Middle Australia: a new narrative for Labor?

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Sunday, 14 September 2014 18:30 by Kay Rollison

Tucked away in one of the last Fairfax-Nielsen public opinion polls in mid-July is the intriguing fact that although the ALP was leading on a two party preferred basis, and Bill Shorten was preferred as Prime Minister to Tony Abbott, Abbott was ‘way ahead of Mr Shorten on the issue of “vision for Australia's future'’, leading 54 to 38 per cent’. It’s an odd finding in the sense that while voters appeared to think Abbott has a vision, a good number of them don’t seem to like it. It’s a worrying finding in that many voters don’t think Labor has a vision. A similar problem dogged Julia Gillard as Prime Minister: journalists said she didn’t have a ‘narrative’, a story that linked together Labor’s policies into a coherent vision.

I find this a bit surprising, because I’ve always assumed Labor does have a vision that has been summed up as a ‘fair go’. But apparently this vision either doesn’t resonate with voters or isn’t being adequately communicated. Or maybe Labor isn’t being true to it?

I can’t really comment on what appeals to voters; after all, they voted for Tony Abbott. A small but significant number of them have since changed their minds, at least for the time being, perhaps having seen in Joe Hockey’s budget just what vision the LNP actually has for Australia — free markets, small government and burgeoning inequality. It’s worth noting, however, that even when public opinion polls were looking dire for Labor before the last election, many of the policies of the Labor government were actually quite popular. Essential polling suggested that a majority of people would be prepared to pay more taxes for better government services, and spending on health and education, the National Disability Insurance Scheme and the NBN all attracted majority support. More recently, polls suggest that a significant majority support putting a price on carbon. So there’s at least some evidence that voters approve of policies whereby government intervenes in the free market to even up the playing field, or to require polluters to pay for their pollution.

The result of the last election is therefore proof positive that Labor isn’t adequately communicating its message. Of course it was difficult for the party to do this when the Murdoch-owned print media was solidly — ridiculously, extravagantly — against them. Then there were the negatives: the changes of leadership, the disunity, the sense that the government was somehow not legitimate. Abbott’s relentless negativity was allowed to dominate the debate, leaving little free air for a more positive message from the government. Labor policy was suffocated in the public mind, partly by clever tactics by their enemies. But maybe the message wasn’t clear enough. It’s unfortunately not good enough to make logical arguments in favour of sensible policies; you have to grab the public imagination as well.

It’s hard to judge how Labor in opposition is selling its policies. At this point in the electoral cycle, conventional wisdom dictates that an opposition is not required to present alternatives to government proposals: their role is supposed to be to critique what the government puts forward. Anything they do say is unlikely to be given prominence in the mainstream media. Furthermore, Bill Shorten has said that the first year in opposition should be spent reforming the party; new policy development should follow on from this, the assumption being that new members should be able to contribute through reformed structures to what the party decides. I don’t entirely buy this. The party needs some basis on which to offer criticism; what they say is wrong with the government’s proposals should reflect Labor’s vision. Specific policy proposals can possibly wait until nearer the next election, but everything Labor members say — in parliament, in press conferences, in their electorates — should reflect Labor’s vision. So it’s worth being clear what that is.

There are also obviously some areas where the problem is not lack of stated vision, but failure to live up to it. The most glaring example is Labor’s policy on asylum seekers — check out this bitter cartoon showing Julia Gillard putting out ‘the light on the hill’ because ‘it attracts the boats’. Labor will struggle to present itself as a party that believes in a fair go, however expressed, while it continues to defend off-shore processing on Manus Island and Nauru. There is no easy solution to the asylum seeker dilemma, but the present position is poisoning any attempt by the party to portray itself as caring about people.

They aren’t safe on economic and social policy either. Labor in office faced the same budget realities that Joe Hockey is dealing so poorly with now and, if re-elected, would face them again if they continue to accept the prevailing economic doctrines. The revenue side of the budget is in crisis, with receipts falling below spending, even if, as under Wayne Swan, spending is also cut back. Think of the reaction to the Gillard government’s placing of single mothers on Newstart after their youngest child turned 8, even though this was already policy for new entrants into the scheme. Labor tried to run the line that being in work is better than being on welfare, and so it is, but this means creating more jobs, and government has only limited capacity to influence employment these days. Even if Labor can resist the pressure to promise balanced budgets, it will likely make cuts to existing entitlements, and while there is room for reduction of welfare for the well off, such as changes to superannuation, on past evidence there could be problems with fairness in selling a message either promising cuts or, much more justified but harder, increasing taxation.

