How the Liberals are destroying Australia

The image above shows rich and poor alongside each other in Mexico. Is this Australia’s future under the Liberals?

Australia has a long history of egalitarianism. Between the gold rushes and the 1890s Australia was considered a ‘working man’s paradise’. The depression of the 1890s changed that somewhat but also fostered the growth of unionism and the birth of the Labor party to represent workers’ interests. That meant that by 1911 Australia was still considered a great country for the ‘working man’ with higher wages than in many other countries, shorter hours than the USA and Canada and more holidays. Australia was also a world leader in social reforms, including universal suffrage, and was known for not having as large a gap between rich and poor as most industrial countries — it was effectively largely egalitarian. 

It was not a rigid system that enforced the same conditions on everyone but a system based on the ‘fair go’. It was built on the concept that we are all inherently equal and, therefore, the differences between us should not be great if we each have a ‘fair go’ — in modern parlance, it was equality of opportunity. We were also very good at cutting down the ‘tall poppies’ when the differences exceeded what we thought acceptable.

Now much of that has changed and the Liberals have contributed mightily by their actions and also by their underlying philosophy.

What drives the Liberals’ actions is their belief in the individual, based on the John Stuart Mill maxim on freedom when he wrote in On Liberty in 1859:
The only freedom which deserves the name is that of pursuing our own good in our own way, so long as we do not attempt to deprive others of theirs, or impede their efforts to attain it.
The Liberals aim towards the first part of that statement but tend to ignore the provisos in the second part. Despite what the Liberals may think, the condition Mill imposes on individual freedom is consistent with the Australian value of the ‘fair go’: as an individual, I give others a ‘fair go’ by not depriving them of their freedom nor impeding their efforts to attain it. It shows that although the ‘fair go’ can be said to be founded on the individual, it includes a social responsibility to give others a ‘fair go’, just as Mill envisaged. In that sense, the ‘fair go’ is the true inheritor of Mill’s legacy, not the Liberals’ approach.

When the Liberals emphasise the individual they are undermining society. They sometimes speak of community spirit, such as when we pull together during times of bushfire and flood, but they do nothing to support it. Generally they believe only in the individual and the family, and community and society do not get a look in. That also provides a green light for individuals to ignore their social responsibilities and look only after themselves if that is their want — it is a green light to reject the ‘fair go’ and a green light for individual greed.

The economic emphasis on the individual is leading to rising inequality in our society. The gap between the richest and the poorest has increased significantly. The gap between the pay of a worker and the CEO of the company for which she or he works has increased dramatically in recent decades. Whereas once it was the equivalent of 2?4 years of the worker’s wage, now it can exceed 15 or 20 years. The ‘tall poppies’ are now protected under the Liberals’ approach and are viewed by them as essential for economic success.

In Australia, based on taxation records, the top 10% of taxpayers had 25% of total national income between 1974 and 1985 but that grew to 31% in 2010. For the top 1% their share was about 4.5% between 1976 and 1984 and in 2010 was 9.2%, after reaching a peak of 10.1% in 2006 before the GFC.

In 2013, a Productivity Commission paper also showed that since 1998?99, even just among those employed, wages had been increasing faster for high income earners than for low income earners.

Such inequality impacts equality of opportunity and this was recognised by the OECD as early as 2005:
... children of poor parents have less chance of succeeding in life than children of rich parents: a widening inequality of income risks leading to a widening inequality of opportunity. Because of these factors, a failure to tackle the poverty facing millions of families and their children is not only socially reprehensible, it will also weigh heavily on our capacity to sustain economic growth for years to come.
Given the last statement in that quotation, is rising inequality also contributing to current sluggish economic growth worldwide, not just the GFC hangover? That’s one for the Liberals to ponder, if they dare!

Australia survived the GFC thanks largely to a return to Keynesian economics by the then Rudd government (on the advice of then Treasury Secretary Ken Henry). Even now our economy has been growing at 2½?3% a year, below our long term average but still a moderate rate of growth. So why do people feel financially insecure?

Wages growth is currently the slowest it has been in 20 years so that certainly doesn’t help but another aspect mentioned by a number of writers, including in relation to the middle class in the USA, is cuts to government services. People feel they have less social support as government services disappear, that such services will not be there when they need them. Also any increase in their wages may go in paying for services previously provided by government — their situation, at best, is not improving or is going backwards.

In Australia, the Liberals cut government services because they believe in the neoliberal economic philosophy (still based on John Stuart Mill) that the individual should be free to use, that is buy, only those services they require. That, by economic demand, the market will meet the need for those services. Government providing services for all, that many may not use, is an inefficient use of resources! The Liberals will continue to emphasise low taxes because this puts money back into the pockets of the individual to buy the services they want and government can withdraw from that provision. That presumes, however, that everyone is earning enough to buy those services which is not the case under the Liberals’ approach.

