State and Market - a Democratic Socialist Approach

above: 'people power' - time to build a democratic economy

In this new essay Shayn McCallum explores the possibilities for a genuine democratic mixed economy; one profoundly more radical that the social market approach. Debate welcome!

nb: Readers can join our Facebook group too!! at: http://www.facebook.com/groups/102658893193637/

Current debates within the European socialist movement on the way forward for the Centre-Left, often seem to be centred on the unnecessarily narrow field of “state versus market”. Much of the debate revolves around questions of the “correct ratio” of state-to-market in the provision of public goods and services, with scant attention given to the political nature of either. Where an economic vision is articulated we see labels such as “decent capitalism” or the highly traditional “social-market economy” employed. Both of these terms however, borrow heavily from a terminology, and therefore a mind-set, which is not of the Left and which unnecessarily limits and restricts the thinking of social-democratic strategists and activists.


The work of George Lakoff and Drew Westen[1] into the neuro-linguistic dimension of politics reveals a great deal that is useful in considering the current weakness of the Centre-Left and its apparent loss of creativity and direction. In accepting the essence of the liberal world-view and limiting its criticisms of the liberal project to the details rather than the over-arching vision, social-democrats have been reduced to becoming the “annoying flea” of politics, creating little more than an irritation for the continuing (neo-) liberal agenda. It has proven relatively easy for conservatives and liberals in Europe and elsewhere to dismiss social-democratic complaints about the ruthlessness of capitalism as mere faint-heartedness or an unrealistic inability to face up to “what must be done”. What is worse, the social-democratic discourse reveals that they may suspect that their neo-liberal opponents might be right after all; thus, the unsure, excessively tentative, somewhat vacuous nature of much social-democratic discourse.


By adopting terms such as “good capitalism” to combat the “bad capitalism” of the neo-liberals, social-democrats are exposing themselves to the obvious response, common to both far Left and Centre-Right, that really “there is just capitalism” and adjectives such as “good” and “bad” are irrelevant or misplaced. For the hard-core economists of the Right, as much as the more economistic voices on the hard Left, speaking of “good” and “bad” capitalism makes as much sense as speaking of “good” or “bad” gravity or “good” or “bad” oxygen. The term is weak, ineffective and unambitious and fails to offer more than a limp moral critique of the system as it is. In fact, the charming vision of a virtuous, industrious society re-enshrined in the virtuous “real economy” of manufacturing and productive industry is not only a fantasy, it is, in many ways, a reactionary one at that. When ecological collapse is looming right behind the collapse of the unbalanced and excessive, increasingly-consumption driven, global economic system, producing yet more “stuff” is probably not the optimum way forward from where we are now. Short-sighted, populist attempts to revive the industrial revolution in the wealthy nations makes as much sense as trying to stop the Titanic from sinking by making the orchestra play more slowly. The era of unsustainable industrial growth, at least in the first-wave of industrialised nations, belongs to the past not to the future and this is, perhaps, one thing the “neo-social democrats” have got right.


The state we are in demands a much bolder response than a nostalgic appeal to the good old days of industrial growth. Terms such as “decent capitalism” or even the “social-market economy” are flawed, in that they create a conceptual framework that is inseparable from, and therefore unable to move beyond the basic framework of the existing system. In contrast, by adopting terms such as “economic democracy” or even “a democratic mixed economy” socialists would have the means to open up this currently truncated and inhibited conceptual framework and, potentially, take back control of the dominant discourse. Where capitalism, whether “good” or “bad”, is defined by certain structures and institutions that cannot, even must not be transcended or interfered with for fear of undermining the system itself (once the central goal of socialists not so very long ago) terms such as a “democratic mixed economy” at least open the door to the possibility of transcending the flawed logic of capitalism and “the market economy” altogether.


Not only “capitalism”, which, it should be pointed out, is a term originally coined by critics of the system and which has only recently been embraced by its aficionados[2], but also the term “market economy” (whether social or not) is a conceptual prison. The Delors-era social-democratic slogan of “we want a market economy, not a market society” is reminiscent of a caricature of a man being devoured by a tiger and, whilst half-engulfed in the tiger’s maw, pleads with the creature to eat only his lower half and no more. A market economy, in the sense implied by liberal theory, cannot but lead to a market society[3]. A “mixed” economy however, at least conceptually, has the potential of being a society “with markets” without necessarily being dominated by them.


Just to frame this concept so it can emerge from the level of rhetoric to the level of a concrete example, economic history reveals a myriad of examples of economic systems which employed markets without being dominated by them and without exchange and commerce occupying the central place in economic life. Indeed, for much of human history, commerce has existed as one among many forms of economic activity and it is only in the modern age that it has acquired such a uniquely pervasive influence. Feudal economies, for example, were essentially war-driven economies based on the control of land and commerce remained a highly secondary pursuit. Merchants were tolerated and or encouraged as a means to an end and it wasn’t until the vast influx of wealth from the new world, from the 1500’s on, began to undermine the feudal power structure and grant the rising merchant class a significant degree of political influence that the road to modern capitalism was opened[4]. Likewise, in the Islamic Middle-East, trade was an important pursuit and markets held an important place in the life of the cities yet, even here, the dominant economic engine was the demands of a militarised state. There was no market economy to be found in the Middle-East, although very sophisticated markets played an important role in the urban economic order. No matter how important markets may have been to pre-modern economies, these were always merely one part, mostly a subordinate part, of the broader economic and political context.


As Polanyi points out[5], economic relations are always embedded in (and have been historically subject to) broader social and political contexts. Capitalism therefore, may be perceived as an attempt to dis-embed the economy and grant it a central, autonomous and superior role in the construction and maintenance of society. This is, however (according to Polanyi at least, and history is yet to prove him wrong) an unworkable fantasy. The idea of the self-regulating market is just as mythical and untenable as the idea of a fully-planned, efficient communist paradise. In reality, all economies embody a variety of co-existing production and distribution systems and most have varied property forms. Even the most “capitalistic” economies, such as the U.S., clearly demonstrate these variances. The state and large corporations are intertwined in ways that make a mockery of Smith’s “invisible hand”. Capitalism, in short, means “the rule of capital” and markets are merely a vehicle to be used when profitable and to be ignored whenever a liability[6].


This definition of capitalism permits the, otherwise absurd, position of advocating free markets against capitalism. This highly optimistic approach can be found in the works of David Korten[7]and the theory of mutualism associated with Pierre-Joseph Proudhon, together with various theories of “market socialism”. Indeed, there are a number of political approaches which separate the market as a mechanism from the rule of capital. Although this “socialist reading of Adam Smith” is perhaps naïve and overly rooted in a near extinct class of smallholder artisans, farmers and entrepreneurs, the idea of a separation of the market from the rule of capital, although problematic, is not totally unreasonable as the existence of socially-embedded market mechanisms long precede the emergence of the capitalist political economy. As has been mentioned above, the self-regulating market is an ideological fantasy and does not approach the reality of capitalism which is increasingly exercised through highly-organised, bureaucratic trans-national corporations that employ markets as a tool. The problem of “markets against capitalism” however, is that the competition inherent to a market system inevitably creates winners and losers and leads to an evolutionary dynamic that, in a very short period of time, undermines the basis of the market itself (which is the essence of Polanyi’s critique of free-market ideology). A market-centred economy, regardless of its ideological foundations, appears inevitably to tend to support the emergence of capitalism at some point (a process somewhat demonstrated by real-world attempts to implement “market socialism”[8]).


Capitalism therefore, defined as the “rule of capital”, is, in every sense, at odds with popular sovereignty. If social-democrats accept “decent capitalism” as a goal, they are essentially pleading for capital to be decent as they are not capable of advancing any meaningful counter-power, such as powerful, well-organised trade-unions or citizens’ alliances to ensure this. In fact, the “decent capitalism” of the post-war Keynesian era, that forms the basis for this vision, was “decent” precisely because capitalism was compromised and partly balanced by a rising wave of democratisation. This democratic revolution was, unfortunately, undermined by circumstances and partially abandoned in the late 1970’s, at which point the neo-liberal counter-revolution seized the initiative. After WWII, capitalism was forced into an open-ended compromise with democracy, from the 1980’s onwards it has been busy undoing the bonds imposed by that era.


