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May 31, 2013
it's called political reform
This week's secret deal between the ALP and Coalition over public funding for their party apparatus highlights their self-interest. They needed $10 million a year to do administration work, apparently.
The self interest is not just their collective hand in the public till (ie., the extra funding for their own parties); but for the way they tried used this to attempt to squeeze out the emergence of minor parties. They did this through the mechanism of doubling electoral nomination fees and by giving back the extra $125,000 in increased electoral fees to the major parties but not to the minors.
David Rowe
The two major political parties have a collective interest in ensuring that they have this massive advantage over anybody else who wants to enter the political field and that they don't want other players in the field. Hence the ant-democratic instincts of both the ALP and the Coalition.
Political reform on this issue means moving the parties away from reliance on private sources of funds and to give them public money. The idea is to make the parties less vulnerable to special interests, to lobbying and to corruption by ensuring that the public money replaces the private money.
This is a necessary step to break the fraudulence in the system.
Posted by Gary Sauer-Thompson at 3:35 PM | Comments (1) | TrackBack
May 28, 2013
scrutinizing the Catholic Church
Both the royal commission into child abuse in institutions and the Victorian parliamentary inquiry into child abuse are highlighting the Catholic Church's unacceptable response to pedophilia by its priests in Australia. This is to deny there is a culture of abuse; that it adopts the half-baked solution of moving the clergy from parish to parish; destroying records; attacks a hostile media; avoids any systemic investigation into the abuse; places itself above the law; obstructed investigations and protected child molesters.
David Pope
It's a broken church and it requires the power of the state to force it to confront its own denial about clerical sexual abuse, the lack of pastoral care of its people and the entrenched culture of concealment within the church. There has been a failure of the Church at very senior levels, right up to the present day, to deal adequately with allegations of serious and predatory crimes, including the apparent failure to alert police.
The Church's leadership has its back to the wall, unable to say much except sorry and apologize. The power of the state is being used to tell Catholics that their Church has to smarten itself up and bring its practices into line with best practice accepted by everyone else in a liberal society; or suffer prosecution for its culpable negligence.
Posted by Gary Sauer-Thompson at 10:59 AM | Comments (6) | TrackBack
May 27, 2013
goodbye Ford
Ford's withdrawal from car manufacturing in Australia in 2016 was bound to happen. It was just a question of time after Detroit excluded the Australian branch from its global production and Ford Australia continued to built big cars when consumer demand had shifted away from gas guzzlers to small cars.
Consequently, its production runs were far too small for the manufacturing plants to be economically viable.
David Rowe
The foreign imports have been able to satisfy the changes in consumer preferences where domestic manufactured cars have not. It does imply that there is a great future for broad-based car manufacturing in Australia. Future Australian governments will face a hollowed-out manufacturing sector as well as declining revenues from resources.
Holden is already hinting that it will probably need yet more public subsidy if it is to remain viable. Public subsidy is corporate welfare.
Posted by Gary Sauer-Thompson at 2:33 PM | Comments (3) | TrackBack
May 21, 2013
two handed politics
The Coalition talks in terms of smaller government and rolling back the welfare state its policies (paid parental leave, dam construction, and Direct Action for carbon abatement) are those of Big Government. Mark Latham spot it, and he sees the significance----the Liberal Party is in retreat.
David Rowe
Of course the contradiction in the Liberal Party will be covered up by its variously effective tactics that are designed to show that the Gillard Labor Government is both incompetent and dishonest; and by it making global warming its ideological battleground and its loathing of environmentalism.
Posted by Gary Sauer-Thompson at 9:06 PM | Comments (5) | TrackBack
May 20, 2013
"a future akin to Europe's present"?
Moir's cartoon is pretty accurate by you would guess that from business and political journalism. As we know the media’s commercial interest masquerading as news is not new and that a lot of the commentary is PR-driven churnalism.
It's a situation of weakened media companies, reliant on corporate advertising, not only not scrutinising powerful business interests, but pretty much acting as the cheerleaders for the interests of Australian business opposed to modernization.