I think, however, the problem with Labor’s vision is deeper than asylum seekers, or single mothers, or any other group they might in the future fail to treat fairly. Labor is, like most centre-left parties the world over, still wedded to a neo-liberal understanding of economics. After all, they were the government under Paul Keating that did most to usher in the era of the floating dollar, reduced tariffs, privatisation of public assets, lower taxation and spending cuts. At the heart of this set of policies is the belief that because wealth trickles down, measures that promote equality are only achieved at the expense of greater national prosperity. You can have a safety net, but only if you can afford it. Look at the whole thrust of the Hockey budget, with its narrative that welfare spending is out of control. It’s all very well to say that Australia is a rich country and can afford proper welfare but even when times are good it’s hard to convince people that they should give up something for someone else. It’s the old ‘you’re working to pay someone else’s welfare’ lifters and leaners line that Hockey is still using. Neo-cons can use the language of fairness too, when the trickle-down paradigm remains unchallenged.

Labor needs to come out decisively with a new story. Small government, tax cuts for the rich, competition in health and education are all recipes for greater wealth inequality — Labor must unequivocally reject all elements of such policies. To their credit, some Labor figures, such as Andrew Leigh and Jim Chalmers, are talking about wealth inequality and the destructive effects it has on communities. But the party as a whole still uses the language of ‘the fair go’ in ways that are compatible with the trickle-down theory. The ‘fair go’ addresses the people who lose out under neo-liberal capitalism, but doesn’t look at the rich — those who benefit completely disproportionately from the current economic arrangements. We need a story that values the real wealth producers in society.

Economists’ views, even in the mainstream, are changing. Many now agree that trickle-down economics doesn’t work for the public good. And a significant number are now arguing that prosperity and greater equality aren’t alternatives; in fact you can’t have one without the other. Rich people do not generate most of the jobs in society — small business and middle class consumers do. My consumption fuels your business; the more people in a position to consume, the more profitable your business. Instead of top-down economics, we need ‘middle-out’ economic policies.

According to Eric Liu & Nick Hanauer, its foremost proponents, ‘middle-out’ economics offers a new, or at least revived, explanation of where prosperity comes from — ‘a "circle of life"-like feedback loop between consumers and businesses’ that creates conditions ‘that allow both middle-class consumers and the businesses that depend on them to thrive in a virtuous cycle of increasing prosperity for all.’ This means that a prosperous economy revolves not around a tiny number of the very rich but around a great and growing number of middle-class consumers and small businesspeople. It follows from this, Liu and Hanauer argue, that:

  • Demand from the middle class — not tax cuts for the wealthy — is what drives a virtuous cycle of job growth and prosperity.
  • Rich business people are not the primary job creators; middle-class customers are. The more the middle class can buy, the more jobs we'll create.
  • A nation has the right and the responsibility to decide where the jobs created by its middle class will be located — here or off-shore.
  • Trickle-down has given us deficits and a decimated middle class.
  • Middle-out economics means investing in the health, education, infrastructure, and purchasing power of the middle class.
  • Middle-out economics marks the difference between what is good for capitalism broadly versus what protects the vested interests of a select group of capitalists narrowly — and it invests in the former.
You can read further explanation of this term here, and see what sort of policies arise from this view of how the economy actually works best for the community. Unsurprisingly, they include creating a truly progressive tax system, investing in the skills and health of the middle class, pushing for a fairer and more equitable split between workers and owners of the value created by enterprises, and investing strategically in the industries of the future.

Labor already has policies in most of these areas — though it needs to do more. But even more important, it needs a message that isn’t just about improving welfare, or even levelling up the growing inequality that arises from the unregulated free market. It needs a message that can’t be derailed by the cry of class war — however spurious that cry is. It’s not just about a fair go, and greater equality of opportunity. These messages will fail if the electorate thinks the Liberals are better economic managers, that fairness is unaffordable, and that wealth will, as they claim, trickle down. Labor needs to tie its policies into a narrative that embraces ‘middle-out’ economics — a narrative that values ordinary people as workers, consumers and taxpayers, who together create the wealth of our society.

What do you think?