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April 30, 2013
invoking the spectre of Greece
Another day. Another article in the economic scare campaign around the federal budget deficit, which has Labor has disclosed is due to a $12 billion projected revenue shortfall. That campaign is along the lines of a decade of deficits spelling a bleak future for Australians.
Jakob Madsen invokes the spectre of Ireland and Greece as a possible future for Australia, if the current deficit spending is maintained.
David Rowe
Jakob Madsen says that it is important to steer the economy back to balanced budgets. His reason is that:
Unless this spending path is broken, Australia could risk an unpleasant speculative attack on its currency at some point in the future. And it risks having little to fall back on if economic conditions substantially worsen. Australia’s budget has been in deficit since the onset of the global financial crisis in 2008. No serious corrective course of action has been taken to reduce it – even though deficits are usually run in recessions, not during an unprecedented mining boom.
His argument is that it would have been much better if the government had saved up for a rainy day so that it would have the means available to stimulate the economy in times of economic weakness without being forced down the austerity path when it is the least desirable.
The mining boom is over, the economy is slowing down due to a high dollar and a recession in Europe and the US, Gillard Labor is tightening government spending whilst the shortfall in the budget is about 1% of GDP.
If the answer to budget deficits is to cut spending rather than raise tax collections--and that is the position of the austerity merchants--- why not eliminate some of the special concessions for Big Miners (eg., the diesel fuel excise rebate), Big Aluminum (cheap power subsidies), the fossil fuel industry, the handouts to irrigators and the public subsidies for private health insurance?
Secondly, it is the economy growing more strongly over time that is the best way to increase the long-term budget balance. This can be done by upskilling the workforce so that Australians became smarter at what they do and facilitating the shift to a digital economy.
Posted by Gary Sauer-Thompson at 3:03 PM | Comments (2) | TrackBack
April 29, 2013
omissions in the current debate
Stuart Hall has an interesting article on contemporary global capitalism, which he characterizes in terms of neo-liberalism, global interconnectedness, driven in part by new technologies, the dominance of a new kind of finance capitalism, the dramatic growth of inequality and a widening gap between those who run the system or are well paid as its agents, and the working poor, unemployed, under-employed or unwell.
He adds that:
Neoliberalism's victory has depended on the boldness and ambition of global capital, on its confidence that it can now govern not just the economy but the whole of social life. On the back of a revamped liberal political and economic theory, its champions have constructed a vision and a new common sense that have permeated society. Market forces have begun to model institutional life and press deeply into our private lives, as well as dominating political discourse. They have shaped a popular culture that extols celebrity and success and promotes values of private gain and possessive individualism. They have thoroughly undermined the redistributive egalitarian consensus that underpinned the welfare state, with painful consequences for socially vulnerable groups such as women, old people, the young and ethnic minorities.
In Australia the mainstream media are full of articles about budget deficits, increasing public debt and how the economy’s capacity for recovery is impaired by too much government borrowing. These escalating obligations, they claim, will be passed along to our children and grandchildren, leaving Australia a poorer country. The medicine needed is the politics of austerity.
What is always missing in this kind of rhetoric by conservative commentators and politicians is that the enlarged government deficits are the consequence of the great financial crash, (GFC) not the cause. That crash was due to private speculative debts---eg., exotic mortgage bonds financed by short-term borrowing at very high costs. It is private debt of the banks that is strangling the economies of Europe and the US through the debt trap whilst Australia's s tax base has still not recovered from the GFC, and shows no sign of repairing itself.
Debt functions as part of the politics of social class and social control. The political power of business and large financial institutions, plus the momentum of the austerity campaign---too high a "debt-to-GDP ratio" will always, necessarily, lead to economic contraction---- suggests that there will be damage to the economy and human suffering in the near future along with a significant redistribution of wealth upwards rather than downwards.
