tag:theconversation.com,2011:/global/topics/hawke-keating-government-12869/articlesHawke-Keating government – The Conversation2024-01-22T23:25:32Ztag:theconversation.com,2011:article/2210182024-01-22T23:25:32Z2024-01-22T23:25:32ZHow Australia’s huge superannuation funds can do much more to fight climate change, with a little help<p>Few of us pay much attention to our superannuation. Under the <a href="https://www.fairwork.gov.au/pay-and-wages/tax-and-superannuation#super-guarantee">Superannuation Guarantee</a>, employers pay at least 11% of salaries into their employees’ super funds without workers having to do anything.</p>
<p>These accumulating automatic payments have turned the Australian super fund industry into one of the world’s largest, and <a href="https://www.bloomberg.com/news/articles/2023-07-24/wall-street-is-partnering-with-cashed-up-fast-growing-australian-pension-funds">the fastest-growing</a>. Worth $A3.5 trillion, our superfunds sit alongside funds from Canada, Japan, Netherlands, Switzerland, the United Kingdom and United States to make up <a href="https://www.thinkingaheadinstitute.org/research-papers/global-pension-assets-study-2023/">92% of total global pension assets.</a></p>
<p>But none of these funds are investing enough in the net zero transition. Institutional investors, of which super funds are a vital part, provided less than 1% of all direct private climate change finance globally in <a href="https://www.climatepolicyinitiative.org/publication/global-landscape-of-climate-finance-2023/">2021/2022</a>- a contribution of around $US6 billion. This is far from the trillions <a href="https://www.allenovery.com/en-gb/global/news-and-insights/news/new-study-reveals-usd200-trillion-of-investment-will-be-needed-to-deliver-net-zero">needed</a> every year to finance renewable energy projects, cleaner industrial processes, and replacing fossil fuels in transport, among other initiatives.</p>
<p>At the same time, many Australian funds continue to invest in carbon-producing companies, such as oil and gas, even when they <a href="https://www.abc.net.au/news/2023-12-14/sustainable-ethical-super-funds-with-fossil-fuel-investment/103196032">claim to be making “green” investments</a>.</p>
<p>This article outlines reforms the federal government could undertake to encourage super funds to tackle the climate crisis. This would help align the super system with its original purpose: to provide a better standard of living for the millions of us who will retire on a climate-damaged planet.</p>
<h2>The Albanese government’s sustainable finance plan</h2>
<p>Treasurer Jim Chalmers is aware of the unmet potential of super funds. Treasury’s <a href="https://theconversation.com/making-money-green-australia-takes-its-first-steps-towards-a-net-zero-finance-strategy-214063">Sustainable Finance Strategy</a>, released in November, outlines measures underway or in development to enable more sustainable investment. The <a href="https://www.asfi.org.au/taxonomy">Australian Sustainable Finance Taxonomy</a>, for example, helps investors and regulators to identify whether an investment is “green”.</p>
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Read more:
<a href="https://theconversation.com/making-money-green-australia-takes-its-first-steps-towards-a-net-zero-finance-strategy-214063">Making money green: Australia takes its first steps towards a net zero finance strategy</a>
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<p>Last month <a href="https://ministers.treasury.gov.au/ministers/jim-chalmers-2022/media-releases/investor-roundtable-help-modernise-economy-maximise-advantages">Chalmers held</a> an “Investor Roundtable” that brought together heads of superannuation funds and others to discuss how to scale up investment in climate change.</p>
<p>Funds expressed their intent to make more investments aligned with net zero. <a href="https://www.rightlane.com.au/wp-content/uploads/2023/05/Right-Lane-Consulting_May-2023_Staying-the-course-on-net-zero.pdf">Studies</a> consistently show most large Australian funds have pledged to support net zero and established investment targets. Yet they say several regulatory roadblocks hinder them from turning their commitments into action.</p>
<p>The government has said it will make reforms on one roadblock – the <a href="https://ministers.treasury.gov.au/ministers/stephen-jones-2022/media-releases/your-future-your-super-review-outcomes">funds’ performance-testing framework</a>.</p>
<h2>Why super funds rarely invest in clean energy</h2>
<p>Because superannuation funds are <a href="https://www.unimelb.edu.au/__data/assets/word_doc/0011/4609586/MCF-submission_31032023.docx">required by law</a> to invest retirement savings for the best return for their members, they give preference to investments that offer the best financial returns with the lowest level of risk.</p>
<p>Funds see companies that are developing and deploying new technologies or operating in areas of significant public policy change as higher risk. That’s a big reason why new green technologies struggle to attract institutional capital compared to those based on fossil fuels.</p>
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Read more:
