ultimately benefit from.  This must provide room to move in making student contributions fairer and less onerous.

State Schooling ‘at the tipping point’

What is also important is the crisis in state schooling in this country ; especially secondary schooling.  Because of the proliferation of private schools ; of their superior human and material resources ; state schools are near a ‘tipping point’.  That is: the proportion of voters and families (especially in the middle income bands) with an interest in keeping state school viable – especially in years 11 and 12 – has been shrinking.  And this has lessened the electoral pressures – and the electoral benefits – in restoring and maintaining our state schools.  If these influences continue to develop we may permanently be left with a starkly ‘two tiered education system’ ; with a public system markedly inferior in human and material resources.  Then we can really forget about ‘educational equal opportunity’ for good.  Ross Gittins of 'The Age' (15/3/17)  has pointed out that the state school share of students has stabilised at 65% - but that it is down from 79 per cent from 1979.  And without Gonski - and further reforms - this 'stabilisation' may not last.  Gonski must be swiftly and fully implemented under a Labor government.  The resources must be found without austerity elsewhere. And perhaps Labor must go even further in reducing the gap between State and Private schools.  Also the prestige of the teaching profession – the respect accorded to it – must improve.  And this could also find realisation with better wages and conditions for teachers ; with lower workloads/smaller classes ; as well as better job security for those unsatisfied with casual and contract work.

All these concerns must be incorporated into the Platform.

The Humanities and Social Sciences must be Protected and Valued

The Humanities and Social Sciences have long been devalued compared with courses with have a more obvious vocational application.  In many universities they have been cut back.  They have come under attack from Conservatives who see no value in any enquiry which does not have an obvious and immediate vocational application.  With the emphasis on STEM and basic literacy and numeracy – their importance is widely disregarded.  But they are vital for a number of reasons.

·        They have the potential to be the vehicle for a radically democratic civics and citizenship focus – at both a Secondary and Tertiary level.  Harking back to earlier in this paper – the goal is to promote political literacy – comprehension of social movements and political parties ; as well as the values, interests and ideologies underpinning them.  As well as awareness of the avenues open for effective and active citizenship.  Communicated without Ideological prejudice ; the point being to inform – and not to ‘indoctrinate’.   (See earlier in this paper for further details)

·        Historical comprehension and appreciation of the origins of civilizations ; Deep appreciation of culture, ethics and aesthetics ; Engagement with the most profound philosophical enquiries and dilemmas – these and other facets of the Humanities and Social Sciences are enormously valuable in their own right.  Humanities and Social Sciences are also valuable for other reasons: comprehending social trends and phenomena ; understanding them qualitatively and quantitatively.

·        They have practical applications, also – learning how to reason and construct arguments ; broader communication skills ; research skills ; applying social theory and research methods to complex social problems.

·        Humanities and Social Sciences academics contribute significantly to the public sphere ; and hence to our democracy

These concerns should somehow be accommodated in the Platform.

This in mind Labor should commit to these concrete measures in its Platform:

·        Develop concrete ‘civics and citizenship’ and ‘political literacy’ content at a Secondary level ; especially in years 11 and 12. And provide incentives for students to undertake at least one Humanities and/or Social Sciences subject in each year of years 11 and 12.

·        Support Liberal Arts, Music, and Professional Writing Courses in TAFE and if viable in Adult Education (eg: CAE)  Promote these as potential pathways to Tertiary study.  Reform the Liberal Arts curriculum to better incorporate and include questions of ‘political literacy’ ; understanding the values, interests and ideologies underpinning social movements and political parties.  Incorporate an ‘Issues’ component in Professional Writing and Editing – to potentially prepare students for a career in journalism.

·        Perhaps develop courses in political literacy open to all citizens: not only as ‘pathways’ but also because of the intrinsic value of enabling citizens to cultivate their talents in all directions – including political literacy and active citizenship.