Alan Moir
The economic "analysis" roughly works in terms of template. This can be seen in the columns of Peter Hartcher in the Fairfax Press. He ends his Seeing sense as end nears thus:
And in the longer run, Australia's public finances will be a problem. As the population ages, we face decades of severe strain and a future akin to Europe's present. It was a happy week for Australia because both sides of politics contemplated having to take responsibility for their decisions.
The template is this: We cannot afford the welfare state. Greece beckons. Austerity is the only way to avoid this catastrophe. Social democracy has to go as its goals can no longer be afforded.
Sitting underneath this template is the view that the path to prosperity is the extraction of mineral resources and growing grain and fibre with very light regulation. It is a rejection of the social view of investing in human capital, a digital economy and sustainablity.
Posted by Gary Sauer-Thompson at 12:58 PM | Comments (3) | TrackBack
May 18, 2013
'Safe as Milk': Really?
The media commentary around Abbott's Budget reply has by and large been positive. The Canberra Press/Media Gallery is happy to remain at the level of political appearances---"Abbott cleverly sidestepped Labor's booby traps" etc--- and to take Abbott at his word about budget emergencies and the austerity medicine restoring Australia to health after the virus that is Gillard Government has been destroyed.
David Pope
John Wanna, in his positive review, does put his finger on the key economic point:
Much of Abbott’s economic strategy rests on a spike in consumer and business confidence upon the return of a conservative government. As economic activity picks up, revenues will improve further and restore the budget to balance. This may well eventuate, but it is an assumption — not yet fact. If any government squeezes the economy too hard through spending cuts or tax increases, it risks tipping the economy into recession –
Is this a realistic assumption? Is it a plausible one? How will economic activity pick up with austerity economics?
Wanna doesn't say--other than to remind us that John Howard nearly tipped the economy into recession when he made substantial cuts in 1996-97. The tone of the article suggests that Abbott will not be so silly as to tip the Australian economy into recession.
That's misleading as the Coalition's central claim is that austerity will lead to economic growth. Underpinning this is the hypothesis of expansionary fiscal contraction. According to this hypothesis austerity might have expansionary effects in cases where households trust government efforts and think that today’s sacrifices will translate into tax reductions in the future. These expectations on their future disposable income might induce them to increase consumption and investment in the short-term, leading therefore to expansionary effects.
Yet the UK experience of so-called expansionary austerity has been one of stagnation — similar to (but less severe than) the European experience, where limited monetary activism by the ECB has not even come close to offsetting massive unemployment and contraction in the periphery . It is a stagnation that America seems to be beginning to experience in the context of its embrace of expansionary austerity.
Posted by Gary Sauer-Thompson at 4:45 PM | Comments (4) | TrackBack
May 17, 2013
bombast + humbug
Both Tony Abbott and Matthias Gorman on Radio National Breakfast espoused austerity economics, which, they claimed , would lead to a anew age of prosperity. These claims (bombast and humbug were not contested by the journalists even though the flaws of this pre-Keynesian economics were covered over by the rhetoric of reaction that was full of bombast and humbug.
David Pope
The ABC journalists didn't recognize the morality play on offer---a Labor Government had spent too much on frivolous policies, and it had taken on too much debt. It must cut spending and reduce the deficit. The lurid excesses of the past will stop under the responsible Coalition, whilst the pain of the austerity to purge the ghastly excesses of a bad and rotten government is necessary to ensure the return of prosperity. A golden age beckons.
I cannot see the return of the Howard golden age of prosperity, given the condition of the global economy. Australia's slow economic growth means that government revenue won't be rolling in as it did for Costello during the mining boom. So the Coalition will have to keep cutting into, and rolling back, the welfare state. The Coalition keeps saying that a Coalition government would have to take ''unpopular'' decisions that would ''hurt'' people.