<a href="https://theconversation.com/as-australias-net-zero-transition-threatens-to-stall-rooftop-solar-could-help-provide-the-power-we-need-220050">As Australia's net zero transition threatens to stall, rooftop solar could help provide the power we need</a>
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<p>Super funds <a href="https://igcc.org.au/wp-content/uploads/2023/03/IGCC-The-State-of-Australian-Net-Zero-Investment_March2023.pdf">consistently note in annual surveys</a> that the lack of green investment opportunities with the right risk-adjusted return profile is a huge barrier to exapanding climate-aligned investment. And recent legislative changes have made the situation worse.</p>
<p>Under the <a href="https://www.apra.gov.au/your-future-your-super-legislation-and-supporting-material">Your Super Your Future</a> scheme, announced in the 2020-21 Budget, the financial regulator for super funds evaluates funds each year by comparing their performance over an eight-year time period against one of 11 “benchmark” investment portfolios.</p>
<p>This process aims to weed out underachieving funds and to protect members from losing money. Funds that are found to underperform must disclose the fact to their members, and persistent failures cannot accept new member funds. This tough sanction has led funds to “<a href="https://treasury.gov.au/sites/default/files/2023-04/c2022-313936-yfys-review.docx">hug the benchmark</a>”, meaning they pursue investment strategies to beat the performance test and their peers.</p>
<p>The result, as studies <a href="https://theconexusinstitute.org.au/wp-content/uploads/2022/11/YFYS-Performance-Test-Constraint-on-ESG-Sustainability-and-Carbon-Transition-Activities-20221109-Final.pdf">show</a>, is that funds are discouraged from pursuing climate-related investments. The test encourages funds to invest in companies or projects that deliver returns over time frames that are too short for most climate-related investments to achieve returns.</p>
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Read more:
<a href="https://theconversation.com/australian-homes-can-be-made-climate-ready-reducing-bills-and-emissions-a-new-report-shows-how-219113">Australian homes can be made climate-ready, reducing bills and emissions – a new report shows how</a>
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<p>Treasury has <a href="https://ministers.treasury.gov.au/ministers/stephen-jones-2022/media-releases/your-future-your-super-review-outcomes">announced</a> it will extend the performance test period to ten years, and adjust it “to ensure that funds are not unintentionally discouraged from investing in certain assets”. These are encouraging first steps but they are not enough.</p>
<h2>Letting ordinary fund members invest in a greener planet</h2>
<p>Melbourne Climate Futures’ <a href="https://law.unimelb.edu.au/centres/mcle/research/current-research-projects/advancing-investor-action-on-energy-transition">research</a> has uncovered further regulatory barriers that are stalling investment. One relates to the way individual members choose investments.</p>
<p>Since its establishment by the Keating government in 1992, the Superannuation Guarantee has given individuals some choice over how they handle their superannuation. While many <a href="https://www.ato.gov.au/businesses-and-organisations/super-for-employers/setting-up-super-for-your-business/select-your-default-super-fund">are placed into a fund</a> with a default investment option when they begin work, they are able to choose different investment approaches.</p>
<p>Some of these focus on a theme, such as sustainability, and some offer different levels of risk exposure. Encouraging individuals to direct more of their super to green companies and projects could be a powerful tool to enable more climate investment.</p>
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Read more:
<a href="https://theconversation.com/why-australia-urgently-needs-a-climate-plan-and-a-net-zero-national-cabinet-committee-to-implement-it-213866">Why Australia urgently needs a climate plan and a Net Zero National Cabinet Committee to implement it</a>
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<p>Surveys show <a href="https://responsibleinvestment.org/resources/benchmark-report/#:%7E:text=The%20Responsible%20Investment%20Benchmark%20Report,comprehensive%20approach%20to%20responsible%20investment.">more than half of Australians</a> support greater climate action. While many people would not support their super fund making climate investments that hurt their returns, <a href="https://www.afr.com/politics/federal/super-should-go-green-but-not-for-lower-returns-say-afr-readers-20231210-p5eqcr">at least some members</a> would. Yet the rigid nature of the best-financial-interest duty, combined with the performance test, prevents funds from offering members the option to put the climate first.</p>
<p>This needs to change. The government could amend the best-financial-interest duty so individuals can instruct their funds to invest their money in projects that reduce long-term and systemic financial risks such as climate change. A tax break or a matching contribution from government could also encourage individuals to choose sustainable investment options.</p>
