Recent Observations on the Media ; And Observations on the ALP's Policy Trajectory

above: Bill Shorten needs to focus more on Policy Substance and Depth; 
Very Little is possible without a serious commitment of resources

What follows is some commentary on recent material from ‘The Age’, ‘The Herald-Sun’ and the “Border Mail’, as well as a critique of Labor’s current lack of a strong policy on tax and superannuation concessions reform…. Readers please feel welcome to debate the issues here and share with your friends and networks...

Dr Tristan Ewins

Cash Splash?  How a ‘throwaway line’ offends both our values and our intelligence

 

i)                    ‘The Age’ should have been more careful with its rhetoric in relation to  the Gonski education reforms. (‘The Age’, 29/12/15)  In particular the term ‘cash splash’ is highly questionable.  Of recent years the term has been deployed heavily, with the obvious inference that the public spending associated is ‘frivolous’ or ‘wasteful’.  Indeed the term has consolidated the neo-liberal Ideological assumption that public spending generally tends to be wasteful.  But Gonski is anything but wasteful. The Gonski initiative and its associated funding are crucial in stopping the drift to a highly stratified education system; where the state sector becomes ‘residual’ and ‘second class’.  That is: only for those who cannot afford better.  By contrast Gonski has as its assumption that this drift must be halted, and that all students should have the opportunity to realise their full potential. There are economic reasons for this (training tomorrow’s workforce) – but the social and cultural ramifications are just as important.  Journalists for ‘The Age’ should be more careful in the future.  Gonski is anything but a ‘cash splash’, and ‘The Age’ should from now on be more careful in realising the ramifications of this kind of rhetoric.   (letter to ‘The Age’; edited version published)

 

A Surprising Position on Tax Reform in the Herald-Sun of all Places!

 

ii)                  It is good to see the Herald-Sun considering options for fair tax reform as opposed to austerity.  Capital Gains Tax discounts and Negative Gearing provisions are already set to cost around $20 billion year as Kara Vickery’s article (14/1/16, p 15) indicates.  But there are other options for government in containing the $40 billion/year deficit.  Dividend Imputation (rarely applied outside of Australia) could also be wound back for another $20 billion a year.  And a more rigorous winding back of unfair Superannuation Concessions for the wealthy and upper middle class could bring in well over $20 billion a year. Finally there are other options to actually expand investment in infrastructure, education  and health, fair welfare, and more.  Company Tax could be held steady. (already at 30% is lower than the Amercian rate) The Medicare Levy could also be increased and restructured – and channelled into Aged Care and Mental Health. And for the sake of fairness bracket creep for low and average income Australians could be contained by indexing the bottom thresholds.  Austerity is not the answer to the deficit – and would only hurt the economy , and at the same time some of our most vulnerable Australians.  (letter to ‘The Herald-Sun’ ; not published)

 

 

iii)   Interesting Position from NSW Labor Leader Luke Foley on the GST

The ‘Border Mail’ recently observed that:  “Opposition Leader Luke Foley [said] he would consider supporting an increase in the GST from 10 to 15 per cent as long as the funds were used solely for health and education and to compensate low-income earners.  NSW Conservative Premier Mike Baird seems to agree.  But the ‘Border-Mail’ also observed that:

“federal treasurer Scott Morrison insists any potential GST increase must also be used to fund income and company tax cuts”

In response I would argue the following:

A package including but not limited to the GST and other measures can be made 'progressive' depending on the compensation. If the compensation is strong enough the poor could even end up better off. (ie: if an increase in the GST pays for big improvements in welfare, targeted tax concessions etc) The problem, though, is that taxpayers tend to focus on INCOME TAX.   And if we cut the income tax of people on low incomes, for instance (in order to compensate), later down the track that will come under pressure as a consequence of high income (and potentially even some middle income) resentment.  Any increase to welfare could also come under pressure in such a way.  The focus will be on the simple rates of welfare (without considering the place of compensation in the total package), as well as the cost to the Budget and so on.  AND before you know it that compensation is whittled away! That is: both tax credits, income tax restructure, increases in welfare.... So in the end – over many years - we have a reversion to the full impact of the increased GST re: its distributive effects. Those on low incomes especially will be hit hard. Which is why we need to communicate this fact to Foley and others who think raising the GST could be a good idea.