Australia, it is being argued by the austerity merchants, cannot really afford a welfare state, humane working conditions, pensions, social and economic democracy. The Gillard Labor Government has been on a binge and it will make Australia an economic basket case. Australia must tighten its belt so that it lives within its means. It'll be hard, but it's something the Coalition can and will do for the sake of the grandchildren. "Tighten its belt " means winding back the welfare state.
That's the snake oil the austerity merchants are selling with their recession making economic package. They are using the budget deficit "crisis" as an opportunity to dismantle the social safety net provided by the welfare state.
Posted by Gary Sauer-Thompson at 1:49 PM | Comments (7) | TrackBack
April 26, 2013
budget pressures: health care
The Grattan Institute's report on budget pressures shows that rising costs, a shortfall in tax revenues, declining minerals prices and big political promises could see a combined annual deficit of around 4 per cent of GDP by 2023.
Pat Farmer
The greatest single pressure on the budgets comes from growing health spending, which is is eating up more and more of government budgets, both state and federal. The main cause of government health spending is due to people of all ages getting more and more expensive services per person, and there is no reason to think that this trend will slow down in the next ten years without major policy reform.
Health rationing is going to become more explicit over the next decade as it is crunch time for health funding. Doctors and their professional bodies, especially the AMA, wielded considerable power over decision making and they use it to ensure the health minister’s focus remained on providing acute care services.
They ensure the longstanding media traditions of promoting a medical rather than a health policy debate. The federal government’s own Department of Health and Ageing, or DoHA, gives scant recognition to the social determinants of health in a policy area that continues to be dominated by hospitals and the medical lobby to the detriment of primary care.
Since health, for the Coalition, is primarily a matter of personal responsibility and individual choices, we can expect cutbacks to the health budget. Nor can we expect the Coalition to address the problems caused by our fee-for-service based Medicare system. This is a payment system that works for one-off episodic care but is not well designed to promote preventive care or chronic disease management which requires ongoing care across different health sectors.
So we will continue to have a systemic dysfunctionality with prevention or chronic disease and, consequently, a hospital system faced with increasing numbers of avoidable admissions every year.
Posted by Gary Sauer-Thompson at 2:10 PM | Comments (7) | TrackBack
April 22, 2013
educational reform
Australia does need educational reform to prioritise the lowest performing students and to have a funding system that is both good, effective and equitable. The current political battle is over both the school funding arrangements, the states as partners holding constitutional responsibility for public education; and greater principal autonomy, in curriculum, assessment and reporting.
Alan Moir
The current arrangements and policies limits accountability and contributes to growing resources and performance gaps between rich and poor schools, with the disadvantaged students suffering most. CoAG failed to deliver.
The Gillard Government's $2 for $1 school funding deal for the states and territories was rejected because the non-mining states lack the significant fiscal revenue to contribute significant additional funding of their own and it also meant the states losing a huge amount of control over how they spend this precious school funding. This goes to the heart of what federalism means in Australia.
The Coalition's position is that Australia's school funding system doesn't need reform and they will retain current inequitable arrangements that reinforce the ever-increasing social and academic divide between schools. The gaps between schools serving the rich and those serving the poor have grown, with the gaps marked by growing differences in school size, student intake, resources and achievement.
Posted by Gary Sauer-Thompson at 12:51 PM | Comments (4) | TrackBack
April 21, 2013
remodelling the welfare state
Ross McKibbin has an interesting article in The London Review of Books on the remodelling of the welfare state in the UK by the Cameron Government. Gone is the idea of a Big Society and the associated conception of charities taking over the delivery of government services as they are more sensitive, more caring, more vigorous than the sclerotic state bureaucracy.
McKibbin says that:
What really drives this legislation is ideology and electoral calculation. Many Tories simply hate the welfare state and its beneficiaries, and as the party becomes increasingly right-wing so the determination to do away with the state system, or diminish it as much as can safely be done, becomes stronger. Over the last five years the Tories have succeeded, quite illegitimately, in presenting a crisis of the banks as a crisis of the state generally and the welfare state in particular. The new legislation has also to be seen in the context of the cuts to benefits already introduced by the coalition and the wholesale onslaught on the remaining public functions of the state. Many of its functions, of course, have already been privatised, with punitive consequences.