<p>Climate change poses a grave risk to the health, wellbeing and finances of all Australians, including retirees. Federal policy reform is urgently needed to unlock more superannuation for green investment, harness the power and preferences of individual members and help reduce future climate impacts. </p>
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Read more:
<a href="https://theconversation.com/too-hard-basket-why-climate-change-is-defeating-our-political-system-214382">Too hard basket: why climate change is defeating our political system</a>
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<p class="fine-print"><em><span>Arjuna Dibley is a Fellow at the Centre for Policy Development, a Board Member at CarbonPlan and Environmental Justice Australia. He is part of a research team at the University of Melbourne that receives funding from the Australian Research Council to study institutional investors and climate investing. </span></em></p>Our super funds say they want to invest more in the net zero transition but that regulation blocks them. It’s time to put them to the test, and turn their piles of money toward a greener future.Arjuna Dibley, Head of Sustainable Finance Hub, The University of MelbourneLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/2084392023-06-25T11:54:27Z2023-06-25T11:54:27ZSimon Crean, former Labor and ACTU leader, dies aged 74<p>Simon Crean, a former Labor opposition leader, has died suddenly while in Germany, aged 74. </p>
<p>Crean, who served in parliament from 1990 to 2013, was a minister in the Hawke, Keating, Rudd and Gillard governments. </p>
<p>He was opposition leader between 2001 and 2003, when he was replaced by Mark Latham.</p>
<p>Under his leadership, Labor opposed Australia’s involvement in the Iraq War, although it supported the Australian troops who served in that operation.</p>
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<p>In the various Labor governments, Crean held a variety of portfolios. They included primary industries and energy, trade, education, employment and workplace relations, the arts, and regional development and local government. </p>
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<p>Before entering parliament, Crean was president of the Australian Council of Trade Unions from 1985 to 1990, and worked closely with the Hawke government. </p>
<p>He was brought up in politics - his father, Frank Crean, was treasurer in the Whitlam government.</p>
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<p>Prime Minister Anthony Albanese said in a statement on Sunday night: “Simon was a great servant of the Labor Party and of the broader labour movement.” </p>
<p>Albanese said be personally had benefited from Crean’s “advice and wisdom”.</p>
<p>“Simon’s many achievements in portfolios that ranged from trade to employment, from primary industries and energy to the arts, were characterised by a focus on the national interest, engagement with stakeholders, and always acting with principle and determination.</p>
<p>"The common threads running through his long career were his courage and his principled action, qualities that came so powerfully to the fore when he opposed the Iraq war. Yet his opposition to the war was backed by his unwavering respect for the members of the Australian Defence Force, a respect he showed when he went to address the troops ahead of their deployment.</p>
<p>"History has vindicated Simon’s judgement, but at the time his stance was deeply counter to the prevailing political and media climate,” Albanese said.</p>
<p>“After parliament, Simon continued to work for Australia’s interests, most notably as chairman of the European Australian Business Council.”</p>
<p>Opposition leader Peter Dutton said he was “shocked and saddened to hear of Simon Crean’s passing. </p>
<p>"Simon was a gentleman to deal with and a giant of the labour movement. I always admired Simon for his decency and intellect and only just saw him recently in Melbourne,” Dutton said. </p>
<p>The Crean family said in a statement that Crean, who was in Berlin as part of an industry delegation, had died suddenly after his morning exercise.</p><img src="https://counter.theconversation.com/content/208439/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Michelle Grattan does not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>Crean, who served in parliament from 1990 to 2013, was a minister in the Hawke, Keating, Rudd and Gillard governments.Michelle Grattan, Professorial Fellow, University of CanberraLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/1987902023-01-30T08:57:25Z2023-01-30T08:57:25ZPolitics with Michelle Grattan: Treasurer Jim Chalmers answers critics of his ‘values-based capitalism’<p>Treasurer Jim Chalmers has rejected as “laughable” criticism he has turned his back on the Hawke-Keating reform era in his blueprint for “values-based capitalism”. </p>
<p>In this podcast Chalmers also reveals he spoke with Paul Keating while writing the essay, published in The Monthly. </p>
<p>“Capitalism after the crises” looks at Australia’s future following three international crises: the GFC, the pandemic, and the current energy and inflation shock. Chalmers advocates government-private co-investment, the renovation of the Reserve Bank and the Productivity Commission, and improving the functioning of markets. </p>
<p>Critics have labelled his values-based capitalism highly intervention, and counter to the direction of the reforms Bob Hawke and Keating implemented. </p>