Just as it is impossible to serve two masters, it is also impossible to simultaneously uphold the power of capital and the sovereignty of the people. The unsatisfactory compromise offered by liberalism is to separate the political from the economic, leaving the economy to the abstraction known as the market (in truth, organised corporate interests) whilst parliaments elected by the people handle what remains of the political. In short, according to the theory, the “market” will see to employment, prices, wages and the distribution of essential and non-essential goods and services, whilst “democracy” need content itself with rulings on issues such as the permissibility of gay marriage, the criminalisation of flag-burning, gun ownership, abortion or other details of the social, cultural and political milieu. In such an environment, politics becomes a matter of flavour and preference with cultural issues substituting for questions of class power, redistribution or the provision of social goods and services[9]. That social-democrats have allowed themselves to be led down this path is a sad indictment of the robustness of socialist thought and strategy in the current era.


As Thomas Meyer points out[10], economic issues, issues of public welfare and economic justice give democracy its substance. If the liberal celebration of “negative freedom” (i.e. “freedom from” as opposed to “positive freedom” being the “freedom to” act or access something[11]) leads to little more than the “freedom” to be unemployed, homeless, ignorant or uninsured, there is good reason for adopting a more balanced and sober attitude. There is no point speaking of “freedom” unless people have the basis on which to enjoy that freedom and this can only be assured politically, by means of an active, participatory democracy that embraces all areas of public life.


Thomas Meyer roots his approach to social-democracy in the U.N. Universal Declaration of Human Rights and there is some merit in referring to this document. The Declaration attempts not to align itself overtly with any particular political or economic theory or ideology although it is quite explicit in its advocacy of a political and social democracy entailing a raft of full social and political rights. Indeed, the resulting document proves, in its fundamentals, incompatible with either capitalism or communism (as practised in the Soviet Bloc or China) but highly compatible with either democratic socialism or social-liberalism and, indeed, it was on this terrain that the post-war Western European political order was established. The emergent order was a compromise between socialism and capitalism which, although capitalism was always the dominant force, arguably also contained the (historically unrealised) potential also to evolve in a more socialist direction.

It is worthwhile remembering that liberals such as Keynes, although by no means socialists, were also very much disenchanted with capitalism, although they grudgingly tolerated its continuation as the least-bad of the available alternatives. The aim of Keynesian demand-management was the general welfare and it saw capitalism as a tool, a means rather than an end. Keynes’ economics were, therefore open-ended and evolutionary and, arguably, contained the seeds equally of what could become either a democratic socialist or a social-liberal approach.


Although the benign capitalism of the “social market economy” may have resembled, in practice, the social-democratic ideal of a “democratic mixed economy” in truth the intentions were, and are, different. The social market may be “social” but the market is the indispensable, central mechanism of the economy, albeit modified where necessary by the need for a degree of social justice (again, to the degree that it does not “distort” the market mechanism). The “democratic mixed economy” however is an open-ended evolutionary project which stresses democracy as its primary feature. Its goal is not mere benevolent capitalism but a terrain on which new, emancipatory forms of property and production are able to evolve and emerge. It does not seek to overthrow capitalism in a frontal assault, nor necessarily to entirely eliminate market mechanisms from the economy, but rather to tame them, then subordinate them to the general good where possible. The difference, in brief, is that the “social market” is conceptually rooted in the market and therefore limited by the demands of the market whereas a “democratic mixed economy” is conceptually rooted in, and limited by, the demands of democracy and social justice. In the former, the limits of the social are determined by the market whereas, in the latter, the limits of the market are determined by the social.

Of course, in the real world, assuming the basis for a new compromise could be created, there would be a competition in politics between the visions of the “democratic economy” and the “social-market” which was, indeed, the ideological cleavage separating the Centre-Right and Centre-Left in the post-war Western European political economy. The democratic Left begins from the assumption that its own vision must be fought for amidst a plurality of competing visions and approaches. Any democratic political project must be open-ended and subject to both advances and reversals. It is a pity that the large sections of the Centre-Left abandoned its own vision before it had even achieved the bulk of its goals, although there is still a chance it will find its way back home.


At this point, it is perhaps appropriate to remember the approach of Eduard Bernstein for whom the “movement (was) everything, the end nothing”. The end, for modern socialists, is perhaps not “nothing”, in that it helps to have a landmark in the distance by which we can measure our progress, although, the nature of social-evolution is such that there usually is no identifiable end that can be discerned as one victory endlessly opens the path to new struggles. The goal of the Centre-Left therefore ought to be to ensure that the direction of evolution be towards greater freedom, equality and solidarity. Getting trapped in the historical cul-de-sacs of specific systems or institutional frameworks, whether it be “state-socialism” or “decent capitalism”, is the passport to extinction. Socialists need to imitate life itself and embrace constant evolution, but they must never forget the direction they wish to evolve in if they are to avoid the fate of the dinosaurs and dodos of the past. In time, terms such as “democratic mixed economy” are bound to pass their use-by date and develop into hidebound clichés as reality continues to extend its limits and social-democrats, if they are even continuing to call themselves by that name by then, will once again need to adapt or die, but always, hopefully, on the path to ever more democracy, ever more equality, liberty and fraternity.


[1] Lakoff and Westen’s work strongly parallel and even largely duplicate each other. The most comprehensive exposition of their approach can be found in:
Lakoff, George (2008): The Political Mind: why you can’t understand 21st-century politics with an 18th-century brain, Penguin, NY
Westen, Drew (2007): The Political Brain: the role of emotion in understanding the fate of the nation Public Affairs, NY
[2] Professor Fred Block points this out frequently in his work on capitalism and social-democracy and particularly compellingly in a Miwon lecture he delivered to Kyung-Hee University, Korea on September 26 2011, entitled; The Origins of the Current Crisis of Global Modernity
[3] Articulated most clearly by Karl Polanyi, especially in his magnum opus The Great Transformation. See
Polanyi Karl (2001 (1944) The Great Transformation, The Political and Economic Origins of Our Time, Boston,
Beacon Press
[4] These ideas are explored widely in Polanyi’s writings on economic history and can also be found in Eric Hobsbawm’s writing on the era as well as in a number of other sources. There is a wide range of literature dealing with the Islamic Middle-East however, among the best is probably the 3-volume investigation on the political-economy of the Ottoman Empire by Halil İnalcık and Donald Quataert., see
İnalcık H & Quataert D (1994) An Economic and Social History of the Ottoman Empire, CUP, Cambridge
[5] Polanyi Karl (1944) op.cit.
[6] This is also mentioned by Polanyi but also widely commented on by a very wide range of other sources positioned on all points of the political spectrum. It was even acknowledged by former U.S.president Dwight D. Eisenhower in his musings on the “military-industrial complex”.
[7] David Korten is a leading proponent of a non-capitalist market economy. Most of his work embraces the central contention that capitalism is actually not a market system and that a “true” market economy is the solution. In many respects, his work is reminiscent of classical Proudhonian mutualism.
[8] Examples of this may be cited as the collapse of Yugoslav market socialism as well as the rather makeshift “goulash socialism” of communist Hungary but also the feeble market reforms of perestroika or state-capitalism of China and Vietnam. It remains to be seen how the emerging reforms in Cuba are likely to take shape.
[9] For an enthusiastic embrace of this process, see Thomas Friedman’s The World is Flat
Friedman Thomas (2005) The World Is Flat: a brief history of the twenty-first century FSG NY
[10] Meyer, Thomas & Hinchman, Lewis (2005 (2007) The Theory Of Social Democracy Cambridge, Polity Press
[11] The distinction between “positive” and “negative” freedoms here are based on the categories introduced by Sir Isaiah Berlin in his famous essay Two Concepts of Liberty.

Labor Left - Doug Cameron Speaks Up

above: Labor Senator and Left Convenor Doug Cameron

In this week's Left Focus Post we talk about Labor Left Senator Doug Cameron and welfare/social wage initiatives; As well as Labor's survey of supporters and members. Have your Say!!! 

Tristan Ewins

PART ONE: Doug Cameron Speaks Up

There was an Interesting statement from Doug Cameron in The Age yesterday – with the prominent Labor Left Senator and Left Convenor arguing for $11.5 billion in tax reform to provide for the National Disability Insurance Sceheme, ‘world class’ Aged Care and Gonski education reforms.