·        Set in place incentives (positive and negative incentives) to encourage Universities to support the Humanities and Social Sciences – as they are central to the viability of our Public Sphere ; and hence the viability of our democracy. Take action to stem and reverse the decline of the Humanities and Social Sciences in our Universities.

·        Encourage course structures which enable Tertiary students to undertake supplementary Humanities and Social Sciences content if they so choose ; perhaps at a heavily discounted rate ; with the aim of enabling deeper personal development ; and a civil society comprised of informed citizens.

Dr Tristan Ewins

ALP member of over 20 years ; February 2017

Tony Abbott playing "Robin Hood in Reverse"

Tony Abbott:  Is this what Australians Voted For?

Tristan Ewins

During the 2013 Federal Election Campaign the Liberal camp attempted to play down Labor suggestions of their ‘cutting to the bone’ on attaining government as ‘fear mongering’.  But now – with the Abbott government ‘settling in’ it is becoming clear that austerity will follow – even amidst the most gratuitous middle class and corporate welfare.  The Abbott government is playing at ‘Robin Hood in Reverse’ – as a number of observations demonstrate.

On November 6^th ‘The Age’ and the ‘Herald-Sun’ reported that the Abbott Coalition government was going ahead in its restoration of Superannuation tax concessions for those very few (16,000) who make over $100,000 a year from superannuation investments.   The cost of this largesse is no less that $300 million in public money – which will largely be made up from attacks on vulnerable Australians, and 3.6 million of the most lowly paid workers.  This includes removal of superannuation concessions for those low-paid workers.   The Liberals say this is necessary to pay for shelving the Minerals Resource Rent Tax. But they have prioritised tax concessions for the wealthy over tax concessions for the working poor. 

Other Liberal measures include the restoration of Private Health Insurance Rebates for those on high incomes – with the removal of Labor’s means test.  According to their own figures, restoring the Private Health Insurance rebate for wealthy Australians will cost the Liberal government over $3.8 billion. Even given the Liberals’ preferred framework of private health insurance rebates, an alternative could have been higher subsidies for those on lower incomes, and the removal of penalties for welfare dependent and low income Australians whose private health insurance lapses.  But again: the Liberals are in the business of taken from the poor and giving to the wealthy.

Further, the Liberals have not committed to the full implementation of the Gonski education reforms, with no commitment to the final two years of the program. (ie: when most of the funding was to be concentrated; hence depriving state schools of billions in funding)   Labor’s ‘schoolkids bonus’ – which delivered $820 per child a year for families - will also be cut.  The result is that the government must be seen as accepting (or promoting!) the trend towards a tiered education system: where an under-resourced state system is increasingly seen as the inferior option.  The ongoing leakage of students to the private system will only exacerbate this tendency – with its consequences for the life chances of opportunities of hundreds of thousands of disadvantaged students.  This will cost the country over the long run. 

Importantly, the government is also moving to save $4.5 billion by slashing our foreign aid budget – with a callous disregard for the most desperately vulnerable people on the planet.   In the same spirit the Liberals are poised to slash the country’s humanitarian refugee intake by 6,250 places a year to 13,750.

On the environmental front, the Coalition’s ‘Direct Action ‘ emissions reduction policy will ‘rob Peter to pay Paul’ – in the sense that money returned to taxpayers from dropping the Carbon Tax will be taken back by the government through other taxes to pay for the new policy.  Rebates for micro-renewables are to be cut; as well as billions in funding for the Clean Energy Finance Corporation, and for other renewables research.   Specifically the program – including investment in ‘soil carbon’ and ‘positive incentives’ (ie: subsidies - but with no guarantees!) for business is estimated by the government to be costing tax payers just under $2.9 billion. But independent research shows the program will need a minimum $4 billion extra to meet its (already modest) targets. 