<p>“I think that’s laughable […] particularly for me personally,” Chalmers says. “I’m someone who is here because of the Hawke-Keating period.”</p>
<p>“I wouldn’t be here were it not for Paul Keating. And he’s someone who is a friend. He’s someone whose advice and counsel I value and cherish a great deal.” </p>
<p>But, Chalmers says, “our heroes of the 1980s would say that our job isn’t to kind of double back and retrace their steps. Our job is to walk further and forward in the same direction.” </p>
<p>“The reforming spirit of the Hawke-Keating period was about looking forwards to the future. It was about looking upwards to aspiration and social and economic mobility and looking outwards to the world. And that is a pretty neat summary of how I approach these challenges. </p>
<p>"What for Hawke and Keating was financial deregulation and liberalisation of trade is for us the energy market. It’s technology, it’s getting capital flowing to the right places. And that’s something that Paul and I discuss frequently.” </p>
<p>Chalmers says some of the essay’s themes are the fruits of conversations with Keating during and before its writing. </p>
<p>He says Keating thinks “the energy transition is the big thing for us. And he thinks the intersection of critical minerals and advanced manufacturing is the big chance for us, as I do. And so a lot of the themes in the essay are familiar to the conversations that we’ve been having for some time, but including over Christmas. From memory, I think we had a long conversation on Christmas Eve about some of these sorts of things.” </p>
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<a href="https://theconversation.com/jim-chalmers-lays-out-agenda-for-pursuit-of-values-based-capitalism-198675">Jim Chalmers lays out agenda for pursuit of 'values-based capitalism'</a>
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<p>Chalmers stresses that in promoting values-based capitalism “I’m not talking about a kind of 1950s-style approach to industry policy. I think the world’s moved on. But nor am I talking about this kind of approach, which has served us incredibly poorly for the best part of a decade, which says that we have to make this false choice between our social objectives for our community and our economic objectives. </p>
<p>"I think the pandemic and in other ways have taught us that a healthy, robust economy relies on healthy, robust people and communities. </p>
<p>"And that’s why I do talk about ‘wellbeing’, unapologetically so. I do talk about progress. I do talk about how we line up our values with our budgets and the economy, because I think that there’s an appetite for that. For a decade, we’ve been pretending these two things are at conflict. As a consequence of that, we’ve not really satisfied our economic objectives or our social objectives. </p>
<p>"I think we can neatly line them up. I think there’s an appetite in the investor community for a bit of that, so long as there are decent returns and we’re not messing with that – and we’re not proposing to.</p>
<p>"And so that’s the approach that I’ve taken. It’s wrongly caricatured – I think deliberately so – as some kind of old style industry policy. It is nothing of the sort.”</p>
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<p>E&OE TRANSCRIPT
PODCAST</p>
<p>THE CONVERSATION</p>
<p>TUESDAY, 31 JANUARY 2023</p>
<p>SUBJECTS: The Monthly essay: Capitalism after the crises, Economic Inclusion Advisory Committee. </p>
<p>MICHELLE GRATTAN, HOST: Treasurer Jim Chalmers has just produced a major essay. He examines capitalism after three recent crises - the GFC, the pandemic and now the energy and inflation shock. The essay’s attracting a good deal of attention, both favourable and unfavourable. Chalmers sets out his philosophy for where he thinks policy needs to go to reimagine capitalism into a more progressive and inclusive model. The plan includes government-business co-investment and closer economic cooperation, the reform of institutions like the Reserve Bank and the Productivity Commission and also the overhaul of markets. It also includes giving investors more information so that they’re encouraged to pursue impact investment such as the transition to a clean economy. Jim Chalmers joins us today to discuss his value based capitalism and some of the reactions to it. Jim Chalmers, I’m always interested in the way the sausage is made. So tell us briefly what spurred this essay which you wrote over the summer. And in particular, what have been the intellectual influences on your thinking?</p>
<p>JIM CHALMERS, TREASURER: Thanks, Michelle. We got an offer out of the blue in the middle of December from The Monthly magazine to write a considered piece on a relatively short deadline. And we thought about it and to be honest with you after the year that we had last year, we ummed and ahhed about it a bit but we decided it was too good an opportunity to miss. There have been big, prominent essays written by some of my predecessors.</p>
<p>GRATTAN: Like Kevin Rudd.</p>
<p>CHALMERS: Kevin Rudd, Wayne Swan, Penny Wong was the last politician to write an essay in 2016. And so I thought it was too good an opportunity to miss and so I spent a big chunk of my Christmas break after the kids had gone to bed penning these thoughts.</p>