We are also seeing a rise in what is termed ‘precarious’ employment — casual and part-time work, and short-term individual work contracts. The April employment figures this year showed that 20,200 part-time jobs were created but 9,300 full-time jobs were lost (there had been no increase in full-time employment in the previous three months). Continued work is not guaranteed in such situations, leaving workers unsure of their future: they need to be earning very large amounts, as with some of the FIFO mining contractors, to make them feel such uncertainty is worthwhile. But in many cases these approaches are used to reduce wages and working conditions. As the number of full-time positions diminishes that situation worsens. The Liberals have long supported this approach, no more so than when Howard introduced WorkChoices. Unions are sometimes criticised for not paying enough attention to part-time and casual workers but that is because they tend to focus on keeping, and creating more, full-time positions as it is only a full-time position that provides economic security. There are some studies in Australia suggesting that for a family to lift out of poverty at least one member of the family has to have a full-time job — even having a number of members of the family working casual or part-time doesn’t help because they are unable to invest in a better future as their work, and income, can stop at any time with little or no notice.

So the Liberal approach to employment is also increasing economic insecurity no matter how well the economy may or may not be going.

The current Liberal (Turnbull) government is focusing on business, and small business in particular, at least to start with. A focus on small business is to some extent consistent with the ‘fair go’ but not when large businesses and multi-nationals are included, and not when increases in productivity are being pocketed as profits, not improvements in wages.

In a 2013 report for the ACTU it was found that in the 1990s there was a stability between productivity and wages — both productivity and real wages grew at 2.1% each year.
Wages decoupled from productivity in the 2000s. Between 2000 and 2012, productivity rose by an average 1.3% per year, while real hourly labour income rose by only 0.6% per year on average. This meant that labour’s share of national income fell over the decade, and fell quite sharply. In 2000, the labour share was 65.6% — this had fallen to 59.7% by 2012.
Again, this is a global phenomenon:
In developed countries, the share of labour income declined, falling by 5 percentage points or more between 1980 and 2006-07 — just before the global financial crisis — in Australia, Belgium, Finland, France, the Netherlands, Norway, Sweden, the United Kingdom and the United States, and by 10 points or more in Austria, Germany, Ireland, New Zealand and Portugal.
It is global because so many governments are following the same neoliberal economic philosophy.

If workers do not benefit from increased productivity that is not a ‘fair go’. As the ACTU report suggests, a ‘fair go’ involves profits and wages increasing at about the same rate as productivity, not one outpacing the other by a wide margin. Now, to return to a fair distribution of national income, the profit share needs to reduce, which is not going to happen under this government. So if people turn against Turnbull’s approach it will be obvious why.

The approach is justified by the ‘trickle down’ (or supply-side) theory in economics (see Ad Astra’s recent article here for an explanation), that claims supporting business, including big business, improves the overall economy — a rising tide for all. At least that’s the theory. As so much evidence shows, however, it does not work.

On matters like education and health, the Liberals prefer to follow their economic path focused on the individual and are only held in check to some extent by outcries from the Australian public that their approach is unfair. Their obvious preferred model is for privatised health and education based on the premise that the value people put on these is shown by the price they are willing to pay. They are undermining Medicare. They are reducing funding for hospitals and schools (a recent increase does not match proposed cuts already built into the budget). Yet they continue to spend $6 billion a year on a rebate for private health insurance.

Almost everything the Liberals are doing is undermining Australian communities and Australian society as a cohesive unit. Their philosophy, so centred on the individual and ignoring community support, social responsibility and the common good, is anathema to the ‘fair go’. Their focus allows them to ignore inequality because that is simply some individuals doing better than the rest. In their approach, it supposedly provides an incentive, a goal for those lower down to aspire to. They believe that aspiration will inspire people to work harder. Aspiration may have been valid when Australia had a more egalitarian range of incomes: if the CEO was only earning the equivalent of a few years’ wages of the worker, then aspiring to a similar lifestyle was an achievable goal but not when that gap can be 20 years or more, effectively requiring a lifetime's work just to come closer to the aspiration without being likely to achieve it. When an aspiration becomes unachievable or unrealistic it no longer has value but the Liberals don’t seem to recognise that.

The Liberals cannot honestly call on our community spirit when they are the ones undermining it.