This is not to suggest, however, that we should not try and raise welfare and lift people out of poverty.  But a big restructure of income tax as compensation for an increased GST would definitely face a significant threat of being wound back over time.  Possibly through another restructure later down the track.  And possibly because of bracket creep. (if there is not indexation of the lower thresholds)

There are alternatives, however: Tackle negative gearing; reduce dividend imputation, wind back capital gains tax concessions; maintain company tax; raise and restructure the Medicare Levy; introduce a financial transactions tax; withdraw superannuation concessions for the wealthy and the upper middle class; impose a super profits tax on the banks; introduce new progressive property taxes, modest inheritance taxes for large inheritances...

Indeed the measures listed above could potentially bring in $60 billion or more.

I can see how if the specific model of change pondered by Foley was implemented it could have good outcomes short term. But I'm just saying the progressive distributive changes would be whittled away over time. And eventually the effect would be regressive.

 

iv)                But isn’t Bill Shorten promoting strong reform on superannuation concessions?

 

Well, No.  The superannuation concessions reforms currently proposed by Bill Shorten currently are VERY modest.  The suggested reforms could even be dismissed as being ‘cosmetic’ in ‘the big picture’.  Shorten proposes cutbacks in concessions only for the wealthiest of all: "$14 billion OVER TEN YEARS" (that is: $1.4 billion a year by today's reckoning)  By contrast Richard Denniss of the Australia Institute believes the cost of Superannuation Concessions will soon balloon to OVER $50 BILLION EVERY YEAR.  (ie: by 2019)   And the deficit is currently in the vicinity of $40 billion a year.  To get a sense of proportion the economy is valued at approximately $1.6 Trillion.  So Bill Shorten's proposed superannuation concessions reform amounts to about 0.01% of GDP – and probably proportionately less when you factor in economic growth.  That is: it is so modest as to be considered trivial.

All this means that a Labor government will be under enormous pressure to introduce austerity. At this rate there could be cuts in pensions, an increase the retirement age, and so on.  Or they will ‘sit on the deficit’ and attract massive flak from the Conservatives.

At the ALP Socialist Left Forum Facebook Group one contributor inferred I should just get behind Labor’s costed policies, and that criticism was simply succor to the Liberals.

But the ALP Left is more than a 'cheer squad' for opportunistic policies that are about appearance and not substance.  I am saying that once we step back from the heat of the rhetorical policy battle - there is not enough SUBSTANTIAL difference between us and the Libs on policy yet. (though there are notable differences on Penalty Rates for example)

NOW if you want to talk about ALP Policy - I understand the PLATFORM does NOT lock us in to 'small government'. But understand that as things stand - without a change of direction - we won't have the fiscal ‘room to move’ to fully introduce Gonski and NDIS - let alone other absolutely critical reforms like:

·         National Aged Care Social Insurance on a similar scale to NDIS

·         reform of welfare to lift the most vulnerable out of poverty

·         full integration of dental, optical, physio, psychology, hearing aids, speech therapy, urgent cosmetic surgery -  into Medicare

·         increase proportionate and absolute funding for mental health

·         Begin a fully-funded program to ‘close the gap’ on mental health related  life expectancy - just as critical a priority as ‘closing the gap’ re: indigenous lifespan

·         A big investment in public and social housing

·         Maintain a retirement age of 65

·         Restructure HECS to approximate something like a genuinely progressive tax

·         Big public investments into infrastructure: transport, energy, water, communications, hospitals, schools, ports and more

·         Bolster Legal Aid

·         Kickstart a process leading to a negotiated Treaty with indigenous Australia

·         Big public investment into renewable energy research and infrastructure

Without root and branch reform of tax and superannuation concessions pursuing even a modest selection of said policies (above) would mean either extensive austerity elsewhere, or a ‘sit on our hands’ attitude to government. (neither of which are acceptable)  ‘One step forward, two steps back’ is not enough , and the prize of government is not sufficient if there is so little progress on the policy front.

I want a REFORMING LABOR GOVERNMENT. I want 'the forward march of labour' to get moving again.  A trajectory of progress.  Is that too much to ask?

Responding to Kim Carr on the ‘Socialisation Objective’

 

Above: ALP Socialist Left Senator Kim Carr is right to take NSW Labor leader, Luke Foley to task for rejecting the ALP's 'socialisation objective'; But he is wrong in his apparent rejection on an 'extensive' public sector.

The socialisation objective is about more than nationalisation ; but extensive and strategic social ownership needs to factor into our plans and principles.

Tristan Ewins

In ‘The Age’ on August 9th 2015, Socialist Left Labor Senator Kim Carr provided a statement in defence of the ALP’s standing Socialist Objective.   That includes the ‘socialisation objective’ specifically which (originally in 1921) committed Labor to the following:

‘‘The Australian Labor Party is a democratic socialist party and has the objective of the democratic socialisation of industry, production, distribution and exchange, to the extent necessary to eliminate exploitation and other antisocial features in these fields.’’