<p>GRATTAN: And what were the intellectual influences on this essay?</p>
<p>CHALMERS: Well, for some time Michelle I’ve been really interested in this idea that we can more neatly line up and more nicely line up the things that we want to see in our society and the things we want to see in our economy. And so the global economist Mazzucatto was obviously a big influence on my thinking, but others as well - Michael Traill here in Australia, Mark Carney the former central bank governor in two countries. And for a long time now, I’ve been grappling with this idea - how do we match up our social goals and our economic goals? How do we create the type of economy which is creating lots of profit for the private sector at the same time as it’s generating lots of opportunities for our people?</p>
<p>GRATTAN: Did you discuss the essay with your colleagues? And did you discuss it with the Prime Minister?</p>
<p>CHALMERS: I did. Yes, I showed a number of colleagues a draft including the Prime Minister. He was very kind with his feedback when I showed him a draft towards the end of December I think from memory, and he was encouraging.</p>
<p>GRATTAN: He gave you feedback on substance or just encouragement?</p>
<p>CHALMERS: He said he enjoyed it and encouraged it and said it was a good piece. And, my other colleagues - Katy Gallagher and others had the opportunity to have a look at it as well.</p>
<p>GRATTAN: Now, let’s just run through your main themes including how co-investment would work and on what scale you would see that co-investment between the public and private sectors, and how you see the Reserve Bank, the Productivity Commission, which you mentioned, and markets, needing renovation - needing change.</p>
<p>CHALMERS: Yeah, and I think all of these things are closely related. I strongly believe that by strengthening our economic institutions and strengthening our economy, we strengthen our democracy. I think there’s a straight line between all of those things and so if you take a step back for a moment which the essay allowed me to do and encouraged me to do, some of our big goals in the economy are how do we get cleaner and cheaper, more reliable, increasingly renewable energy into the system? How do we make sure technology works for people, not against them? How do we get capital flowing to these areas where we’ve got big national advantages where we can create lots of jobs and wealth and opportunities? And so once you work that out, then you realise that you need to go about things a little bit differently than what we’ve seen in Australia over the course of the last decade, which has not been meeting our economic objectives when it comes to business investment, productivity, stagnant wages and the like. And so a key part of renovating our approach to the economy is how do we have better designed and better informed markets? How do we have an element of collaboration and co-investment and cooperation between the public sector and the private sector? And how do better designed and more modern economic institutions - whether it’s the Reserve Bank or the Productivity Commission, or in other ways - how do they help feed these kinds of decisions that we want to make about the economy. And so all of that together, our goals, the ways that we determine how we go about public policy and the economic outcomes, we want to try and line those up. And really all I’m arguing for in this piece is a way of lining up our values with our economy and with our Budget in a way that sees the public sector and the private sector, their roles recognised - very different roles, but working together to deliver on some of these objectives that we all share.</p>
<p>GRATTAN: If we can just drill down into these - you mentioned in terms of co-investment the clean energy finance body, but can you give another example of how you would see co-investment working?</p>
<p>CHALMERS: Yeah, I’ll give you three quick ones. Obviously the Rewiring the Nation fund which is all about how we transmit more reliable, cheaper, cleaner energy. Obviously, the National Reconstruction Fund in Minister Husic’s portfolio is all about broadening our industrial base and in addition to that, the Housing Australia Future Fund in Julie Collins’ portfolio - those three examples in addition to the Clean Energy Finance Corporation and in other ways, that’s about how we recognise this opportunity to get public and private sectors working together, investing in areas where we haven’t seen enough investment, but where investment now will deliver big economic gains and opportunities into the future. And so when you read the kind of ill-informed commentary from the LNP Opposition and others and they say well where was this before the election - we took all of those three things to the election, they are absolutely central to this approach that I’m describing.</p>
<p>GRATTAN: Now, you have an inquiry running into the Reserve Bank but just in general terms, you talk about renovating the Reserve Bank and also looking at the Productivity Commission. What does renovate mean in conceptual terms? What are you thinking about here?</p>