So we can expect more bombast and humbug from a Coalition that reacts against Gillard Labor's reforms, and uses pre-Keynsian economics to support and legitimate its politics of austerity that will impact heavily on the working poor. You can here the traditional talking points of the rhetoric of reaction already: “perversity” (the reform will make the problem even worse), “futility” (the reform will do nothing to solve the problem), and “jeopardy” (the reform will endanger some hard-won social gain).
These are the major polemical postures and maneuvers likely to be engaged in by the Coalition and its corporate allies who are setting out to debunk and roll back “progressive” policies and movements of ideas.
Posted by Gary Sauer-Thompson at 11:48 AM | Comments (7) | TrackBack
May 16, 2013
austerity's siren song
Mark Blyth’s Austerity: The History of a Dangerous Idea looks at the ideas of those austerians who have succeeded in casting government spending as useless profligacy that has made the economy worse and centered the economic policy debate on budget on cuts to government spending.
Austerity is the only way to restore prosperity is their claim. The idea of “expansionary austerity,” the proposition that cutting spending would actually lead to higher economic growth, is what sits behind this claim. As the Business Council of Australia constantly reminds us confidence-inspiring policies ( ie., the sustainability of public finances or budget surpluses) will foster and not hamper economic recovery, because confidence is the key factor.
David Rowe
Blyth argues that in the current situation post global financial crisis the accumulation of debt by the public sector throughout the industrial world has far more to do with the direct and indirect effects of financial distress than it does with government profligacy. Indeed, countries such as Ireland and Spain had more favourable records of government debt accumulation than even Germany before the crisis. He makes a strong case that at times such as the present, austerity can actually be self-defeating in that its adverse effects on growth exceed any direct benefits from reduced borrowing.
He has a point, as the turn to austerity after 2010 was drastic, particularly in European debtor nations. Greece , for instance, imposed spending cuts and tax increases amounting to 15 percent of GDP; Ireland and Portugal imposed 6 percent. The United Kingdom’s economy shrank due to the austerity imposed by the Cameron Conservative Government. In these countries austerity did not lead to a surge in confidence nor enable these countries pull themselves by their own bootstraps out of the quagmire. It had major adverse economic effects, so much so that the IMF reversed its position on the idea of austerity actually boosting economic growth.
The history of economic policy shows that governments have experimented with austerity, it has led to disaster, and yet a couple of decades later, their successors try again, with equally dismal consequences. The current lot run a morality tale about the need to reduce government debt by ending entitlements and hacking away at out-of-control government spending. In doing so they avoid the bad behavior of the private sector in the global financial crisis and the way that finance capital made taxpayers liable for banks’ morally hazardous behavior.
It is faulty economics. Free market economic liberals acknowledge that economic crises have happened, but they have thought of them as an inevitable hangover from previous economic exuberance. All that the state could do was balance the budget, and perhaps even raise taxes, to restore economic confidence. Under this theory, austerity was something like allowing the economy to purge itself between successive bouts of overindulgence. The pain is necessary as it is part of an inevitable cleansing process to “purge the rottenness” from the system.
Greece is the poster child
Posted by Gary Sauer-Thompson at 8:26 PM | Comments (4) | TrackBack
May 15, 2013
the new normal in a post-GFC world?
The Gillard Govt's budget strategy is one that locks in its long-term social welfare reforms in education and disability in the context of the shortfall in tax revenues caused by falling commodity prices and a high Aussie dollar. This strategy also involves cuts in spending--eg., the baby bonus, university funding, research incentives, and clean energy funding.
Taking money from tertiary education and giving it to high schools is short sighted. It suggests that the limits of Australia's strategy of decent public services + low taxes has been reached in a a post-GFC world. The days of easy revenue for federal governments is over.
David Rowe
It is also short sighted that Australia’s Renewable Energy Agency – the independent institution charged with giving a kick-start to emerging renewable energy technologies and supporting infrastructure – has had its overall funding cut and deferred. What should have happened is a boosting of its the funds to enable the transition to a cleaner economy--eg., a solar thermal energy power station in Port Augusta.