He also relates how in 1981

“23 explanatory subparagraphs were added to it. These set out goals such as full employment, the abolition of poverty, a more equal distribution of wealth and the elimination of exploitation in the home.”

Carr places himself at odds with NSW Labor Leader Luke Foley – for whom the socialisation objective was ‘confusing’.   Foley was beginning from the assumption that socialisation means nationalisation – and that those defending it were simply engaging in obfuscation.  For Foley Labor ought ‘say what it means and mean what it says’.   If we are about ending exploitation, then in the Marxist sense this infers the abolition of wage labour.  This is important – as is the question of socialisation interpreted as nationalisation.  And we will come back to this later- to consider why the positions of both Foley and Carr are problematic.

For Kim Carr it is the more-recent explanatory paragraphs which communicate the true essence of the Party’s Socialist Objective.  Further elaboration or reformulation are thus considered not necessary.

Some commentators have argued to the effect that these ‘explanatory paragraphs’ rendered the Objective meaningless anyway.  But before proceeding it is useful to consider specifics.  Hence the following selection from that section of the ALP Platform in question:

"c) Redistribution of political and economic power so that all members of society have the opportunity to participate in the shaping and control of the institutions and relationships which determine their lives.

"d) Maintenance of and support for a competitive non-monopolistic private sector, including small business and farming, controlled and owned by Australians, operating within clear social guidelines and objectives.

"l) Equal access and rights to employment, education, information, technology, housing, health and welfare services, cultural and leisure activities and the law.

"j) The abolition of poverty, and the achievement of greater equality in the distribution of income, wealth and opportunity.

"n) Recognition and protection of fundamental political and civil rights, including freedom of expression, the press, assembly, association, conscience and religion; the right to privacy; the protection of the individual from oppression by the state; and democratic reform of the Australian legal system.

"p) Elimination of discrimination and exploitation on the grounds of class, race, sex, sexuality, religion, political affiliation, national origin, citizenship, age, disability, regional location, economic or household status.

"t) Recognition of the need to work towards achieving ecologically sustainable development.

"u) Maintenance of world peace; an independent Australian position in world affairs; the recognition of the right of all nations to self determination and independence; regional and international agreement for arms control and disarmament; the provision of economic and social aid to developing nations; a commitment to resolve international conflicts through the UN; and a recognition of the inalienable right of all people to liberty, equality, democracy and social justice."

Hence the Objective is really quite extensive and substantial, and it does not restrict itself solely to socialisation interpreted as nationalisation. Indeed it could be considered both politically liberal and democratic socialist as well in the sense of advocating universal social rights of citizenship.  The promise of moving towards equality of political and economic power suggests a radically redistributive project, but at the same time there is the important (and realistic) concession in support for a non-monopolistic, competitive private sector. 

This Objective – reformulated in 1981 to be inclusive of both the Party’s Left and Right could be interpreted after the way of Nordic social democracy, with the probable implication of supporting a comprehensive welfare state and social wage; a progressive taxation system; as well as appropriate industrial rights. But there is room for improvement.  Some of these could be spelled out more clearly and overtly. And the significance of socialisation interpreted either as occurring through the public sector – or through a more diverse ‘democratic sector’ including State Aid for co-operative and mutualist enterprise – is not elaborated upon sufficiently.

Kim Carr gives the impression that he believes Foley’s proposed Objective is “tepid” and weak – and could just as easily find a place in the Platform of the Liberal Party.  After all, who today disagrees with the principle of ‘equal opportunity’ – at least openly or ‘in theory’?  Carr gestures towards the true inequality of opportunities that persist under capitalism ; for instance the meaninglessness of any ‘freedom’ of individuals to negotiate terms in the labour market – where the only real strength of workers under these circumstances – their collective solidarity – is progressively undermined and even criminalised.  He argues that this:

“is like saying that a millionaire and a homeless person have the same freedom of choice to sleep under bridges”

And for socialists ‘equal opportunity’ must mean more than ‘meritocracy in the labour market’. As the Objective insists, it must include: “Equal access and rights to employment, education, information, technology, housing, health and welfare services, cultural and leisure activities and the law.”   Socialism implies progress towards the principle of ‘From each according to ability, to each according to need’.