<p>CHALMERS: Well, I start from the foundation that over a long period of time the Reserve Bank has served us relatively well but no institution should be beyond the kind of thinking that says, what’s international best practice? How do we get the structures right and the personnel right so that we’re most likely to get good decisions in the national economic interest? And so I’ve been pretty upfront when it comes to the Reserve Bank, I think, with this public review and I’ll get the fruits of that work in March and I’ll respond to it hopefully soon after that. The Productivity Commission is another area of interest for me. I think the Productivity Commission has the capacity to be a real ideas factory, a real engine of economic policy ideas. Even at its best, I think people would concede that there are ways that we can get it working more effectively. I don’t want to mess with its independence, I don’t want to substantially diminish the Productivity Commission, I want to turbocharge it. I want it to be the sort of provider of ideas about - not just how do we make our economy more productive, though that will remain central - but how do we make our economy more prosperous, how do we create these opportunities? And so now I think with the new government, having flagged our intentions to strengthen our economic institutions on the way to strengthening our democracy, I think it’s a good time to be thinking about the Reserve Bank, the Productivity Commission and the institutions that feed our economic policies.</p>
<p>GRATTAN: On the Reserve Bank which runs monetary policy, are you thinking of diluting the emphasis it puts on running monetary policy by having it take into account other objectives?</p>
<p>CHALMERS: Well, already it takes into account full employment and financial stability so already there’s an element of weighing up these different considerations, but obviously its primary responsibility is to try and maintain inflation within that target band of two to three per cent. That has been incredibly difficult for central banks around the world in recent times. I’m not proposing to diminish its focus on inflation or on monetary policy but what I’ve asked the review team to work out is what is the appropriate balance between those different objectives - financial stability, full employment are obviously big priorities, rightfully so, of the Reserve Bank already, but how we weigh them up, how we get fiscal policy which is what I’m responsible for and monetary policy which they’re responsible for, how do we make sure that they’re working together and not at cross purposes as well? These are all crucial considerations of the RBA review and I’m looking forward to seeing the report when I get it in March.</p>
<p>GRATTAN: You say that markets need to be attended to, again, can you give us an example here?</p>
<p>CHALMERS: I am a believer in markets, not markets for their own sake but markets, which are well designed and well informed. I still think that in lots of ways they are the best mechanism for making sure we achieve our economic objectives. But that, again, doesn’t mean that they are beyond reproach. In some cases, for example, when it comes to how investors decide between different opportunities in the clean economy, one of the things that I’ll be doing this year is I’ll be introducing a climate reporting standard for business. So if you are investing in one business or another business A or business B, I’m going to create a way where you can compare the climate risks and the decarbonisation plans of those two businesses to help you make an informed decision. And that’s one of the ways that a better informed, better designed market for capital, if government has a role in designing that market. And the better it is, the better informed it is, the better designed it is, the more likely we are to see capital flow where we want it to.</p>
<p>GRATTAN: How much of this change, in general, do you see as being in the short or medium term? How much is a long term aspiration?</p>
<p>CHALMERS: What I tried to do, and the reason I’m grateful to The Monthly for publishing a longish piece by political standards - not by the standards of some of the books that you’ve written, Michelle, of course - but what I’ve tried to do is to flag a direction, and to say where our existing policies fit into this framework that I’m describing, and where it might head into the future. I think that there is an appetite out there after this wasted decade of sort of over-politicised economic policy, and a lot of fits and starts and poor outcomes, there’s an appetite from government for us to be upfront with the sorts of issues we’re grappling with, and the framework through which we will try and respond to these challenges. So that’s what I’ve tried to do, so people know where I’m coming from, they know that I see a legitimate, powerful, influential role for the private sector. They know that I see a role for government leadership, I’m not actually arguing for some kind of heavy-handed government intervention here. On the contrary, I’m arguing for a role for the private sector, a role for the public sector, where we work together to try and satisfy our national economic objectives. Some of the commentary has kind of missed that point. But I am a believer in the job-creating, wealth-creating role of business and the private sector. I just think that collectively on my side of the fence, and on their side of the fence, we can get better at designing our policies and our markets and our institutions to satisfy those economic goals, rather than work in in conflict with each other.</p>