Labor must pressure the government not only to adopt a cap on pollution via an Emissions Trading Scheme (ETS), but to pursue more genuine and robust ‘direct action’ – funded progressively. The abolition of the Clean Energy Finance Corporation is short-sighted; and generous feed in tariffs for energy, and public investment in renewables research and infrastructure could make a real difference.  The Carbon Tax was good policy – producing results on emissions reduction.  But it has been rendered politically impossible given Gillard’s 2010 pre-election promises; and Abbott’s ruthless disinformation campaign.

The government blames the carbon tax for cost-of-living pressure in energy – but like Labor and even the Greens - will not face up to the role of privatisation. (ie: duplicated administration and marketing costs, profit margins, higher cost for finance etc)

Meanwhile Abbott’s Paid Parental Leave scheme aims to provide six months leave at full pay for some of the country’s richest women:  those on $150,000 a year.  Though amendments by the Greens could see a ceiling for women on $100,000/year – with the consequence of a $50,000 maximum payment over six months.   ‘The Australian’ argues that  “the new flagship paid parental leave scheme will cost $5.5 billion a year” – as opposed to $6.1 billion as originally intended.   A fairer cap on the scheme would be $35,000 – or six months full pay for working women up to $70,000/year. (close to the average wage)  Perhaps Labor should support such a policy.

Here, the Coalition’s levy on big business is welcome. But it could be far better spent:  on national aged care insurance for instance.  And it makes little sense in the context of larger Company Tax cuts (another 1.5%; costing about $5 billion ‘over the forward estimates’), further entrenching a culture of corporate welfare.  

While Abbott believes this will create some private sector jobs, it will undeniably cost public sector jobs. For instance, big Centrelink cuts will cut deep into the quality of customer service – with the return of ridiculous waiting periods of over an hour for clients seeking assistance.  How can Abbott ‘come down hard’ on poverty-stricken job-seekers at the same time as ‘taking the rug from under them’ in terms of support?

Interestingly also, Australian Company Tax is significantly below US levels, and the forsaken revenue from Company Tax cuts must be made up elsewhere – as otherwise services, welfare and infrastructure cannot be paid for.  Insofar as corporations benefit from services and infrastructure – the consequence is ‘corporate welfare’ – in the sense that ordinary taxpayers are subsidising corporations. That is – they are making up for corporations’ proper share of the tax burden.

At the same time Abbott is on the verge of withdrawing  government support for the car industry – with a projected $500 million in cuts.   Estimates hold that this move could see unemployment rise by 1.5%, costing the economy $21.5bn a year. And while car industry support may also be seen by some as another example of ‘corporate welfare’ itself, it is a special case – because of the multiplier effect with regards jobs, and the fact that core jobs are relatively high-wage compared with manufacturing elsewhere.  The skills and capacities are also of strategic value for the Australian nation. 

Meanwhile, the Liberals have signalled their intention to significantly increase Defence expenditure: at a time when they are claiming a ‘budget emergency’ as a rationale for wide-ranging austerity. And yet previously announced Gillard government subsidies for Aged Care workers will be withdrawn in an attempt to undercut unions: with the probable consequence that the sector will lose more skilled workers; and aged care residents will suffer the consequence.

Abbott has declared that:  "the carbon tax will go, but no-one's personal tax will increase and no-one's fortnightly pension or benefit will reduce.

It is beginning to look unlikely, however, that welfare will remain untouched.

There is a uncomfortable reality that both the Liberals and Labor were reluctant to talk about during the election campaign.  When fully implemented, Disability Care Australia will peak with a price-tag over $22 billion, with roughly half coming from the Federal Government.  What is more, an ageing population and a growing population must mean additional expenses when it comes to health, aged care, and infrastructure.