This is *very* welcome even though it is only half as much as we have long campaigned for at Left Focus. The priorities of NDIS, Gonski and Aged Care are very welcome. But arguably we need *more* ambitious and open voices on the ALP Left - arguing for a more ambitious agenda. $11.5 billion – or 0.75% of GDP - in new social programs would be the greatest ‘steps forward’ Labor would have taken in years. (which says something, because in the ‘big picture’ it would be a modest initiative)

But a quick look at the math demonstrates that $11.5 billlion is not quite enough. Ultimately the NDIS will cost about $7 billion; and Gonski would Cost $5 billion. And if presumably we're *serious* about improving Aged Care and removing regressive user-pays mechanisms - several billion would be necessary there also. So let's say we need at least $16 billion to achieve our ends here. That would require tax reform to the tune of 1% of GDP - 25% more than what Doug Cameron is proposing. If Labor were to achieve this then we would be bedding down some very serious reforms.

Yet if we wanted to be more ambitious still - and arguably more electorally viable (not less) - then let's assume we also require more Federal funds to bridge the fiscal gap and prevent the slide towards privatized infrastructure - including the private energy infrastructure which is driving a Cost-of-Living crisis. And Cost-if-Living is *the* big issue out there.

Even in the context of increased purchasing power those saying that ‘Cost of Living is not an issue for Labor’ need to take a second look. Consumer purchasing-power has had a temporary boost as a consequence of low interest rates and a high dollar. But this is in the ‘big picture’ of a declining wage share of the economy. It’s also in the context of an increasingly bi-polarised workforce – with many in poorly paid, insecure work.

So firstly: the high dollar and low interest rates mightn’t last. Secondly, with the cost of energy having skyrocketed by 40%; with massive increases in the cost of water also; people on low incomes are hurting immensely; and people on middle incomes are hurting as well.

The reason this is so objectionable is because we have consumers hurting across the board – but it is NOT NECESSARY.

Over at the ‘Labor Green Alliance’ Facebook Group, Labor supporter Matt McLeod has made well-intentioned claims that Cost-of-Living is “an opposition play”, and that we would be better off targeting assistance to the poor, and reining in “middle class welfare”. My response is simply that we can do ALL these things.

A simple shift to public finance of new energy and water infrastructure would mean many things. Firstly competitive Federal Government borrowing rates would instantly and dramatically reduce the cost of raising funds for new infrastructure. It would also mean that the cost of new infrastructure could be staggered over many years through the gradual repayment of competitive public-sector loans. Hence inter-generational equity. And in such a way, also – in the context of progressive taxation – the method of payment, here, would also be much fairer than if left to ‘the market’.

Cost-of-Living pressures CAN be ameliorated greatly with a rejection of privatisation. If we (Labor, the Greens, progressives more generally) “vacate the field”, though, we can be certain that the Coalition will fill that space with ingenuous and deceitful claims about the Carbon Tax. And if we don’t have our own credible narrative in response – then they will ‘tear us apart’ on this issue even if they’re lying through their teeth.

I'm not sure how much it would cost to bridge the fiscal gap re: infrastructure but I do know this. An increase of Federal taxation by 1% of GDP would provide the necessary funds for Gonski, Aged Care, the NDIS. On top of that action is crucial on the cost-of-living front. Perhaps this means the best policy would be to embrace an increase in progressively-levied taxation as I have argued for here for some time. (ie: 1.5% of GDP; or $24 billion in a $1.6 Trillion economy)

As a minimum we need $16 billion for the first three initiatives. Doug Cameron has taken a big step forward the other day with his announcement. But we need more ambitious mainstream voices in the ALP to turn this into reality!!! And we need to 'get the message through' to the Right that this is not 'day-dreaming'. It is absolutely essential that Labor *deliver* clearly and unambiguously ahead of the next Federal election. We need something that will shake voters out of their cynicism and disengagement – In a good way, not a bad way, of course.

Hence: $16 billion for Gonski, NDIS and Aged Care. And more for action on Cost-of-Living via public finance of infrastructure.

And no butchering of existing worthwhile programs to pay for it!

For Cameron's initial statement see:

http://www.theage.com.au/opinion/political-news/reforms-need-tax-rise-20120802-23ig4.html

Part Two: ALP Member and Supporter Survey – Have you had your say?

above: Labor Julia Gillard has been promoting a survey of Labor members and Supporters

I also just answered the ALP Survey and thought people might be interested in one response I made to the question: "What policy changes would you like to see?"

I wrote the following: (And I would urge progressives to visit the ALP website and have their say also)


My Policy suggestions for the Gillard Labor Government.

Break with 'small government' policies and rhetoric. Gradual expansion of progressive taxation including a more robust MRRT, cutting back dividend imputation, cutting back on superannuation concessions for the wealthy, implementing a 1% Company Tax levy - like Abbott is proposing - but instead diverted into Gonski implementation, and further restructuring income tax. (this also backs Abbott into a corner as he would be reticent about implementing a *second* levy upon business)

Public finance of new infrastructure - roads, ports, public transport etc - Commit to keep NBN public; Speed up NBN construction ahead of next election.

Implement Gonski Education funding recommendations

A much more liberal National Curriculum - with education for broad ideological literacy and active citizenship.

Re-calibrate "modernised Awards" so no worker is worse off.

Extension of industrial liberties when industrial action is taken in good faith.

A real increase in the minimum wage - neutralising past wage freezes and increasing the minimum wage

More funding for mental health and residential age care; more money for Carers including of the Disabled and the Aged; No User Pays for Aged Care.

Further reform of pensions - especially improving Newstart; A less onerous eligibility test for the Disability Pension

No welfare income management

A Treaty with indigenous Australia involving a long term settlement including compensation and recognition in the Constitution

Media diversification policies - robust funding to build up media diversity - perhaps an associated levy.

More direct public investment in renewable energy infrastructure

Re-socialisation of essential infrastructure - with natural public monopolies in energy, water, future communications infrastructure, transport etc.

Experiments with economic democracy - including co-determination and low-interest loans to establish co-operative enterprise - including producers and consumer co-operatives.

Many of these policies implemented ahead of 2013 election so we have a firm record to stand on - a very strong record of reform; and reforms that will last.

Have you had YOUR say in the ALP Survey? Visit the ALP website and have your say today! And PLS Think about supporting some of the policies I’ve suggested here too!

See: http://laborsurvey2012.surveyanalytics.com/

Australia: The Consequences of Privatised Infrastructure

In this article Tristan Ewins considers the problems associated with privatised infrastructure: especially privatisation of roads. He critiques the abandonment of the mixed economy by Labor, and urges a return to such a model - but also the extension of a more progressive "democratic mixed economy'. Debate welcome!

Readers are also welcome to join our Facebook group which hosts regular debate, and publishes notice of new material at the blog. See: http://www.facebook.com/groups/102658893193637/

Tristan Ewins

In Melbourne’s “The Age” on July 17th the headlines proclaimed “Tolls urged on existing freeways”. Apparently advisory body “Infrastructure Australia” is frustrated with ever worsening infrastructure log-jams. Whether we’re talking about ports, roads, public transport or new utility infrastructure (gas, water, electricity) – the trend for many years now has been towards infrastructure privatisation – usually in the form of Public Private Partnerships. (PPPs)

In fact both Labor and Liberal governments have been guilty of jumping on the “PPP bandwagon” – to the benefit of their friends in the private sector for whom PPPs were often akin to “a license to print money’. Now ‘Infrastructure Australia’ is urging either public finance of new infrastructure – or privatisation of existing infrastructure and imposition of user-pays charges in order to provide the funding for new roads especially.

Tim Colebatch – also of ‘The Age’ has explored the associated issue in depth. Colebatch poses the question as follows: Australia has a choice in how it pays for an estimated $700 billion in socially and economically necessary infrastructure over the coming decades. See: http://www.smh.com.au/opinion/politics/heres-a-way-to-get-700bn-of-infrastructure-we-need-20120716-226gi.html

In fact we have three options.

a) We can continue to allow the infrastructure backlog to accumulate – actually damaging our productivity and quality of life – especially for families in emerging suburbs where transport infrastructure is negligible.

b) We can impose user pays charges upon existing roads or privatise them outright

c) We can actually raise taxes and invest in infrastructure the old way – via public borrowings and infrastructure bonds

In fact the neo-liberal Ideology is so entrenched now that the prospect of public investment in new infrastructure might be viewed by some as kind of radical. This is patently ridiculous - but we have an entire generation who have known little except PPPs and other forms of privatisation. The combination of mixed economy and welfare state – for decades taken for granted during the post-war period – is now thought of as belonging to the ‘political fringe’. Indeed our friends in the hard Right of the NSW branch of the Labor Party might now consider the model of traditional social democracy as “extreme”. Even Anna Bligh’s government in Queensland – Bligh herself hailing from the Left (!) – privatised energy and rail assets – in a move that led to extensive defections from Labor and Queensland unions to the Greens. And now the neo-liberal ideologues are pursuing a new wave of privatisation at a level that once upon a time would have been considered outrageous. Yet the arguments for a return to the mixed economy are clear and they are sound.