The electoral calculation is to mobilise those perceived to be hardworking and striving – that is, most people – against the scroungers and skivers who spend the whole day in bed: to turn the not very well off but not really poor against the really poor, whose creature is, of course, the Labour Party.
The rhetoric of George Osborne, the UK Chancellor, is that scroungers are living off the taxpayers and the cuts in welfare were therefore fair, and you should be grateful to the Conservative Party for arranging them. It is creating a political culture geared towards private aspiration and a hostility to the common good.
McKibben makes the interesting point that the Conservative's strategy is one of:
turning the working class against itself is not new – it was practised by the Conservatives in the 1930s with some success. It exploits a tendency in working-class life for people to distrust their own class more than they distrust the people above them. Hitherto, negative stereotyping has worked.
The reality is that the great bulk of welfare payment goes to those in work, not to the scroungers and the feckless, and this points to the increasingly straitened condition of the strivers.
In Australia Osborne's strivers are Howard's battlers or Gillard's working poor. The public has a crude conception of the welfare state and is largely unaware of the extent to which it is also dependent on it. The conservative media have done a pretty good job in demonising the imaginary scrounger class. This covers up the political dissonance in which the middle class come to believe they are genuine battlers entitled to government handouts, be it family tax benefits or subsidised private education for their children.
Any effort to maintain the progressive nature of the taxation system, or to redistribute income, is decried as ''class warfare'' - an expression of the new conservative political correctness that demands the politics of austerity, a small state and lower taxes. If Australia faces a decade of deficits, then the welfare state's services for the poor has to be cut back. There is no alternative.
Posted by Gary Sauer-Thompson at 3:00 PM | Comments (3) | TrackBack
April 19, 2013
US Senate says no to gun regulation
The US Senate has failed to pass a gun control measure expanding background checks that had 90 percent popular support. The proposal prevented gun access for criminals and the mentally ill, and expanded existing background checks to gun shows and online sales on commercial gun sales (but not for sales between "friends and neighbors").
David Rowe
The Manchin-Toomey background check bill failed to get the 60 votes required on a motion to proceed; to overcome the threat of a filibuster. It only got 54-46 and so failed to advance. Only four Republicans voted for the proposal, with 41 voting against it. Five Democrats from the red states rejected the proposal as well. The main reason it failed is because the NRA has unrivaled political power.
That power means corruption in the form of receiving money from firearms lobbyists.
Posted by Gary Sauer-Thompson at 3:31 PM | TrackBack
April 17, 2013
Energy: disruptive technologies
Whilst the Barnett Government in WA is using energy as a mode of economic development for the state (developing gas fields) and protecting their incumbent generators from the disruption caused by renewable entry, the old incumbent network operators across the nation are facing a very troubling future. from the decarbonisation of Australia's energy system.
David Pope
They supersized the electricity grid only to find they in a situation where there is a decline in revenue due to declining manufacturing capacity, the impact of energy efficiency schemes, and the ability of households to produce some of their own electricity requirements from rooftop solar systems.
The old incumbent network utilities are not getting the revenue they require from the network investments already made. The competing disruptive technologies (eg., solar and wind) will continue to eat away at the generator's revenue base as homeowners turn to rooftops and energy efficiency.
Will they follow the music industry option of business as usual and declaring war on their customers by using state and federal governments to make solar unattractive by increases in fixed electricity charges, raising tariffs, and implementing regulatory barriers? Not to mention the inequitable arrangements (market rigging?) offered by the electricity supply cartels in buying the power generated by the solar panels at one third the price they charge you to use their grid power.
The utilities and power generators are resistant to a large-scale transition to a clean energy system whilst most of the state governments currently block the transformation of the energy system.
Posted by Gary Sauer-Thompson at 2:17 PM | TrackBack
April 16, 2013
a fairer + smarter educational system?