In 2014, the Centre for Policy Development released a book Pushing our luck: ideas for Australian progress. Lindy Evans wrote in it of the need for a new Australian narrative. She asked for more emphasis on Australia’s democratic history: the radical path we trod in the late 1800s and early 1900s, giving women the vote and allowing ordinary people, not just an elite, to be elected to parliament. She related the story of an early member of the Australian parliament making a speech with holes in his suit pants because it was the only suit he had. The fact that Australia had the world’s first Labo(u)r government was no accident but a result of our founders ensuring that ordinary people were drawn into the political process.
The idea that human societies are not chained to repeating history and that we can create a better world runs deep in the Australian tradition. In recent years we have lost sight of how rare that philosophy was, and still is.
She called her approach ‘egalitarian nationalism’ and presented it as an alternative but inclusive national narrative to that of multiculturalism. But if the Liberals continue their destructive path, our chances of ever achieving that sort of uniting narrative, emphasising our egalitarian democratic values, diminishes by the day.

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29/05/2016Ken What a telling piece you have written. Worsening inequality is afflicting our society, aggravated by the neoliberal approach to economics espoused by the LNP. Its trust in trickle down economics, despite it having been discredited over and again, perpetuates the trend to widening inequality, and brings with it all the awful social consequences: a community sense of unfairness, unrest, and in its extreme form, social disruption. This is where we are headed while the LNP persists with its flawed economics. Australians are sensitive to unfairness, as evidenced by their adverse reaction to the grossly unfair 2014 Abbott/Hockey budget. Even among LNP supporters saw it as unfair. The problem is that those in charge of our finances, Treasurer Morrison, Finance Minister Cormann, and Assistant Treasurer O’Dwyer are ideologues who follow their ideology slavishly, never questioning its validity, never taking into account the undesirable consequences of its application, never probing its effect on our society. They regard inequality as simply part of the natural order, and its worsening as inconsequential. What is more distressing is that they see no harm in their approach, and show no signs of wanting to change. It is like watching an impending train wreck – we can see it coming at high speed, but the driver sees no need to apply the brakes or to get onto another track. So on it goes towards the inevitable disastrous end, with many people thrown into the ditch, the train itself irreparable. It’s sad for progressives to witness.

Ken

29/05/2016Ad Yes, it is the neoliberal emphasis on the individual merely as a consumer in the market that ignores all the social issues that hold a society together. They think of society as no more than a market economy fuelled by competitive capitalism. They ignore social responsibility and the common good because they do not fit with their view of the consumer individual. I think that approach is destroying society, and giving rise to all the problems I mention, and destroying the Australian concept of the 'fair go'.

Neil Hogan

29/05/2016Thank you Ken, A great article that really encapsulates my thinking on the way society is being led by neoliberal governments, big business & multi-national corporations. It's all so logical when it is laid out before you like your article has done & it can only bring you to think that the said neoliberal governments, big business & multi-national corporations are either wearing blinkers when looking ahead at best, or they're all wearing virtuality reality masks that only show what they want to see & what they can't see doesn't exist. It's not rocket science. Capitalism is eating itself more & more each year as the gap widens between the rich & the poor & yet they still can't see what's happening. Despite their fears, Capitalism won't be killed by Communism. Capitalism will be killed by low-wage workers who can't afford to buy their products. Neoliberal governments will fall because they aren't providing basic things like education, health & welfare that we all equally have a right to share when we choose to live & work in a functioning society that is supposedly working for the common good all backed by the sense of a fair go. A month or two ago there were a few posts on Facebook addressing issues you have addressed in your article & reading many of the somewhat damning replies, any sense of a fair go would have been the furtherest thing from your mind as it certainly wasn't taking any part in the minds of the respondents & it drove me to post the following like it was a LOST AD... Lost - The Australian Sense of a Fair Go & Mateship, last seen wandering aimlessly beyond the black stump out the back of Bourke after a change of government in March 1996. If located could you please kindly ask them to return home as soon as possible as their country is in desperate need of some moral guidance. It got many likes, but only a couple of replies. No one wanted to openly support it & only a couple were willing to put their name to a post against it. Apathy is alive & well in Australia & unfortunately it is the neoliberal governments, big business & multi-nationals greatest asset!!

Ken

29/05/2016Neil, thank you for your comment and welcome to TPS. I love your 'Lost' ad. The fact that it elicited some negative responses indicates just how far the neoliberal philosophy is penetrating society. People are accepting the idea of the 'individual' but not seeing that by doing that they are handing power to governments and big business. In that regard you may also like a piece I did some time ago 'How the economic rationalists tried to steal our hearts and minds' http://www.thepoliticalsword.com/post/How-the-economic-rationalists-tried-to-steal-our-hearts-and-minds You will recognise some words from that piece in this one, as my current piece was a bit of a montage of earlier pieces put into a new narrative.

Neil Hogan

29/05/2016Thanks Ken, I did actually did respond to this previous article of yours & I think you liked my my input too... http://www.tpsextra.com.au/post/2016/04/30/divining-the-federal-budget I certainly like your articles as they really put a lot of my thoughts into actual words...I will read the article you just sent later today when I have more time.
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