Tim Colebatch raises the spectre of Australia and its various state governments losing their AAA credit rating were we to lift our borrowing ceiling. But what if said borrowing was clearly established as being fiscally sustainable by raising taxes to the level necessary to service and repay the debt? And if increasing a nation’s debt ceiling results in a reduced credit rating – regardless of said states’ structural capacity to service the debt – does this make sense? Or is it an Ideological prejudice that ‘locks in privatisation’? Indeed: Can global or regional social credit provide an alternative? Such questions need to be posed now more than ever.

The problem is that the alternative to higher taxes and higher public investment is much more worrisome. So public finance of infrastructure is preferable for a number of reasons.

Firstly the Federal and State governments can borrow at a more competitive rate than any private sector operator.

Secondly, the argument that PPPs ‘pass on risk’ is fallacious – as when PPPs fail governments inevitably have to step into the breach and pick up the pieces.

Thirdly, privatised infrastructure involves user-charges that operate like regressive, flat taxes. Not only are the increased cost-structures of private finance passed on to consumers: but low and middle income groups are disproportionately affected.

The following is most crucial: Under privatisation most citizens pay much more in their capacity as consumers than they would in their capacity as tax payers with public finance. Privatised infrastructure is bad for equity purposes – with the increased cost structures flowing on to business as well as consumers. The consequence of this is thatinfrastructure privatisation is bad for capitalism in addition to being bad for equity.

We need only look to the costs of energy infrastructure privatisation in Australia to grasp the consequences of infrastructure and utility privatisation for a spiralling Cost-of-Living. Private investment in new energy infrastructure is being passed on in the form of consumer charges that have largely seen energy prices in Australia rise by 40 per cent over the past five years. http://www.abc.net.au/news/2012-03-21/australians-pay-highest-power-prices-says-study/3904024

Full privatisation of infrastructure is obviously the greatest threat – as compared with imposition of tolls on public-owned infrastructure – as user charges become entrenched permanently, rather than comprising an ‘emergency measure’.

But how and why has the ideology of privatisation taken hold – even within the ALP itself? What are the consequences? What is the alternative?

For decades progressives and social democrats have been on the back foot when it comes to privatisation. It is the author’s opinion that many younger members of the Australian Labor Party cannot imagine what a real mixed economy would look like; or conceive why it would be desirable; or conceive anything outside of the neo-liberal framework. Within the ALP there is even scepticism with regards reform of tax and meaningful extension of the welfare state and social wage.

Even on the ALP Left there is an ‘ideological drift’: a loss of a sense of perspective and purpose as the substance of democratic socialist policy is increasingly seen as ‘unspeakable’ even in internal forums.

Without being regularly reinforced through a vigorous and participatory counter-culture traditional Left ideals are fading. Liberalism is filling the void. By while liberalism is part of the answer, it is not sufficient to meet the ‘social question’ which provided the original source of inspiration for Labor. While worthwhile causes such as the rights of refugees and the right of those of queer sexuality are important, any critique of neo-liberal capitalism is relegated to the far margins. Such a critique could advance to cause of moving back towards a mixed economy - including natural public monopolies, as well as government business enterprises which actually enhance competition while providing cross subsidies for disadvantaged consumers. And more particularly progress could be made towards a democratic mixed economy, which could also be marked by co-operative and mutualist enterprise and co-determination.

The power-brokers do not seem to understand that the firmer the control they exert over the grassroots, and the more grassroots initiative is obstructed, the consequence is the decline of the ALP as a movement, and the loss of democratic socialist ideology, culture and identity. At this rate all that will remain ultimately is a patronage machine – which is how some people seem to like it. The disillusioned flock to the Greens – and yet even amidst the current crisis of support for Labor, the Greens’ mass electoral appeal remains largely confined to inner suburbs. Labor remains a crucial electoral bastion that must be contested by progressive forces.

There has been a steady line of retreat since the 1980s on the Left - from a perspective favouring economic democracy, to a rearguard action in defence of a robust mixed economy, to neo-liberalism and a minimal public sector sustained by some residual ‘natural public monopolies’ – and finally now the almost absolute expunging of the public sector from even those sectors of the economy where it is in capitalism’s own interests to contain its cost-structures via public ownership.

We need, now, to return to the theme of the democratic mixed economy: in a sense to ‘save capitalism from itself’ – not necessarily because all facets of capitalism are worth saving – but to prevent the human suffering that comes in the wake of capitalist contradictions. And over the long term we can still aspire to the extension of political, social and economic citizenship – culminating in a qualitatively better social order.

For now a hybrid system can provide the best mix of socialist efficiency and fairness, and market-facilitated innovation and choice. This is the democratic socialism the Labor Left – and the Centre-Left more broadly – needs to return to. It demands a robust counter-offensive against neo-liberalism – not merely another faltering rearguard action in the face of this latest ideological and public policy assault. It requires pro-active advocacy in favour of a democratic mixed economy. And it requires the implementation of these principles by Labor in the field of public policy.

Gonski - Just do it!

[Public Education] IT’S BROKEN...FIX IT...

Above: Julia, implement Gonski now!!! 

The following article by Jenny Devereaux explores the case for implementing the Gonski Education recommendations which would deliver an additional $3.8 Billion for state education in Australia. This is crucial to restore confidence in state education and avoid its marginalisation over the long term. Arguably such major initiatives are crucial if Labor is to seize the initiative and inspire on the basis of real achievements. PM Julia Gillard - Implement Gonski now!!    DEBATE WELCOME!


nb: Readers are also welcome to join Left Focus's Facebook Group where there is ongoing robust debate of all manner of issues relevant to the Left! 


See: http://www.facebook.com/groups/58243419565/

By Jenni Devereaux

The Prime Minister, Julia Gillard, is on the defensive where the Government’s commitment to the Gonski Review is concerned.

Responding to a question on the implementation of the Gonski recommendations during her recent Q&A appearance, she said that we could expect the Government “to say something in response to Gonski in the months ahead”:

... in the meantime, we’ve got all of our education reforms flowing, including almost doubling the amount of money going into school education with special arrangements to inject money into disadvantaged schools and special arrangements to inject money into the care and support of kids disabilities.

There’s a lot one could say about the wider question of the ALP’s education reforms, but let’s look just at the question of Gonski and school funding since the ALP took office in 2007.

The Gonski Review was commissioned in April 2010 by Julia Gillard, then the Federal Minister for Education. Acknowledging that Australia’s system of schools funding is “one of the most complex, opaque and confusing in the developed world”, she said the Review was expected to conclude in 2011, with new funding arrangements in place for the next schools’ funding agreement beginning in 2013.

Gonski and his review panel consulted widely, commissioned a body of research on key issues around the funding of Australia’s schools, and received more than 7000 written submissions. The report was delivered on time to the government in December 2011 and publicly released in February.

As widely expected it confirmed that Australia’s system of schools funding is unfair and inequitable. Not only  does it lack coherence and transparency, it is also unsustainable, and contributes to widening resource gaps between schools and sectors and schooling outcomes for students from different backgrounds; so much so that students who live in disadvantaged areas are up to three years behind their peers in more affluent areas.

In short, several decades of funding arrangements largely driven by political accommodations rather than educational policy imperatives have entrenched a deeply flawed funding system which delivers a disproportionate share of Commonwealth funding to Australia’s private schools at the expense of our public schools and the majority of students who attend them.

Gonski found that Australia is investing far too little in education and, in particular, in public schools. The Report recommends a $5 billion a year increase in funding (2009 dollars) with $3.8 billion to public schools which are in the greatest need, and major changes to the way money is allocated to schools to ensure it is better targeted to the meet the needs of students.