The sad reality is that four decades after federal and state governments began syphoning of funds from the public purse to top up poor Catholic parish schools we have seen an exponential growth of government funding go to middle class and wealthy private schools at the expense of increasingly impoverished and disadvantaged public schools.
Now, with the Gonski reforms to school funding we have a siphoning of funds from the universities to begin the process of public schools getting extra federal funding. However, Canberra now gives more money to private schools than it does to universities.
David Rowe
Labor's social democracy ethos is now reduced to bold education reform to achieve its social goals of a fairer and smarter Australia. The argument is that this $14.5 billion reform to education will open up the economic opportunities that flow from getting the best chances as early as possible in life. It's Gillard Labor's big national project.
How will funding cuts get more and more children into university; or ensure that Australian universities can deliver world-class education when the teenagers get there? What is the point of having a top school system in Australia whilst making cuts of $2.3 billion to university funding as part of the Gonski education reform
Posted by Gary Sauer-Thompson at 8:59 PM | Comments (3) | TrackBack
April 10, 2013
goodbye to all that?
Thatcher is being reinvented by the conservative movement as the woman who saved Britain from the left , and a conviction politician who was a leader above politics. They are rewriting history in terms of them being the winners.
David Rowe
Winners because the power of the trade union bosses was broken; sold public housing to the tenants who occupied it; denationalized industries and utilities; established the primacy of the deregulated market and the ethos of individualism. This, the narrative goes, reversed Britain's long-term economic decline by restoring the power of capital and shifting the structure of the economy away from manufacturing --de-industrialisation---towards financial capital.
It's a narrative hard to maintain after the global financial crisis, the market inequality and the economic depression in the UK--the dominance of finance in the economy and the failure of bank regulation flowed from Thatcher's belief that markets should always be left to themselves. This was a capitalism of self-regulating markets, a strong but minimal central state that backed their rule and an antagonism to democracy.
The narrative is being reworked by current conservatives who are using the economic crisis as a chance to reshape everything--especially rolling back the welfare state. Like Thatcher they assume no responsibility to minimise social disruption or to create new jobs and industries.
Posted by Gary Sauer-Thompson at 12:22 PM | Comments (5) | TrackBack
April 9, 2013
a post-industrial world
It doesn’t take a rocket scientist to see that we increasingly live in an information and service economy, not a manufacturing economy of industrial cycles, business needs, tooling costs, central distribution networks, planned obsolescence, seemingly abundant natural and synthetic resources and tghe poisoned industrial urbanscapes of heavy industry.
David Pope
We see the impact of these changes not only in the ravage and rot of former industrial cities but also in the rhizomatic boom in edge-city development and sprawl. We increasingly work, live and play within a technological, economic, and cultural infrastructure that has long moved on from its industrial base. Australia's future is tied into communications and technology connecting new industries and global markets, thereby making high speed internet a key economic development issue.
The Coalition has dragged its heels on acknowledging this fundamental economic shift. It's initial position was a Luddite one and it has taken 5 years to come up with its second rate policy for high speed broadband infrastructure--- fibre optic cable to the node, which then relies on old, dodgy copper wiring for the last kilometer from the node to the premises.
They talk about is the cost to build the network not about the benefits the NBN could offer Australia’s digital economy, even though the digital economy, as the only likely growth sector that can complement, and ultimately replace, the mining industry as a key economic driver. As Peter Gerrand points out:
The digital economy is already a larger employer than the mining industry, and it has the advantages of providing a much greater diversity of highly paid, high-value jobs, which can be teleworked virtually across Australia – given enough access bandwidth.
The Coalition's claim is that their quick-fix proposal is better than Labor's fibre to the home because it is cheaper and its much lower upload speeds is all that we need.
These will be unusable in the future, and we will be marooned indefinitely on copper and on the equivalent of ADSL. Turnbull knows that the Coalition are building something that will be obsolete on the day that it’s built. So we are being offered a quick and dirty policy.
Posted by Gary Sauer-Thompson at 1:43 PM | Comments (8) | TrackBack
April 8, 2013
whither Labor?