The budget could have the funds by cutting back on the tax breaks for fossil fuels, subsidies for the big miners and subsidies for irrigation farmers. The programs supporting carbon capture and storage, and coal mining more generally, were slashed. The former were all spin, as they were spruiked by the coal companies in the mid 2000s as they tried to fend off carbon pricing and renewable energy support policies.
If the emphasis is on growth and jobs is at the expense of a more sustainable Australia, then it is not clear how Australia's manufacturing base is going to be strengthened to replace the 2015 mining investment run-down. There is still an incoherent roadmap of the Australian economy’s direction as the resources boom comes to an end requiring Canberra to create a 21st century economy.
Austerity is happening, through a mixture of spending cuts in key areas and tax rises, but not the neo-liberal shift to a smaller state. The neo-liberal goal is to attempt to bypass a democratic government to create an integrated global marketplace for financial and mining interests. It involves using the crisis to further the economic reforms needed to undermine the social welfare model and to create a self-organizing market that would allow for mobile capital flows across Australia's borders.
So an economic crisis in Australia has to be manufactured, which is what most of the commentary in the mainstream press is doing with its attack on the Gillard Government for failing to deliver the budget surplus that it had promised. They promised big on the surplus, they didn’t deliver, they look inept.
The attack centred around an $18bn deficit---the government had a spending problem, not a revenue problem--- is designed to destroy the legitimacy of the Labor government so that it is dumped into the dustbin of history, thereby enabling a more compliant Coalition government to implement the neo-liberal mode of governance more effectively in the form of the politics of austerity.
Posted by Gary Sauer-Thompson at 7:36 AM | Comments (19) | TrackBack
May 14, 2013
a flawed growth scenario?
An incoming Coalition is committed to the politics of austerity, given its economic mantra of “stop the taxes” , "cut the debt" and only run budget surpluses always. It is also committed to the supporting multinational capital--- Big Miners, the coal industry and the fossil fuel companies/generators--- by rolling back the mining tax and restricting renewable energy. They also plan to cut back the taxation on corporate profits and personal income.
This is part of the decade-long fierce fight-back by the conservative right, especially in the Anglo-Saxon world against what it sees as environmental socialism.The Coalition's option is to adapt to climate change rather than give in to "socialism" to prevent it.
David Rowe
This, it is claimed, will prevent from Australia becoming an economic basket case like Greece, and this, in turn, will also ease the cost of living pressures on those living in suburbia thereby enabling them to have an easier life. So there will be austerity for the populations to bring national debt under control and a pro-growth strategy based on dig baby dig. This represents the end of rising energy prices and squeezed living standards.
Coal has a brilliant future. The good times are just around the corner. Self-organising markets and business, with minimal public intervention and oversight, are the route to wealth generation, prosperity and jobs.
There's a possible alternative scenario within thee self-organizing free market. Here's possible alternative scenario. The world's top 200 fossil fuel companies are currently valued at $4trn, with $1.5trn of debt. That valuation implies they would burn all their carbon reserves, increasing global temperatures by at least 6C, with untold consequences for life on Earth. So the current valuations and business strategies could be self-defeatingly irrational – and $4trn of value could be suddenly halved.
What happens if China and India start cutting back on their use of coal to generate the energy for their economic development because coal pollution makes their cities unbearable to live in? That would mean them buying less imported coal from Australia. Doesn't that put constraints on the plans of Clive Palmer and Gina Rinehart to construct Australia’s biggest ever coal mines and billions of dollars of associated infrastructure in Queensland around the Galilee Basin?
Wouldn't that mean it becomes more difficult for the coal miners to obtain the finance for their capacity expansion and that their coal assets (eg., coal export terminals, mines and railways in Queensland and NSW). What if the power generators are unable to raise raise capital to build new plants. Doesn't this scenario mean stranded assets?
So you can see the Coalition's gamble. They are betting on China and India's ever increasing demand for Australian coal due to their ever expanding reliance on coal until 2050. Yet the market for coal is not looking good as India and China increase their wind and solar capacity by putting ever more incentives behind solar, wind, gas and nuclear.