· A School Resource Standard [SRS] which sets a per student dollar amount for primary and secondary students (Primary – $8,000 & Secondary - $10,500 – in 2009 figures);

· A series of loadings depending on the size and location of the school; the concentration of students from low SES backgrounds; students with a disability; Indigenous students; and language background/proficiency of students;

· Capping the SRS for private schools at 90% which will reduce according to their capacity to attract fees – potentially to 20-25% of the SRS.

Despite Gonski’s insistence that “Australia will only slip further behind unless, as a nation, we act and act now”, there has been no commitment by the Government to deliver the urgently needed additional funding, while the Coalition says there should be no changes to the existing system until at least 2017. Rather, the Government says, more consultation is required.

While there is no question that the Rudd and Gillard Labor governments have significantly increased schools funding, there are two significant problems with Gillard’s Q&A response in this regard.

Firstly, a substantial proportion of the increased funding has been of a short-term nature. The $16 billionBuilding the Education Revolution infrastructure funding program has now wound-down, and a number of short-term programs being funded through National Partnerships Payments [NPPs] are in the process of being wound-down.

Secondly, the underlying Commonwealth funding arrangements for public and private schools remain. The most recent analysis of these arrangements by Dr Jim McMorrow, a leading schools funding analyst, is based on the May Federal Budget. It shows that Commonwealth funding for public schools is projected to decrease in real terms for each of the financial years from 2011-12 to 2014-15. While it is projected to increase in 2015-16 due to the re-introduction of some NPPs, the overall effect is that public schools would receive $673 million less in real terms in 2015-16 than they received in 2011-12, a cut of 12%. In ‘per student’ terms, this would see each public school student receiving $385 (or 16%) less.

The reduction is mainly due to the cessation of short-term programs like the NPPs; programs from which public schools have received more than their enrolment share of funding because they are targeted to schools and students with higher concentrations of low SES backgrounds and those needing greater literacy and numeracy support. These are the schools and students hardest hit by the effects of the Budget; the very schools and students who would benefit most from the implementation of the Gonski recommendations.

By contrast, Commonwealth funding to private schools is projected to increase in real terms by more than $1.3 billion (or 15%) by 2015-16; a $495 (or 7%) for each private school student. And the reason for the increase? 

“The assumptions built into the Budget estimates and projections that preserve and protect the Commonwealth’s current funding scheme for non-government schools. In particular, the ongoing indexation of general recurrent grants ... at a level that exceeds increases in the real costs of schooling overcompensates for the non-government sector’s share of the budgeted reductions in National Partnership and DEEWR-administered programs.” (http://www.aeufederal.org.au/Publications/2012/JMcMorrowBudget.pdf)

This highlights both the “fragility and vulnerability” of public school funding and the “inequity of an indexation measure which applies increase to non-government schools regardless of relative need” and is what the Government’s lack of commitment on Gonski is defending and protecting. No amount of talk about education reform and (short-term) funding increases can justify that.

McMorrow argues cogently that the Budget analysis both encapsulates the very problems identified by the Gonski review, and demonstrates the urgent need for the recommended reforms including replacement of the existing indexation measure with a more equitable measure and better targeting real increases to the needs of schools and students. This requires new legislative arrangements in place before the current inequitable funding arrangements end in 2012. The Government needs to be reminded, as Gonski says, that “Australia will only slip further behind unless, as a nation, we act and act now”.

Jenni Devereaux is a Federal Research Officer of the Australian Education Union. 

In the Wake of the Greek elections: Is there a way out of the Recessionary Spiral?

above: The Symbol of the Rising SYRIZA Left-Coaltion in Greece

In this article Tristan Ewins discusses the aftermath of today's Greek Election. Debate very welcome here - and at our Facebook page. See: http://www.facebook.com/groups/58243419565/

Tristan Ewins; June 18th 2012

There is some interesting analysis of the Egyptian and Greek elections over at radical-left blog 'En Passant'. Here at “ALP Socialist Left Forum” I would like to take a moment to consider the consequences of the election in Greece – and alternative ‘ways forward’ – out of the depressive spiral which is engulfing much of Europe.
(See: http://enpassant.com.au/2012/06/18/greece-and-egypt-a-tale-of-two-elections/ )

In Greece, specifically, the Conservative “New Democracy” Party is set to form government – but with only approximately 30 per cent of the total vote. As a consequence of the specifics of the Greek electoral system the largest single party receives a 50-seat boost. This makes it very likely that New Democracy will attempt to ally itself with the pro-austerity PASOK. (Pan-Hellenic Socialist Party)

Nonetheless PASOK has historically supported a more moderate approach to austerity: the consequence of which must mean that any new coalition government between New Democracy and PASOK will see bailout conditions re-negotiated to “slow the cuts [and] introduce more generous unemployment benefit.” (See:http://blogs.telegraph.co.uk/news/danielhannan/100165822/another-non-result-in-greece-how-much-longer-can-this-go-on/ )

But in any case - it would be ‘the same poison’ of recessionary austerity - even if a milder variety.

At ‘En Passant’ John Passant further reports that while “left-wing radical group SYRIZA came second with just under 27%”, PASOK received “a little over 12%.” Meanwhile, “the Democratic left, a moderate split from SYRIZA on just over 6% and the KKE, the Greek Communist Party [managed] about 4.5%.”

The fascist, so-called ‘Golden Dawn’ party was thankfully contained on just under 7% of the vote: but it is nonetheless a significant precedent and could bode ill for the future.

The division of the Left in Greece has therefore been crucial for the Conservative victory. Had SYRIZA maintained internal unity it clearly would have emerged as the largest party in the Greek parliament rather than ‘New Democracy’. While the Left broadly defined was a hair’s breadth from securing a majority of votes, the additional 50 seats that would have been delivered to SYRIZA in the event of maintained internal cohesion would have been enough to deliver a clear Left victory. The Greek Left needs to think upon this should continued instability create another opportunity for a Left majority in the near future.

According to one website, SYRIZA leader Alexis Tsipras “called Samaras to congratulate him but later rejected any notion of dealing with New Democracy or PASOK.” Tsipras stated:

“We shall be present in any developments from the position of the main opposition,” he said, stressing that that “everyone must know that the measures of austerity and the selling off of state property will not be able to move forward because they lack popular legitimacy.” http://greece.greekreporter.com/2012/06/17/final-exit-polls-show-new-democracy-leads-syriza-in-tight-race/

The refusal of SYRIZA to deal with PASOK leaves PASOK in a potentially fatal union with New Democracy. Without very substantial re-negotiation continued austerity in Greece will see ongoing unemployment, poverty and even homelessness. The privatisation agenda, meanwhile, is blatantly Ideological. By maintaining its distance from the austerity policies of a PASOK/New Democracy government, SYRIZA is likely to rise as the main beneficiary at the next Greek election; more decisively displacing a relatively marginal PASOK. This is exactly why PASOK is refusing to agree at this point to a coalition without the inclusion of a very reticent SYRIZA.

One online news source has reported that:

“The results should bring a sigh of relief to Greece’s lenders, the Troika of the European Union-International Monetary Fund-European Central Bank (EU-IMF-ECB) who provided Greece with an initial bailout two years ago of $152 billion and approved a second in February for $173 billion more, but said it depended on Greece continuing with more reforms, including privatization and another $15 billion in cuts.”
http://greece.greekreporter.com/2012/06/17/final-exit-polls-show-new-democracy-leads-syriza-in-tight-race/

Rejecting the assumptions of this reporting, however, what is the answer for Greece?

As John Passant notes at En Passant:

“Unemployment Is running at over 22% and for the young it is approaching 50%. Growth fell last year by up to 7% and is predicted to fall again this year by around the same or slightly less.”

Firstly – as these figures demonstrate, a recessionary spiral is NOT the answer. Greece – as well as other affected countries such as Spain and Italy – need a plan for socially and economically sustainable debt repayment over the long term. Though this author does not claim to be an authority, it seems rational that if privately-financed bonds cannot provide Greece and other countries with fair repayment rates and schedules, then Europe as a whole needs to step in collectively at a public sector-financial level. As recognised above the IMF, European Union and European Central Bank are already providing a bailout. But this bailout has been offered under the wrong (ie: recessionary) terms.

Greece is currently caught between the toll of an eroding credit rating – with spiralling debt-repayment levels enforcing a macabre ‘discipline’ – and the real economic and human cost of austerity and enforced recession.