Mark Latham's Quarterly Essay, Not Dead Yet: Labor's Post-Left Future, accepts the political reality about the federal Labor Party. It is controlled by union based factions and the subfactions; there is little internal democracy; the withering of the grassroots membership only consolidates the power of the factions; and that Labor's ranks will be mostly composed of those building a political career.
David Rowe
Latham also supports Hawke and Keating's turn to a neoliberal mode of governance in the form of open markets, competition, deregulation, privatisation and public sector interventions. He argues that those who benefited from this 1980s reform agenda were the suburban "aspirational class", and that they now provide the platform for Labor's future electoral success.
Hawke and Keating's turn to a neoliberal mode of governance was unpopular--it caused abn anti-globalization resistance--- but it was premised on the economic realities of globalization, and Australia's survival within the global economy. It had to be done. Australia has benefited due to the modernization of China and its need for iron ore and coal for its economic development.
But the open markets of economic globalization have also created economic dislocation, a more unequal society, and a class of working poor that depend on the support of the social-democratic state. The latter is counter to the neo-liberal mode of governance's general retreat from market regulation and state provision of social services.
Whither Labor then?
One would expect, given Labor's history of commitment to social justice that it would accept that the social-democratic state offers the best guarantee of preserving the productive capacity of properly regulated competitive markets and helping those harmed by technology and competitive markets that have destroyed jobs for adult workers with low levels of skill and education.
Hence the phenomena of poverty amidst prosperity. This raises public policy questions about social mobility, aspirations, grievance, the role of the state, and the tensions between paternalism and liberalism.
Latham, however, turns his back on civilizing global capitalism. He sees the working poor and economically disadvantaged living in public housing as an underclass mired in a culture of poverty characterized by a shared sense of hopelessness and a pervasive lack of aspiration, with its anti-social behaviour (unsocialized, casual violence, drug-taking, crime and illegitimacy) and living in dysfunctional communities. Latham’s paternalistic plan is to move people out of disadvantaged neighbourhoods, by breaking down class barriers and making social mobility possible.
This is close to the conservative/neo-liberal idea of coercing deprived communities into taking more responsibility for their own local communities, rather than waiting for a giant nanny state to do it all for them.
Posted by Gary Sauer-Thompson at 12:13 PM | Comments (12) | TrackBack
April 7, 2013
Nth Korea: sound and fury
It is hard to take Nth Korea rhetoric seriously because it doesn't have the capability to deliver on the threats and it is not preparing for war on the Korean Peninsula. Yet the US talks and acts as if its dominance in Asia is being challenged by the sound and fury from this tin pot regime. Nth Korea's threat of nuclear war is being interpreted as plowing full speed ahead toward an international nuclear crisis.
Alan Moir
North Korea does not have a demonstrated capability to put a nuclear weapon on the U.S. homeland. It's still mostly loud noises----bluster, bellicosity, insults---and provoking the South Koreans in their game of chicken. They are succeeding in making South Korea more and more edgy.
The Nth Korean regime survives through its drumbeats of storm and menace and by playing their neighbors off one another. By acquiring nuclear weapons, the communist regime has warded off the threat of foreign intervention. But they have failed to resolve any of their underlying economic problems and may even have deepened them. As Fred Kaplan points out:
North Korea, while still the most closed society on the planet, is a bit less closed than before: The experimental markets and manufacturing joint ventures with the South, as well as the frequent flow of traffic across the Chinese border, have exposed its people to a bit of the world; a growing number of them are realizing that they’re much worse off than the others, that they don’t have to live the way they do.
Nth Korea certainly doesn't want a war with the US and the Pentagon has no desire to be drawn into a war that was not of their own making.
As Tim Shorrock highlights:
The Obama administration has a choice: It can continue a policy of sanctions, military pressure and no talks until North Korea agrees to abandon its nuclear weapons; or it can try something that’s been tried, with varying success in the past: negotiate, possibly with the assistance of China and other regional powers, toward a peaceful solution that benefits everyone in the region, including the DPRK.