What if coal fired power stations are retired and no new coal fired power stations are built? Doesn't that mean a limited rise in the price of coal. Australia would be the hardest hit of any coal exporters because, as the Big Miners tell us, it has the highest marginal cost. What then, is the price per tonne which the coal miners need in order to ensure that their big projects are profitable?
$87/tonne? The price reached $10/tonne in February 2013. It fell to $93/tonne in April. The trajectory is down.
Posted by Gary Sauer-Thompson at 12:23 PM | Comments (7) | TrackBack
May 13, 2013
a 'horror page' in our economic history?
It's hard to arouse much interest in the 2013 budget and its deficit. The latter has become a fetish.
We know that government revenue is declining, and that this means the naive commentary that the deficit is caused by a profligate, wasteful Labor Government blowing the revenue from the mining boom and maxing the credit card is too one sided.
The Coalition continue to deny that Labor's fiscal activism in the form of a fiscal stimulus insulated the Australia economy from the external shock of the global financial crisis that would otherwise have produced a deep domestic recession. The revenue decline will be a condition the Coalition has to deal with, if it gains power, because it is a consequence of the recession in the global economy that is due to the global financial crisis caused by Wall Street.
Secondly, the Howard/Costello Coalition also went on a spending spree---- they actually spent, or gave away as tax cuts, a staggering 94 per cent of the windfall gains delivered by the China-driven mining boom's first phase.
Bruce Petty
The Coalition is contradictory: they are saying that they will spend big on a family-centred welfare state and to the middle-class, as well as saying that they are committed to the politics of harsh austerity and that the era of ''universal entitlement'' is at an end. They wont reverse all those tax cuts that Howard and Costello gave to the middle class, whilst their direct action plan to achieve the bi-partisan target of a 5 drop in emissions is going to be paid for by taxpayers.
The Coalition have yet to acknowledge that the unusual strength of the Australian dollar and the breaking down of the historical correlation of the dollar and commodity prices has been due more to other countries debasing their own currencies and to capital flows for the Australian dollar than to local actions of a Labor Government in Canberra.
Posted by Gary Sauer-Thompson at 2:29 PM | Comments (12) | TrackBack
May 9, 2013
the culture wars revisited
Nick Cater’s book The Lucky Culture And the Rise of an Australian Ruling Class is the voice of the Murdoch media in Australia, which controls 70% of the press and a fair slice of the screen. Cater speaks for the political power that is centred on big business, the Murdoch global media empire, elite private schools and the Liberal and National Parties.
His book continues the culture wars--it promotes climate change denialism, winding back mass university access, funding state-led economic development through the construction of dams, highlights the cultural divide and attacks the impractical, progressive cosmopolitan inner city elites as being out of touch with suburban Australia and favours endless economic growth.
Cater argues that in the first decade of the 21st century, a new “self-appointed ruling class” emerged in Australia, comprising university graduates who were “cosmopolitan and sophisticated”. These powerful inner city elites did not simply feel better off but held that they were better than their fellow Australians. Australia is under threat from the elitism of a "morally snobbish intellectual class". Labor is part of a new social and political elite, a class of tertiary educated progressives who sneeringly look down their noses at ‘ordinary Australians’.
Cater says that this is:
A class that relies for status on cultural rather than financial capital cannot concede that wealth carries virtue, and resorts to attacking Rinehart’s cultural standing in the most personal terms. It amounts to a crude assertion of cultural refinement … (on) how to handle money and how to arrange their hair. In a society where net wealth is considered a poor guide to character, the sneer is an assertion of class superiority … In a country where cultural superiority becomes important, belittlement of others is an underhand form of self-aggrandisement, a habit that once adopted becomes almost impossible to break.
Cater, in arguing for a narrowing of university access back to the standards of the 1950s, supports a two-class system, with one set of rules for the conservative establishment and a different set of standards for their political rivals.