All this is by no means unmanageable or unfundable with an economy valued at over $1.6 Trillion. And certainly a regressive GST is not the only option. Removing superannuation concessions for the wealthiest 5% would bring in about $10 billion alone. But the looming crisis has consequences for an administration trying to ‘reduce the size of government’ as an Ideological imperative. Those consequences are especially dire in the context of a previously highly-targeted welfare state – under siege from middle class and corporate welfare.  It means some already tight welfare provisions stand to be narrowed even further – with the most vulnerable and disadvantaged of all paying the price.But as this author has argued elsewhere:

“Looking back to the 1950s it is interesting to note that the conservatives and ‘centrists’ of that time were often more ‘radical’ on the economy than today’s avowed social democrats: and even of some avowed members of the Socialist Left.”

 Specifically, a “social market” model was adopted by the German Christian Democrats in the 1950s”. This included providing for a mixed economy, social wage and welfare state. Not a ‘traditional socialist economy’ by any means. But at least the poor and vulnerable were not sacrificed for the sake of corporate and upper middle class interest, and/or ‘Ideological purity’. (Aarons, Routledge, 2009, pp 33-34)

The time has come for Abbott and other self-avowed Christians in the Coalition to search their consciences. The time has come to confront the fact that given the developing social and economic pressures, ‘small government’ at all costs is neither compassionate, rational or just. 

Budget 2013: An Analysis of Labor's Budget, and of Abbott's reply

 

above: Treasurer Wayne Swan has delivered a Budget that could have been worse; but also could have been better. 

In the following article Tristan Ewins examines the pros and cons of Labor's 2013 Federal Budget. Labor's timidity in key areas of reform (eg: superannuation concessions) is confusing given its willingness to withdraw benefits from some low and middle income demographics.  But there are some very good policies here as well - even though Gonski has been 'watered down'. Nonetheless, there are clear divisons between Labor and the Conservatives; and hopefully these will be cast into greate relief as the election draws nearer.

Tristan Ewins

The 2013 Federal Budget was neither what it could have been, nor what it should have been.  Labor faced an unenviable task with a $60 billion revenue shortfall over four years- linked with the high dollar, declining terms of trade – and wavering business profits as a consequence.   This impacted on Company Tax receipts especially. Reduced revenues from the mining and carbon taxes certainly didn’t help either; though Labor was too timid or too pragmatic to restructure and revivify either. 

Labor had options – which we will discuss later – to bypass austerity entirely while actually better containing the deficit. But they chose not to go down that path for fear of ‘getting on the wrong side’ of vested interests.  On the good side, Labor did decide to limit austerity.  Cuts have not been so severe as to lead to a European style scenario of negative growth and mass unemployment.  For this (parts of) ‘the business community’ are happy: as increased consumption power is in their interests (or at least for those focusing on domestic consumer markets), even though business tends to oppose social welfare as a rule.   (in order to ‘make room’ for further tax cuts that add to their bottom line)  The overall dimensions of this Budget include cuts of $6 billion over four years and increased revenue of $29 billion of the same period.

First we will summarise Labor’s cuts in more detail.   

Decreases in Medicare coverage will hurt some on low incomes and represent a step in the wrong direction.  And while changes to superannuation will reduce concessions for the richest of all and bring in $800 million over four years – this is not anywhere near what was necessary – or what was possible if the government had targeted a broader base of genuinely wealthy Australians.

Higher Education cuts are in the vicinity of $2.3 billion.  The worrisome truth, here,  is that having locked itself in to a policy of small government and low taxes the Government  decided to reprioritise rather than provide new money in order to fund something anything like what the Gonski review had recommended.  The result of was the sacrifice of university scholarships valued at $2000 – which were transformed into ‘loans’, as well as the rescission of options to repay HECS (Higher Education Contribution Scheme) upfront at a 10 per cent discount.  The latter will mainly affect reasonably secure families – as for the disadvantaged upfront payment could be unmanageable in any case.  But the $900 million ‘efficiency dividend’ will put pressure on the wages of academics and other education professionals, while perhaps resulting in more course closures.  There are already predictions that Sydney University will be required to slash $44-$55 million, while Wollongong University has predicted $14 million in cuts and foreshadowed further staff reductions.