The reality is that the US dominance in the pacific is being challenged by China, which is the rising power in the Asia Pacific Rim, not missiles from Nth Korea designed to reach the continent of the United States or Hawaii, the home of the U.S. Pacific Command.
Posted by Gary Sauer-Thompson at 9:33 PM | Comments (3) | TrackBack
April 3, 2013
"on struggle street"
Thanks to Howard and Costello Australia allows the wealthy to park more and more of their earnings in super accounts at discounted marginal tax rates. The Gillard Government is considering reducing superannuation concessions to the top 1 or 2 per cent of earners who get 9 per cent of the total value of the tax breaks. The bottom 30 per cent of income earners get just 1.2 per cent of the total value of superannuation concession.
David Pope
The Coalition plans to scrap the super tax offset for low-income earners which means going after 3.6 million Australians on salaries of $37,000 or less. Despite this, some members of the ALP (eg., Joel Fitzgibbon) talk in terms of those on incomes of $250,000 being battlers on struggle street in western Sydney, whilst the Gillard/Swan proposal to reduce the generous tax concessions to the top 1 or 2 per cent of earners is seen as "trashing" the Labor brand.
What is going on within the ALP these days? Shouldn't they be talking about reform of the system to fix its many failings? One of those failings is the excessive fees are being skimmed from people's savings and a superannuation industry "living of the public teat".
Reforms to make the superannuation system more sustainable, given that the cost of the concessions is set to climb 9 per cent next year, then 14 per cent, then 13 per cent. Or reforms to improve the adequacy of the Age Pension for those who have little or no access to the benefits of the tax concessions.
Eva Cox points out that:
problems arise partly because superannuation’s basic design reproduces the inequities of the distribution of earned income. Compulsory contributions as a set percentage of pay, means the “savings” will reflect the frequency of contributions and their amounts.The more time in paid work and the higher the pay received means the range of savings will reproduce the relative inequalities of labour force participation and rewards. This has obvious gender implications as women tend to earn less when in jobs and take more time out of paid work as well, so end up with substantially less.
Superannuation is designed to give the biggest subsidies to those who need them least, yet members of the ALP are publicly defending the generous superannuation tax breaks received by the very richest Australians.
Posted by Gary Sauer-Thompson at 12:13 PM | Comments (6) | TrackBack
April 2, 2013
gungo-ho developmentalism
John Williams' review of the science on coal seam gas ---An analysis of coal seam gas production and natural resource management in Australia: Issues and ways forward--- says that coal seam gas is just another another land use that needs to be regulated like the others; and that environmental risks (especially groundwater) are serious.
Pat Campbell
John Williams and colleagues conclude with the right question:
Do we want degraded and collapsing landscapes? If the answer is “Yes” then we appear to be well on the way. If the answer is “No” then we need to seriously reconsider and re-think how we make decisions about how we use our landscapes.
The approach they recommend is to work out what the landscape can sustain: how much degradation can the landscape incur before it starts to lose function?
The states it seems are not interested. Coal seam gas extraction in Australia is poorly and inconsistently regulated. The state's development approval process does not address the concern of farmers who've seen rivers bubble with methane, their bore water polluted with chemicals, while the reserves of ground water on their property have dropped alarmingly. Queensland, for instance, is primarily interested in fast tracking approval for coal seam gas development in that certain Queensland coal seam gas projects were rushed through without proper governmental oversight.
It's the usual story of commercial considerations being put ahead of the environment, which is what we saw with irrigated agriculture development in the 20th century. There is a need water water to be added as a new matter of national environmental significance.If a coal seam gas project puts water resources at risk it should be referred to the Federal Government for review under the Environment Protection and Biodiversity Conservation (EPBC) Act. A specific water trigger will mean that most coal seam gas projects become amenable to Federal Government evaluation.
Posted by Gary Sauer-Thompson at 9:51 AM | Comments (1) | TrackBack