As an alternative, Greece’s effective credit rating needs to be fully restored in return for ‘locking into’ a European ‘economic contract’ aimed at restructuring the Greek economy, and repaying debts in the most efficient and sustainable manner possible – under conditions of full employment.

Only Europe-wide planning and co-ordination, now, can provide for such a process of restructure – mobilising the capital and the skills necessary to forge new and sustainable export markets – maximising that potential for debt-repayment under conditions of full employment. This applies as much for Spain and Italy as it does Greece.

The alternative is recessionary austerity: again with the consequence of homelessness, deskilling, poverty – in short, social and economic disintegration.

The SYRIZA anti-austerity platform can be found here and makes interesting reading:
(See: http://www.solidarity-us.org/site/node/3620 )

From 1929 until the dawn of the Second World War the world suffered a Depression the consequences of which radicalised a generation, and with the experience of war-time economies entrenched a Keynesian orthodoxy, providing the basis of the Post-war boom. With SYRIZA refusing to join a unity government the battle in Greece is far from over. Do we really have to learn all the old lessons over again – with the associated toll in human misery?

Debate Very Welcome!

Responding to the 2012-13 Federal Budget – Better Late than Never!

The following article by rank and file Labor activist and freelance writer, Tristan Ewins examines the highs and lows of the 2012-13 Labor Federal Budget; the ways in which Labor has delivered to its core constituency; and the ways in which it could have and should have done better.  He also considers the ways in which the performance of Tony Abbott continues to provoke fears for the future.

Interested parties are welcome to join our Facebook Group also at:  http://www.facebook.com/groups/102658893193637/

Tristan Ewins, May 24^th 2012

Recently at this blog we discussed what would be desirable for the 2012 Federal Budget.   A few weeks after we ask the question: Was this the ‘battler’s budget’ Swan and Gillard have claimed it to be?; and on the other hand – have there been missed opportunities?

Summarising the coverage in ‘The Age’ and elsewhere the following features were notable:

Firstly there was a threadbare surplus of $1.5 billion – with over $30 billion of savings – but nonetheless a surplus.  Whether a surplus was actually necessary or desirable at this point is open to question.  On the southeast coast there appears more of a need for stimulus rather than austerity.  Bringing forward infrastructure projects there would therefore seem advisable. Certainly achieving a surplus has loomed as a political imperative for Labor, and despite recent (and rare) questioning of this ‘imperative’ in the media, past coverage had consolidated the impression that consistent and continuous surpluses were equal to “sound economic management”.  Liberal claims that Labor had not delivered a surplus since 1989-90 were hurting in the wake of that past, basically uncritical media discourse.  On the other hand a balanced budget over the course of the economic cycle is desirable; with debt servicing weighed against growth, improved capacity and productivity stemming from social investments.

Some of the largest savings were made from Defence – “Cut by $5.5 billion over four years”.  Certainly this was preferable to savings in social programs and welfare; although a growing Australian nation holds the prospect of more self-reliance in Defence over the long term.  This also could mean the prospect of greater foreign policy autonomy.

The Government has also saved approximately $1 billion, cutting by half Superannuation tax concessions for income earners on over $300,000/year: which surely was welcome, but arguably did not go far enough.   

Indeed the Australia Institute has argued that the cost of superannuation concessions has blown out to about $30 billion a year; and Richard Denniss specifically has claimed that $10 billion of this goes to the top 5% of income earners. (!!!) This money could have provided a fair go for single parents; improved the shamefully regressive ‘Newstart’ unemployment allowance by $50/week, and radically improved the quality of Aged Care for those needing high intensity care; and those preferring low intensity care in a more social environment. It also could have been redirected into mental health services where the government has a record of “robbing Peter to pay Paul” rather than sufficiently expanding funding for all areas of real need.  Setting the ‘high income benchmark’ at $300,000/year is being far too generous for many who are on ridiculously high incomes: and yet single parents are singled out to be pushed on to the Newstart Allowance if they do not find work – with the welfare of their children cast into serious doubt.   The rationale is not to upset so-called ‘aspirationals’ – But arguably there is more to gain electorally by consistently and visibly assisting low to middle income groups.

(See: http://www.abc.net.au/news/2012-05-08/swan-scrapping-company-tax-cut/3998784 ;  http://www.tai.org.au/?q=node/277 ; and http://www.abc.net.au/pm/content/2012/s3499255.htm )

A key theme for Swan was ‘spreading the benefits of the boom’; and yet the mining tax was not expanded in scope or degree.  Previously the Greens had been on record claiming that the cost to the Budget bottom line, here, was in the vicinity of $100 billion over ten years.   This begs the question: What kind of social and infrastructure investments could have been gained through a revision of this policy?  And what kind of effective cross-subsidies could have been provided for manufacturing, retail, tourism, education – all sectors struggling in the wake of the high dollar driven by the mining boom?   (See: http://greens.org.au/content/mining-tax-needs-review-ensure-revenue-australias-future )

The projected cut in Company Tax has been deferred – but should have been shelved entirely.  By ‘trumping’ Abbott with a similar 1.5% levy on big business as planned with his own paid parental leave scheme,  Labor could redirect that money to further initiatives in Aged Care, mental health or further cost of living relief for low and middle income Australians.  This would ‘back Abbott into a corner’, making it hard for him to justify his priorities; and making it difficult for him to impose a further Company Tax levy on top of Labor’s levy. 

Money could also have been directed in future social finance and ownership of transport, energy and other infrastructure – with the savings from lower borrowing costs, productivity agreements with unions, and a non-profit footing – delivering very significant savings for consumers.

Meanwhile – though Foreign Aid is rising by $300 million, Labor’s promises to more radically increase aid have been reneged upon – at least for the time being.  This will save an approximate $2.9 billion annually. But the question nonetheless looms: with more far-reaching tax reform could Labor have avoided having to make such “Hard Choices” on Budget priorities?   (See: http://www.smh.com.au/opinion/blogs/the-party-line/should-a-promised-boost-to-the-foreign-aid-budget-be-deferred-for-a-year-to-help-return-the-budget-to-surplus-20120510-1yei6.html )

Other crucial policy areas included $1 billion over four years “to kickstart the National Disability Insurance Scheme (NDIS)” ; “$577 million over five years to help aged Australians remain at home” and additional payments “of up to $210 a year for unemployment and similar benefits.”  (‘The Age’, May 8 and 9 2012)  

Providing tangible results for the NDIS ahead of the next election could be crucial in establishing the credentials of the government as being based on more than just ‘talk and distant commitments’.  So bringing forward the NDIS as much as possible is a very welcome development.  Though as this author has also argued in the past: the proposed Aged Care reforms while welcome do not go nearly far enough to provide for the basic needs of some of our most vulnerable aged Australians.  More financial support is needed for Carers; and more funding is necessary for residental care for those who choose it – and those who require high level care and do not have a  choice.  Sustainable quotas are also necessary for aged care workers and nurses; and resources to improve quality of life for all kinds of aged Australians suffering social isolation, financial stress, difficulty with day-to-day living, and the indignities that come from an under-resourced, sometimes profit-driven and under-regulated residential care sector. 

Over at ‘The Conversation”, meanwhile, there has been the observation that the Federal Budget “includes $515.3 million dentistry package” with  “$345.9 million…used to treat patients on long waiting lists and providing other vital services to adults.”  See:  http://theconversation.edu.au/what-the-budget-means-for-dental-care-in-australia-6792    But the Greens were justifiably critical of Government plans to axe the Medicare Chronic Disease Dental Scheme,  and have argued for means-testing of the scheme instead. 

However the flagship programs of Labor’s 2012 Budget were definitely its Cost-of-Living initiatives.   The Labor website proudly proclaimed the following initiatives on May 8^th” aimed squarely at “low and middle income families”: 

• An expansion in FamilyTax Benefit A with an increase of the benefit to low and middle income families with two children to $600/year, and $300/year for families with a single child.

• A “Schoolkids Bonus” to help 1.3 million low and middle income families meet the costs of schooling: $410 for each primary school child, and $820/year for each child in high school.

• Support for “the most vulnerable Australians”; Cost of Living Assistance for a million Australians: “$210 a year for singles or $350 a year for couples”; with “lump sum payments will be paid twice yearly”

• “tax cuts will be delivered in 2015‑16 for all taxpayers with incomes up to $80,000” through an increase in the tax-free threshold”

In ‘The Age’ such new initatives were given a price tag of about $5 billion – So they are inarguably very significant!