Not just middle class welfare, but middle income welfare (as Tim Colebatch argues) is set to go.  This is classic Labor policy –at least since the Hawke years: making do with less through extensive and narrow targeting of welfare.  But some of the cuts are regressive.   Here it is interesting that Labor has chosen to crack down on welfare  for those on average incomes, but shied away from reducing superannuation concessions for the top 5% or 10% income demographic – which alone could have taken care of the deficit – bringing in between $10 billion and $20 billion.

So Labor has not quarantined ‘middle income Australia’ from its cuts.  But by some analyses  middle income is not the same as middle class.  Surely more reforms aimed at recouping revenue from the top 10% income demographic would have been fairer – though the reality is that we need a broad enough tax base to bring in the necessary revenue to maintain health, education, welfare, infrastructure etc.

Family Tax Benefit A – intended to assist in child rearing - has been also targeted.  The Costello-erea ‘baby bonus’ has been wound back.  Low income groups who would have benefited from carbon tax compensation will also find that some of that compensation – in the form of tax cuts – has been withdrawn.  (a more regressive decision) This is disappointing because regardless of the fact of a falling carbon price with moves to a ‘market carbon trading system’, progressive changes to the tax mix would have been of great benefit to workers and the poor in any case.  

Notably the policy of mandatory detention of asylum seekers – supported by both the major parties – has itself resulted in a blowout of over $3 billion.  But so long as Abbott plays the fear card on refugees Labor can be expected to emulate Coalition policy in order to neutralise or minimise any political benefit.

Now for a range of other policy initiatives – some of them quite welcome.  Although many of them have not been taken far enough.

An increase to the amount of money that those deemed unemployed can earn in casual labour before their benefits are effected has risen by about $20 a week. This is a good initiative: but not going far enough; and not lifting the unemployed out of dire poverty.  (which in principle is supported not only by welfare organisations, but even by elements of the business community.)  A $50/week increase in Newstart remains an urgent priority.

There have also been boosts for cancer research and treatment, and a scheme to assist seniors to ‘downsize’ their home  - moving into smaller and more “manageable’ residences is very welcome.   This is welcome; but further progressive action could involve the removal of taxes such as stamp duty  from low-income  Australians also wanting to move in to cheaper accommodation.  Stamp duty is a state tax; but the states could be encouraged to implement such a policy in return for compensation from the Commonwealth.   

Labor is promising public money for transport infrastructure – but probably much of this will be in the form of Public Private Partnerships.  It is likely, therefore, that some new projects will take the form of toll roads and the like.  This is likely to have  a regressive distributive effect.

Though hopefully  the decision to invest $4.6 million in “an institute for ageing” could lead to more robust and fair aged care policies into the future.

And importantly – Labor is recouping $4.2 billion over four years by closing business tax loopholes – certainly a more welcome initiative than further austerity.

But Labor’s big policies remain disability insurance and the so-called Gonski reforms.

According to ‘The Age’ (May 15^th 2013)  - when fully implemented by 2019-20 disability insurance will have  a price-tag of about $22 billion – covering over 450,000 disabled Australians.   In order to provide funding there will be a 0.5% increase in the Medicare Levy – though arguably more robust action is necessary on the tax reform front to fund  the program over the long term.   These increases to the Medicare Levy are welcome, though further progressive tax mechanisms to provide funding would have been more welcome.

The government is set to provide 50% of the funding for the NDIS (renamed Disability Care Australia) – though when combined with the education reforms it is doubtful that the states can afford this without further federal grants – or further state-level ‘reforms’ – with user pays infrastructure, or increased state taxes.  Disability insurance is a massive and overdue reform – providing support, amenities and services to some of those who are in the most need.  But even the Liberal states had been arguing for tax reform in order to consolidate their fiscal position. (though of course they were Ideologically driven to demand a regressive increase in the scope and coverage of the GST, rather than fair reforms elsewhere in the tax mix)

The Gonski reforms have also been dramatically watered down.  Though nonetheless they remain substantial.  While originally the Gonski Review called for an increase in funding of $6 billion a year, the government is promising only $9.8 billion over six years.  Some money will be redirected from other schemes, and again there is the expectation that the states will ‘come to the party’.  When combined with projected State funding the Commonwealth expects total funding of $14.9 billion over six years – compared with the initial vision to expand education funding by more than twice that amount.  The changes to the funding mix are apparently more progressive, however, with loadings  targeting the inclusion of students from disadvantaged backgrounds –whether the consequence of poverty or disability.