Sure, the Liberals make a mockery of ‘equal opportunity’ in practice – supporting privilege in Education, and proposing deregulation where quality of education would depend upon user pays mechanisms which excluded the poor and much of the working class.  Chris Bowen has also gone a bit further, arguing for equality of outcomes in Health.  Bowen’s proposal of a ‘toothless’ National Conference; his apparent opposition to a robust mixed economy; his support for a simpler (ie: in reality less progressive) tax system –  are all disappointing. But support for real equality of opportunity in education, and crucially equality of outcomes in health - comprise a beach-head for something more progressive – and so this common ground should be capitalised upon.

Hence we desperately need to commit to a National Aged Care Insurance Scheme,  Medicare Dental, and ‘closing the gap’ on life expectancy of the mentally ill – ahead of the next Federal election.

Notably: because the Conservatives are progressively abandoning meaningful commitments to political liberty and civil rights, as well as genuine and comprehensive meritocracy through a more accessible and equitable regime of Education – that should not be taken as a signal to simply opportunistically occupy the vacated political space. (ie: the space vacated by the now-marginal Liberal 'Wets' faction)  Aspects of Greens policy have been depicted as ‘extreme’; whereas in reality they are closer to the legacy of Whitlam, say, than we are ourselves often in the ALP today.  We cannot accept these terms of debate ; and we cannot simply move to the Right and allow the Greens alone to occupy that political terrain. The Politics of ‘Convergence on the Centre’ are really self-defeating where it occurs on the terms of our Conservative rivals, and on the terms of an Ideological monopoly mass media.

If we are truly a democratic socialist party we must not only exist for winning elections as an end in itself.  We must be about contesting the very substance of ‘the mainstream’, progressively reshaping the discourse to shift the relative centre to the Left in keeping with our values.  Antonio Gramsci would refer to the formation of a  ‘counter-hegemonic historic bloc’ – an alliance of forces through which society’s ‘common sense’ is reconstructed as the substance of democratic socialism. Again after Gramsci this could be interpreted as a ‘war of position’ – taken in our own specific circumstances as a process of laying political siege to, and contesting the institutions of civil society and the state. Culminating in the democratisation of the State itself – so that the way is unambiguously open for ‘a democratic path’ to socialism.

Kim Carr concludes his commentary by elaborating on what socialisation means to him.  To establish this we will reproduce some of his closing comments on socialisation:

“It is not about the straw man of extensive public ownership and a centrally planned economy. But it is about public entrepreneurialism, and public investment in the forms of human endeavour that are necessary to build and sustain a democratic, just and technologically advanced society.

Socialisation is about defending a just minimum wage and fair working conditions. It is about the creation and defence of Medicare, the enhancement of a great public education system, and the construction of national infrastructure such as the Snowy Mountains Scheme and the National Broadband Network.”

 

While Carr’s support for public education, nation-building infrastructure and ‘public entrepreneurialism’ are encouraging, he himself appears to be conceding substantially to the neo-liberal Ideology.  That is: In the sense of implying support for ‘small government’ through rejection of an “extensive” public sector.  While Foley wants to get rid of the socialisation objective because he rejects any radical connotations, Carr seems to be implying that we sidestep or reject content associated with public ownership – content which could potentially and progressively challenge the current distribution of power and wealth under capitalism. (and hence a possible 'bone of contention' with capitalists) Though again: perhaps Carr is open to tax reform, as well as social wage, social insurance and welfare extension – all of which are central components of a democratic socialist agenda of ‘socialisation’. In this sense perhaps Carr is less enthusiastic about 'smaller government'. Here we could do with specifics – and policy ambition.

Few today support a Soviet model of centralised state planning.  But we should not close our eyes to the possibilities of strategically extending the public sector, and engaging in strategic instances of planning.  Neo-liberal Ideology rules out public and democratic sector expansion as well as socialisation interpreted as regulation where ‘the absolutism and prerogatives of capital’ are progressively curtailed.  (see the work of the Swedish social democratic thinker, Nils Karleby) But the old socialist Ideology aspired towards progressive nationalisation – potentially over decades.  In the 1970s socialists like Stuart Holland hoped that the ‘commanding heights’ of the economy would ultimately revert into public hands.  Today, though, we could well embrace the project of a ‘democratic mixed economy’.  