The government also stood on its record of increasing pensions in past years, promising “a new Low Income Supplement of $300 per annum” for “Any low income households that do not receive enough assistance through tax cuts and increases to payments to cover their average expected price impact”. (presumably in reference to the Carbon Tax)   (See:  http://www.alp.org.au/federal-government/news/helping-households-with-the-cost-of-living/  )

Imaginably this could be the beginning of an ideological offensive by Labor on the issue of distributive justice.  For years now the monopoly mass media have reinforced the perception that redistribution equals ‘class war’; while attacks upon welfare and organised labour apparently do not!   Abbott and the monopoly mass media have directed salvo after salvo against the very principle of redistribution to correct injustices inherent in unregulated laissez faire capitalism.  Facing very little criticism or scrutiny in the media,  Abbott even begrudged the very basic social solidarity of the once-off flood tax – to assist those effected by the Queensland disasters. 

Meanwhile important social initiatives have been dismissed in the press with the loaded expression “cash splash” – the intent clearly being to infer economic irresponsibility in a blatant piece of popular-psychological manipulation.

Yet as against this cyncial and socially damaging political tactic this author remembers very clearly former PM John Howard supporting the principle of progressive taxation some time before being defeated by Kevin Rudd in 2007.

And a very different Tony Abbott seemed to emerge from the Opposition Leader’s book ‘Battlelines’.   The following observation was made at the ‘Left Focus’ blog in 2010:

Interestingly, Abbott raises the opposition between compassionate conservatism and the kind of ruthless neo-liberalism that cares nothing for the social consequences of austerity (pp.xii-xiii). Here the author juxtaposes the “[single-minded] cutting [of] public expenditure … striving to deliver smaller government” to “compassionate conservatism, stressing solidarity with those who are doing it tough” (pp.xii-xiii). By this reckoning the “social fabric … has to be respected and preserved”, while individuals should enjoy such circumstances that they are “empowered, as far as reasonably possible, to live the life that he or she thinks best” (p.xii).  (references from ‘Battlelines’ by Tony Abbott) 

(see:http://leftfocus.blogspot.com.au/2010/04/battlelines-whats-tony-abbott-really.html )

The Conservatives need to decide whether to pursue a mix of economic conservatism and political liberalism; or whether to adopt a ruthless neo-liberalism which cares little for the poor and disadvantged; and for the political and civil liberties of citizens.  It is important to observe, also, that ‘economic conservatism’ need not imply economic liberalism, but rather could accept Keynesian assumptions (in past accepted by Liberal governments) on the mixed economy and counter-cyclical demand management.  Yet Joe Hockey seemed to be quite clear recently on QandA that he cared little for the traditional Australian spirit of egalitarianism.

But for Labor stronger action is necessary to place class faultlines and class interests in clearer relief.  The principle of class struggle is seen by many as being discredited even on the Left – which has reverted to a kind of modest social liberalism. But when we speak of class interests and class struggle this need not imply terroristic Stalinism; or to begrudge citizens their human and civil rights on the basis of class.  Rather the purpose of democracy is at least in part to set free oppositions of interest and provide a framework for their peaceful resolution.  Or where this does not work, to contain conflict to forms of civil disobedience which do not descend into an escalating cycle of violence. 

It warrants the question:  What problem does Tony Abbott and the Liberal Party have with workers and disadvantaged groups organising industrially and politically to pursue their legitimate interests; Indeed – to pursue justice, compassion, and  ‘the fair go’?  

And if he desires an agreed class peace, how does Abbott suppose this is possible on the basis of ruthless neo-liberalism – as opposed to the kind of Centrist Catholic Social Welfarism (or a ‘Social Market’ such as exisited under the Christian Democrats in post-war Germany) this author had hoped (but not dared to believe) he may have been open to? * 

Further, if redistributive policies are nothing but a ‘bribe’ (as according to Abbott) what are we to make of the ‘upper middle class welfare’ of the Howard years: and of Abbott’s own paid parental leave which offers leave with full pay to workers on as much as $150,000/year?  (See: http://www.news.com.au/money/cost-of-living/paid-parental-leave-scheme-stays-abbott/story-fnagkbpv-1226286894077 )

For Abbott, though, this is ‘non-negotiable’ as the polls consitently inform him he ‘has as problem with women’…

Conclusion

Having to achieve more but with less can drive efficiency – so there is some benefit in a government operating under tight fiscal circumstances.  Indeed, a comrade in the Socialist Left of the ALP recently commented to me that rather than spending billions more in areas like Aged Care that we could achieve more ‘electoral kudos’ (my term) with well targeted and innovative initiatives.

But sometimes there is no getting around the need for an injection of greater resources.  Much of this year’s Federal Budget was just reprioritisation – with little new money. Again: In accepting this framework Labor will repeatedly find itself in the position of ‘having to rob Peter to pay Paul’.  In public education, aged care, mental health, welfare, public housing, disability support and services, and crucial transport and other infrastructure: ‘trying to do more with less’ can only take you so far.  For instance: the Gonski recommendations for Education simply cannot be implemented without billions in new funding; nor can a sustained introduction of Medicare Dental.

By comparison – moving initially from 100% to 75% Dividend Imputation, further cutting superannuation concessions for the wealthy top 5% of income earners, reforming the Mining Tax, and applying an ‘Abbott-esque’ levy on business via Company Tax – along with other reforms – could have grown social expdeniture by 1.5% of GDP – or approximately $22 billion in new and improved initiatives.

And yet with $5 billion of largely redistributive, social-justice, Cost-of-Living oriented policies - this is arguably a traditional Labor Budget.  It puts many of Labor’s core low to middle income constituencies first in way we haven’t seen so much in quite some time.  

Now, though, Labor needs to turn the to source of the Cost-of-Living crisis.  Firstly, this must include implementation of the Gonski recommendations – so low and middle income families can feel secure sending their children to State and poorer Independent schools – at peace in the knowledge they will not be disadvantaged, and that there is no need to ‘go beyond their means’ in providing a private school education.   And reversing privatisation, and promoting public housing and infrastructure for emerging new suburbs also need to find themeselves to Labor’s ‘policy radar’ with policies that attack Cost-of-Living pressures at their very root. 

(*though for the record this author supports an outlook of sustained class struggle; even though it is notable that the kind of semi-corporatist structures such as have existed in Sweden provided channels of mediation of interest to citizens across class lines)

For a Budget both Sustainable and Fair

Above:  Wayne Swan is under political pressure to produce a surplus for May 8th. But to re-engage with voters Labor needs to do a lot more; delivering truly meaningful and substantial social programs that appeal both to Labor's working class and liberal middle class electoral bases. This needs to be provided for through a progressive tax restructure including reform of superannuation tax concessions, dividend imputation and consideration of further 'super profits' taxes where appropriate.

By Tristan Ewins

As the May 8^th 2012 Federal Budget approaches top Labor policy-makers will be nervous. While there is enormous political pressure to deliver a surplus only very substantial progressive new initiatives hold the prospect of re-engaging with Labor's traditional working class and liberal middle class support bases. 'Treading water' on policy simply will not do at this point. So many voters are 'disengaged' after years now of systemic smears and disinformation in the media. Very substantial new programs are the only chance, now, of breaking through: at the very least saving the Senate, and leaving behind a reform legacy that Abbott will not be able to uproot.

But what specific programs could Labor embrace in order to re-engage with voters; perhaps even to win in 2013?

Immediately there are a number of options which spring to mind:

• Medicare Dental
• Gonski recommendations on education
• Further funding to improve the quality and equity of Aged Care; with a long-term official policy of establishing universal Aged Care Social Insurance
• Robust Cost of Living initiatives for disadvantaged and working class Australians, including pensioners and Newstart recipients
• Substantial investment in public housing to assist those low income families and individuals experiencing housing stress; with the additional benefit of increasing housing supply, driving down rent costs
• Targeted tax-driven cross-subsidies for sectors struggling under the weight of the 'two speed economy'; to include tourism, education and manufacturing;
• Fast rail and other infrastructure projects (eg: infrastructure for emerging suburbs) expedited along the East Coast, with the additional benefit of stimulus in states which are economically struggling.

It is difficult to estimate how much would be necessary in way of funding for industry cross-subsidies. Although a fast-rail line along the Australian East Coast – costing $100 billion - could "dramatically cut emissions" and provide great convenience for travellers, and those utilising rail freight.