The Abbott response

In response to the Labor Budget Abbott talked of a “Budget Crisis’ created by ‘Labor mismanagement.’  This might go down well with some people who don’t want to scratch far beneath the surface.  But the reality is that the high dollar has been central to the Budget’s deteriorating position.  And for Abbott’s part he shared the position of not intervening to lower the dollar in order to mitigate poor terms of trade, and the disaster for manufacturing.  Arguably intervention is warranted in exceptional circumstances.  And furthermore, Abbott’s opposition to a more robust mining tax deprived the government of the funds that may have been employed to effectively subsidise affected industries in manufacturing and tourism especially – keeping them viable until the end of the mining boom, and a drop in the dollar.  This was important to prevent skills and capacities being lost over the long term.

Abbott and the Conservatives have also been complaining about Labor’s ‘out of control spending’.   And they are talking about a ‘simpler’ tax system – which almost certainly translates into more regressive flat taxes –(eg: an expansion of the GST, and its extension to food) with a redistribution of wealth from the real ‘battlers’ to the affluent.  Here, the Australian Conservatives are taking a leaf out of the extreme US Tea Party’s book.   And for Abbott it is a betrayal of his Democratic Labor Party past.   While the DLP sabotaged Labor for years, and were not a friend of Labor,  they were not neo-liberals and believed in social welfare. But Abbott will say and do anything to get the ‘top job’.  The Americanisation of Australian politics is a real threat:  and the Liberals seem to see the US ‘ideal’ of harsh social stratification as something to aspire to and emulate.

Also, Abbott’s rhetoric proves to be hollow when subjected to scrutiny. As Tim Colebatch points out (The Age, May 15^th 2013) “Revenue this year is forecast to be 23 per cent of GDP, compared with the Howard Government’s post-GST average of25.4 per cent. And spending levels are pretty much identical.  And amazingly - in Melbourne’s ‘Herald Sun’ Jessica Irvine was allowed to make the observation that Labor “inherited a structurally flabby Budget from the Howard Government, with too many cash handouts and unsustainable tax cuts.”   And:  “The Budget would be in surplus today if personal income tax rates had not been cut [under the Howard Government) eight years in a row.”  (Herald-Sun, May 15^th, 2013) 

Why is Costello’s record therefore not examined more rigorously?   On the Howard/Costello watch the housing bubble rendered home ownership an impossible dream for many.  The privatisation of Telstra left subsequent Labor governments in a position of having to ‘pick up the pieces’ and pay a high price for access to Telstra infrastructure for the NBN. The benefits of the mining boom were squandered with unnecessary middle class welfare and unsustainable tax cuts.

Abbott has also attempted to rationalise his Parental Leave for the wealthy scheme by comparing it to annual leave.  There is a significant difference, however.  While many Australians only get 2 weeks annual leave, Abbott’s scheme will provide SIX MONTHS leave on FULL PAY for professionals earning $150,000/year.  True, Abbott is sourcing the funds from a levy on big business – But the money could be prioritised for areas of greater need.  The ultimate effect is a redistribution from more vulnerable groups to the wealthy – as Abbott’s largesse with Parental Leave will be mirrored by austerity elsewhere.