The ‘way forward’ to something along the lines of ‘socialising the commanding heights’ appears to be blocked on account of the dominant Ideology, and also because of the power of Capital to obstruct reform through destabilisation, capital strike, disinformation etc.  Indeed, this can be a corrupting influence upon democracies.  Here, while the sheer political and economic clout of the biggest transnationals is a genuine threat to democracy, working people and citizens nonetheless stand to benefit from jobs-creating-investment, and as consumers from various innovations in areas ranging from automotive industries to information technology.  While the scale of the transnationals is in some ways threatening – and we need to frankly recognise this - the economies of scale and competition involved can have benefits in these fields. Though there are also other problems (eg: built-in-obsolescence) which might be remediable through some form of regulation.  And global solidarity of labour is necessary to prevent the transnationals from simply exploiting the poorest and least organised workers.

And yet much of the old socialism remains instructive. Capitalism can be inefficient, unstable and wasteful. It can create conditions of exploitation and human alienation.  The expropriation of a portion of the proceeds from labour by capitalists remains morally problematic even though few on today’s Labor Left will openly discuss this. For genuinely small investors (eg: other workers) dividends may comprise a fair return in the context of making a sacrifice through deferring consumption. But in the bigger picture a portion of the value created by workers is expropriated by capitalists. (ie: Surplus Value) Workers generally do not enjoy the full proceeds of their labours. These arguments are commonly ignored simply because the consequences are potentially radical for a Left ‘on the back foot’ in a steady (decades-long) process of liquidating its own traditions in order to ‘Converge at the Centre’.  Here it was really Hawke and Keating who ‘led the way’ providing the ‘inspiration’ for Blair.   We need to retain a frank critique of capitalism even if the movement towards something better has currently stalled.

But the extension of the ‘democratic sector’ - including the important ‘subset’ of the public sector -remains important despite being at odds with the prevailing Ideology.  By ‘the democratic sector’ we refer not only to the traditional public sector, but also to a multiplicity of co-operative and mutualist forms, as well as democratic collective capital formation and other like-projects, as well as self-employment and co-determination.  These democratic economic forms and strategies can mitigate or indeed end instances of alienation and exploitation.  They can result in a more equitable distribution of wealth and the power that corresponds to this; and also give working people creative control over their labours.  

Efficiencies and reduction of cost-structures through natural public monopolies can also be capitalised upon – flowing on to the private sector and making better wages and conditions, and more progressive corporate taxation sustainable.  For instance: did we really ever need two sets of mobile telephony infrastructure?  And what price are we still paying for that duplication?  Indeed, ‘competition’ in areas such as energy, transport and communications infrastructure, water – are still deeply ‘anti-intuitive’, wasteful and unnecessary.  Hence it is possible to add to the current capitalism’s survivability while laying foundation stones for something better ‘long term’. 

An extended public sector specifically can lead to many other desirable outcomes.  Socialisation of profits via public enterprises in areas like mining, general insurance, private health insurance and banking could (in the Australian context) deliver tens of billions into welfare, infrastructure and social wage programs.  And a ‘not-for-profit’ footing could enable better pay and conditions for child care and other professionals who currently face extreme exploitation. Without getting into a long debate over the labour theory of value – public sector workers could be compensated fairly – but again, profits would be redistributed through the social wage, investment in infrastructure and services, and in welfare.  There would be no expropriation of surplus value, here, in the traditional capitalist sense. Though the redistribution of profits could appear to some to be diluting the return to labour. (that would not be a problem for some forms of co-operative enterprise for instance)  Government Business Enterprises and public infrastructure could also be administered in such a way as to cross-subsidise in favour of the disadvantaged ; but also to enhance competition where oligopolistic collusion would otherwise be a threat.

So indeed there are many arguments in favour of an extended public sector as part of a broader project of a ‘democratic mixed economy’.   Contra-Luke Foley - Let’s defend the Socialist Objective.  But let’s not dilute it to the point where it becomes merely token or symbolic.  Indeed let’s try and improve the Objective to make clear our aspirations for a democratic mixed economy; an expanded welfare state; a reformed tax mix and an expanded social wage.  Yet as against Kim Carr’s apparent aversion to an ‘extensive’ public sector, strategic expansion of the public sector remains important and valid, as does the spread of other democratic forms – such as co-operative enterprise – with assistance via State Aid.  Indeed, these together could comprise a ‘multi-pronged strategy’: a long-awaited Left counter-offensive against the dominant neo-liberalism.

Both neo-liberalism and the old ‘Communism’ have demonstrably failed.  We need to reject the prevailing intellectual fetish for ‘undistorted’ markets, privatisation and small government and return to the question of a democratic mixed economy with an open mind.

 

Nb: Several other essays on the theme of a ‘democratic mixed economy’ can be found here:

http://democraticmixedeconomy.blogspot.com.au/2013/10/what-is-democratic-mixed-economy.html