Such infrastructure initiatives could be financed via the issuing of government bonds, which could spread debt repayments over decades, with competitive annual repayment rates.

Development of infrastructure in new suburbs is also crucial on practical, environmental and equity grounds: and could create jobs along the economically languishing South-East Coast. Urban design, including public transport, parklands and other social facilities are crucial for the quality of lives of those young families who have been driven by the Howard housing bubble and population growth onto the 'urban fringe'.

And while Cost-of-Living subsidies should aim to deliver a minimum of an additional 1 per cent of Male Average Weekly Earnings (approximately $600/year for individual adults) to assist mainstream working class and disadvantaged families with energy, water, mortgages and rent, this author does not have access to modelling to determine the cost.

Yet 'Cost of Living' is THE issue 'out there' with Australian families, including those working class and disadvantaged families it is Labor's duty to protect and assist. A big initiative, here: as significant or more significant than already suggested – could be THE crucial factor in re-engaging with Australian voters.

Labor also stands to gain, here, by linking Carbon Tax relief with broader Cost-of-Living Relief. In such a way Labor needs to develop a package in which all disadvantaged and mainstream working class Australians are significantly better off. By linking these issues Labor has a chance of changing public perceptions of the Carbon Tax, while addressing genuine Cost of Living stresses for those in need.

And tax cuts would be quickly forgotten, so Cost of Living Relief will be better addressed through a dedicated supplement, to be paid twice-yearly.

Public construction of new energy and water infrastructure could also have savings flowing on to consumers because of the lower cost of public borrowing.

Nonetheless, despite our lack of access to modelling in some areas it can be stated that were the government to reform taxation so as to bring in around an additional 1.5 per cent of GDP in taxation (approximately $22 billion out of a $1.5 trillion economy), this would provide substantial scope for the social welfare and industry assistance packages hinted at here, while also providing for the politically-desirable surplus.

Potential fund-raising mechanisms could include a move to either 75% or 50% Dividend Imputation (saving between $5 billion and $10 billion/year); eliminating superannuation concessions for the wealthy (saving approximately $10 billion/year); restructuring of income tax, reversion to the original Resource Super Profits Tax template, consideration of other 'super profits' taxes where appropriate, and reneging on projected Company Tax cuts.

There is even the prospect of emulating Abbott in terms ofa 1% increase in Company Tax for large enterprises, ploughing the proceeds into Aged Care. Given his own position on Paid Parental Leave and his eagerness to appeal to aged Australia Abbott would be hard-pressed to oppose such an initiative. It is worth noting that Company Tax in Australia is 30% as compared with 35% in some areas of the United States – so there is 'room to move'.

For now, though, it is also worth observing those initiatives for which we do have costings.

Implementing the Gonski recommendations for education could ultimately cost an estimated $5 billion/year. Although the Gonski report itself suggests the Federal Government would only have to pay for 30% of the Education initiative ($1.5 billion) – with $3.5 billion shouldered by the States.

Detractors have attempted to conceal their own vested interests with calls of 'class warfare', but the reality is that 'class warfare' has been waged not against the wealthy, but against poor and mainstream working class Australia with the neglect of public education and health care, and increasing dependence on levies for essential school infrastructure which are 'voluntary' in name only. The appeal of Gonski is in its emphasis on all students, including those most struggling – with a further emphasis on improving state school funding, but without withdrawing existing funding from the private sector. Implementation of Gonski would mean improved infrastructure, smaller classes, more teachers and more subject choice for all schools.

Meanwhile projected public dental initiatives have variously been estimated to (ultimately) involve costs running into the billions annually. Apart from crucial equity and human interest ramifications of universal public dental care, preventative public dental care could save the economy billions over the long term. Though according to the proposal put to Labor by the Greens the first phase of new public dental programs– focusing on the needs of children and low-income groups - need only cost the government $400 million for the upcoming financial year, and as much as "$8.4bn to $14.4bn across four years, depending on the options chosen".

The final expenditure priority we will consider, here, is Aged Care.

The Federal Government's standing Aged Care policy provides a real funding boost of only $577 million over 5 years.

Much more is needed,yet nonetheless by shifting its priorities and implementing means tests an improvement in service will be experienced by many.

While $1.2 billion has been devoted to providing better salaries and conditions with the aim of retaining aged care staff, user-pays mechanisms will not include any forced sale of the family home. User pays charges will apply for many – both for residential and at-home care. But full pensioners will pay no fees.

There will be 40,000 new home care places (Up to 100,000), relieving the impact upon the Aged Care budget of expensive residential care, while providing many aged Australians with the preferred option of staying at home. Further initiatives include $269.4 m for dementia, $1 billion for Carers' Respite (over several years) and the removal of the low care/high care distinction - which in the past saw aged Australians diverted into high intensity care facilities prematurely in order to save money. The 'My Aged Care website' is another good initiative, and the government has wisely avoided a 'free market in Aged Care'. Many amongst the aged are vulnerable and on their own enjoy little consumer choice or market power. ('The Age', 21/4/2012)

Yet again the initiatives go nowhere near far enough.

The Combined Pensioners and Superannuant's Association New South Wales (CPSA – NSW) has long argued for a Aged Care 'social insurance' model. While CPSA NSW is encouraged by the government's emphasis on at-home care, however, those most in need do not always have the choice. Billions in new funding are necessary to improve the quality of residential care, and to give the aged the choice of high quality low-intensity care in a social environment. (eg: hostels) Staff to resident and nurse to resident ratios are also crucial that those needing high intensity care.

And even for those remaining at home more programs are necessary to keep aged Australians socially engaged, and happy.

The problem with Aged Care is that for many it remains a 'hidden issue'. Aged Australians are suffering – for lack of care; because of poverty; because of social disengagement; and because of the dehumanisation and loss of individual identity that often goes with high-care accomodation.

As an absolute minimum Labor needs to devote an additional $1 billion for Aged Care in the financial year 2012-13; and announce a progressively-structured Aged Care Social Insurance Scheme over the long term – similar to the agreed 'National Disability Insurance Scheme' (NDIS). (covering care, but not pension entitlements) Specifially this author challenges Government Minister Bill Shorten to champion this cause – no less worthy as it is – as he championed the cause of disability insurance.

'The Surplus'

There are sound political arguments for Labor's pursuit of a surplus in the year 2012-13. The level of economic debate in Australia is for the most part quite low. The perspective on the Federal Budget is akin to peoples' ideas on managing a family budget. Hence apparently 'The books must be balanced'. But failure to produce a surplus will result in opportunist media-grabs by the Opposition – which irresponsibly maintains popular mythologies on economic management in order to hold on to political advantage re: perceived competency.

Deeper arguments and realities do not always 'sink in'. Media speculation about the political imperative of a surplus is usually shallow and uncritical. Many voters do not seem to comprehend that investment in infrastructure can increase capacity, improving quality of life and increasing growth over the long term. And there are those who do not seem to see how stimulus is still warranted in many state economies as a consequence of the high dollar, and with falling confidence alongside the decline of tourism, education and manufacturing. Nor how lack of transport infrastructure in developing suburbs is a drag upon the broader economy – making investment there not only sustainable, but of positive benefit.

On the other hand Jessica Irving from the Sydney Morning Herald predicts that after already-projected cuts Swan will needto "raise taxes by $7 billion to achieve his surplus." And also that: "Tax increases on foreigners earning profits in Australia, say mining companies, would also have less of an impact on domestic demand, as would reduced spending on foreign-produced defence equipment."

Were the revenue proposals in this article adopted, alongside other measures suggested by Irving such as increased taxation of foreign profits in mining, that could still leave $15 billion for social programs, while the surplus was achieved.

But regardless of the perceived political imperative of a surplus for 2012-13 Labor still needs truly substantial policy initiatives if it is to re-engage with voters who have 'switched off' or 'turned away' after almost two years of sustained media onslaught. This can only be achieved with a commitment of resources which is truly substantial and appreciable in the 'big picture' of an economy valued at over $1.5 trillion.

Yet if Labor does produce such initiatives it might also manage to rally its own base, as well as the sympathetic social movements which could provide for social base for a real fight-back; and perhaps even a Labor victory in 2013.


Tristan Ewins is a freelance writer, qualified teacher and social commentator based in Melbourne, Australia. He is also a long-time member of the Socialist Left of the Australian Labor Party (ALP).