Other projected Abbott policies include more punitive welfare in the form of Work for the Dole, and the removal of the Newstart  (threadbare) ‘safety net’ entirely for under 30s.  A layer of desperately unemployed – a ’reserve army of labour’ – will undermine workers’ organisation and bargaining power.  And perhaps for the Conservatives that is the point!

We can also expect an inferior version of the National Broadband Network; as well as assaults on the rights of labour including organisational rights; cuts to welfare; and the rescission of superannuation co-contributions for low income workers. 

Abbott is still maintaining a 'small target' strategy; and most of the media is providing precious little scrutiny.  Should he attain government, the austerity could well extend further than even this author supposes!

Lessons for Labor

There are several areas in which Labor could have taken a proactive stance – minimising the deficit, preventing austerity and actually expanding the social wage.

A more rigorous mining tax could have brought in perhaps $6 billion. Reversion to 75% Dividend Imputation could have recouped perhaps another $6 billion – or perhaps $12 billion if reverting to 50% as once advocated by renowned Australian economist John Quiggin.  Restructuring income tax should also be an option; as should a tax on inheritances over $2 million.  Cutting superannuation concessions for the wealthy and the upper middle class could have captured between $10 billion and $20 billion.  Talk of ‘taking pressure off public pensions’, here, is a furphy – as superannuation concessions alone are now costing more than the entire Aged Pension Budget.  Again: we have a policy redistributing money from ‘battlers’ to the wealthy.

Arguably Labor’s timidity was unnecessary.  The government is withdrawing payments from low to middle income groups – but somehow thinks it could not have raised further revenue from the top 5% to 10% income and wealth demographics.  Why back away from such reforms when they would target only a wealthy minority; and when they would provide the scope for massive expansion of Australia’s social wage and infrastructure – the benefits of which should be plain to voters?

Also importantly – Labor could have mimicked Abbott on one crucial point: his 1.5% levy on big business.  Abbott could hardly have complained given his own policy, and Labor could have directed the money into areas of much more acute human need – for instance, aged care.  It is still not too late to develop just such a policy and seek a mandate for it at the coming election.  Such a policy could well be very popular!

With perhaps over $30 billion from such initiatives-  that is, were they all implemented to the fullest extent – a surplus may even have been achieved for the coming year.  Though that would be a political objective; as in reality the precariousness of the world economy demands a more fiscally expansionist stance.   Gonski could have been implemented in full.  And comprehensive Aged Care insurance could have been rolled out on similar principles to Disability Care Australia.  Finally, resources could have been provided for the States – maintaining health funding; maintaining equity in provision of health services; providing further resources for public transport and other infrastructure without regressive user pays mechanisms or even privatisation of roads…

Policies of ‘small government’ will only lead to more Public Private Partnerships, and perhaps outright infrastructure privatisation for which consumers will pay the price. 

Instead, Labor should go to the election heralding further action on the social insurance front.  And while following through with its education and disability reforms, Labor must promise a multi-billion dollar annual investment (new money) for Aged Care services.

Indeed it is not too late for Labor to further re-emphasise social insurance as a central theme for the election.  If Abbott could be pressed to accept disability social insurance, the right kind of articulatory strategies by Labor could drive him to accept Aged Care insurance as well.  If Labor loses the election – but manages to dictate the policy agenda in such a manner – then even in electoral defeat it would comprise a kind of victory. The suffering of our aged citizens – especially those in high dependency care – is an obscenity to the extent it could be ameliorated – but is not – because of ‘other priorities’.   I have argued for such action in previous articles here – and for any who have not read this material yet I urge them to read the following:

http://leftfocus.blogspot.com.au/2009/02/another-look-at-aged-care-crisis-call.html

Again: There is relief that (in Julia Gillard’s words) Labor “has not cut to the bone”.  But the Budget is not all that is could have been, nor what it should have been.   Failing to extensively reform superannuation concessions was the key capitulation in the face of vested interests..  Hopefully, though, Labor will press the themes of tax reform , social insurance and social wage expansion further in the following months, and seek a mandate for progressive change.