Behind the culture war sits a neo-liberalism of transnational capital that favours the imposition of austerity regimes in which nation-states are used by the corporate elites as key drivers of neoliberal globalization. This mode of governance criticizes democracy by taking the form of a politics that says that increasing taxes to fund social welfare spending for the poor destroys the incentives for wealth creation through hard work, enterprise and talent. This mode of governance aims to castrate democracy by insulating economic policies from democratic politics.
This politics reconfigures the social contract in the name of ending the age of entitlement and returning the budget to surplus. The welfare state is to be dismantled. Essential public services are to be cut so that the rich may pay less tax. The public realm is privatised and the regulations restraining the ultra-wealthy and the companies they control are made light. It makes a virtue of the high levels of inequality in that it says that inequality encourages people to work harder, and the bigger the gap, the more some people will strive to try to close it. It exploits the language of Australian national identity to justify the dismantling of the welfare state.
When it comes to economic/social justice or democratic accountability, the state is presented by neo-liberals as a life-draining bureaucratic monster to be fought at every opportunity. But when it comes to the military, defence, and the punitive, and national security functions of the state, it is cast as the last bastion of civilization and freedom which brooks no qualification or oversight.
Posted by Gary Sauer-Thompson at 10:30 AM | Comments (11) | TrackBack
May 6, 2013
after the commodity boom?
Roy Green in Beyond the boom: have we frittered away our opportunities? asks a very good question: "Where are jobs and growth to come from after the commodity boom?"
Improved productivity is central to rising living standards and sustainable economic growth especially when Australia is repositioning and competing globally as a “high cost” economy. Consequently, living standards will be even more dependent in the future on increasing our rate of productivity growth, particularly in trade-exposed sectors.
Bruce Petty
Australia has had abundant previous experience of commodity booms, which have all ended badly, with lessons that produced considerable reflection. What Australian policy-makers had to do was reflect on past mistakes The short answer to Green's question is that the jobs and growth will come from building a dynamic and competitive knowledge-based economy.
However, as Green adds:
Clearly, structural change is taking place throughout the world economy, as a consequence mainly of technology and business model innovation and the changing patterns of international trade and development. But it is equally clear that Australia has been so lulled into complacency by the resources boom that we are not taking as much advantage of such change as we could be...Even with the pick-up in productivity growth over the past year, it will be a huge challenge to compensate for terms of trade decline in a high cost economy with a continuing strong dollar.
Australia has done so little towards building a dynamic and competitive knowledge-based economy based on new technology and innovation. The market changes associated with the deregulation of product and labour markets has shifted much of the jobs growth to casual work in low productivity sectors.
The Coalition's policy behind the sound bite politics of “Stop the boats, "climate change is crap”, and “axe the tax” is that the job of the federal government is to look after the interests of the big mining industry; an industry deeply hostile to climate change and clean energy policies. This fossil fuel industry would scrap all subsidies for renewable energy and cancel all wind farm developments. Like the state-based coalition governments, Abbott's Coalition remains stuck on the policy that deems that renewables are costly and useless, and don’t reduce emissions, and that the renewable energy target should be killed or neutered.
Their coal dependency position is “coal lock-in” due to high capital costs and long assets life spans. That means Australian citizens will be forced to absorb hundreds of millions of dollars in pollution control upgrades for outdated and obsolete coal power plants.
Posted by Gary Sauer-Thompson at 3:11 PM | Comments (4) | TrackBack
May 3, 2013
perhaps
Not so, according to Barrie Cassidy. He reckons that Gillard won the policy debate, but the Coalition may have won the politics. He argues that the Prime Minister abdicated her responsibilities to Tony Abbott, and that the Coalition, which has controlled the news agenda for years, had control of the policy agenda as well.
David Pope
I am not persuaded. The Coalition was pushed into a corner with no way to walk away and hide from the issue. The disability people got what they wanted: a secure funding source that will partially pay for the NDIS and bipartisan support. That means the Coalition will find it hard to renege at a later date because they are publicly committed to the national disability insurance scheme.
This doesn't change federal Labor's electoral situation. Mark Latham states the underlying weakness succinctly:
The shrinkage in Labor’s blue-collar base has left it juggling the demands of two irreconcilable constituencies. One comes from the outer suburbs, with a hard-nosed, materialistic attitude to politics. The other is entrenched in the inner city, taking an abstract, classically liberal approach to issues. This duality has left Labor vulnerable to wedge politics, controversies that set one constituency against the other.
This emerges because the structurally changing economy --eg., the steady decline of manufacturing--- means that the aging unskilled blue collar workers becomes increasingly unemployable. We have a coalition of blue-collar workers who feel under threat and middle-class professionals who feel financially insecure shifting to the Coalition. They are shifting because they reckon they have an insufficient stake in the present and future and express a nostalgic desire to halt the changes of recent years, to turn the clock back to an imagined gentler past.
Latham argues that what traditionally holds the two constituencies-the blue-collar base and the liberal inner city, together in an open market economy is nation-changing reform programs. Unfortunately, environmental sustainability is still an inner-city thing, a world away from the aspirational outer suburbs, where the dream is one of 4WDs in the (double) garage, ducted air-conditioning in multistorey dwellings and ostentatious entertainment and home appliances.
Posted by Gary Sauer-Thompson at 2:35 PM | Comments (2) | TrackBack
May 2, 2013
NDIS--opposing voices
The Bernie Brooks Myer episode over the proposed funding of the NDIS exposes the nature of business intervention into political debate. It is intervention from the position of self-interest in the form of profits before people.
This ignores that the aim of the NDIS is to redistribute Australia’s considerable per capita wealth to allow around 400,000 of the most disadvantaged in our community a better shot at earning a living. To help pay for it--- Disability Care---the Gillard government will raise the Medicare levy — currently a 1.5 per cent levy on everyone's income tax — to 2 per cent--- thereby raising an extra $3.3 billion a year in extra federal revenue.
Alan Moir
This is good reform and Gillard Labor has shown some political courage on this issue with its proposal to increase the Medicare levy. It indicates that Labor are prepared to risk increasing their unpopularity in the pursuit of a significant and lasting legacy of reform.
I expect the rhetoric by those opposed to this scheme on ideological grounds (smaller government and lower taxes) will take the form of the small increase in the Medicare levy (ie., an increase in taxes) beingthe reason the coal industry will soon die, towns will be wiped of the map, cheese will soon cost triple its current price, the cost of living will skyrocket, the debt is strangling a once great country and Australia will be bankrupted. Etc, etc.
Or it will be along the lines of a nasty, arrogant Gillard playing wedge politics and putting politics before policy. It's all political game playing by Gillard etc etc. Better care for those with disability through an insurance scheme is ignored by this kind of rhetoric.
Yet the national disability insurance scheme will both improve the lives of the people it helped and bring into the workforce Australians who were previously unemployable for life---not just the 400,000 disabled Australians, but also their carers and family members.
The Coalition is now prepared to back a modest increase in the Medicare levy to fund the NDIS. It was only yesterday morning that the Coalition was publicly opposing it. They had to shift as their position was untenable , even for them. The Coalition's position was to support the scheme but not the means to pay for it and opposing a levy while simultaneously touting a levy to pay for their paid maternity leave proposal. They blinked and now provide conditional support and so undercut their message of needing to lower the tax burden and limiting the expansion of government.
The core problem is the question of how to fund the remainder of the system. Hal Swerissen at the Conversation says:
The all up cost of the NDIS is currently about A$13.5 billion per annum. The states and the Commonwealth provide around A$6.2 billion at the moment, leaving a shortfall of around A$7 billion.The proposed increase in the Medicare levy raises about A$3.2 billion, to be quarantined in a special fund dedicated to support the NDIS. The rest will need to be found from savings and redirection within the Commonwealth budget.
The extent of this funding will determine the extent to which it operates as a fully fledged entitlement scheme which properly meets the needs of people with a serious and permanent disability, or one which is based on caps and rationing
Posted by Gary Sauer-Thompson at 11:13 AM | Comments (12) | TrackBack