<p>GRATTAN: We’ll come to the commentary in a sec, but you mentioned in the essay, the next intergenerational report, which is coming later this year. How important will this be in what you want to do?</p>
<p>CHALMERS: One of my real obsessions is how do we lengthen the timeframes through which we think about policy. And to give one of my predecessors credit from the other side of the political fence, I think this was a good innovation from Treasurer Peter Costello, when he introduced the intergenerational report. My fear is in the last few terms, the IGR has become unnecessarily politicised and I want to fix that. And one of the ways we fix it, is I’m going to say okay we’re going to hand this thing down in the middle year of each parliamentary term, we’re going to simplify it and depoliticise it in the hope that it provides the foundation for longer-term thinking when it comes to the economy and when it comes to public policy. One of the things that worries me as I look around the world in this kind of post-fact political environment, is we’re not always operating from a set of agreed, foundational understandings about how things are likely to play out, so I want to fix that. I know I have to depoliticise the IGR in order to do that, and I’m hoping by doing that, that both sides of politics, all sides of politics and in the commentariat and in the country more broadly, we have a foundation that we can work from which recognises we’ve got some big pressures in our economies, some big opportunities as well. And we’ve got to get out of this day-to-day, week-to-week approach to managing the economy because we’ve got these big opportunities. They require a bit of foresight, they require collaboration, cooperation, sometimes co-investment, and that’s what the essay is about.</p>
<p>GRATTAN: Mind you, of course, the point should be made that the further you go out, the more blurry the facts become.</p>
<p>CHALMERS: Inevitably, when you’re forecasting 40 years down the track, it becomes harder and harder to do the further you are away. Forecasting at the best of times is difficult, I’m not pretending otherwise. There hasn’t been an easy, calm period in the economy for the best part of 15 years, which is where the essay begins, with this sense of rolling crisis of capitalism over the last 15 years - a GFC, a pandemic, an inflation crisis. And so it is volatile, it’s hard to forecast in volatile times, but that doesn’t mean it’s not worth the effort.</p>
<p>GRATTAN: Let’s turn to the reaction, the essay has received a mix of praise and criticism. It’s predictable, of course, the Opposition members wouldn’t be fans. But how do you reply to, for example, the Financial Review’s editorial, which says and I quote, ‘that your basic purpose is to discredit the modern relevance of the previous Hawke-Keating reform era that liberalised Australia’s protected, and over regulated economy’?</p>
<p>CHALMERS: I think that’s laughable, particularly for me personally, I’m someone who is here because of the Hawke-Keating period. I wouldn’t - as you and I have spoken about before, on and off air - I wouldn’t be here were it not for Paul Keating. And he’s someone who is a friend, he’s someone whose advice and counsel I value and cherish a great deal. But our heroes of the 1980s would say that our job isn’t to double back and retrace their steps, our job is to walk further and forward in the same direction. And so what I talk about is that the reforming spirit of the Hawke-Keating period was about looking forwards to the future, it was about looking upwards to aspiration and social and economic mobility, and looking outwards to the world - and that is a pretty neat summary of how I approach these challenges. What for Hawke and Keating was financial deregulation and liberalisation of trade is for us the energy market, it’s technology, it’s getting capital flowing to the right places. And that’s something that Paul and I discuss frequently. And so I do genuinely welcome the debate about the essay that I wrote, but some of it - to be blunt about it - this idea that somehow it is compromising the gains made by Bob and Paul, it just doesn’t stand up to scrutiny.</p>
<p>GRATTAN: Did you talk when you were writing to that hero of the 1980s, Paul Keating, and have you heard from him since?</p>
<p>CHALMERS: We talk frequently-</p>
<p>GRATTAN: So you spoke during the essay process?</p>
<p>CHALMERS: Some of the themes that I pick up and run with in the essay are the fruits of conversations we’ve been having about the essay, and before that as well. He recognises as I do, and I’m conscious of not kind of speaking for him here, but he thinks the energy transition is the big thing for us. And he thinks the intersection of critical minerals and advanced manufacturing is the big chance for us, as I do. And so a lot of the themes in the essay are familiar to the conversations that we’ve been having for some time, but including over Christmas. From memory, I think we had a long conversation on Christmas Eve about some of these sorts of things. And so, again, the idea that it’s somehow in conflict with the traditions of the Hawke-Keating period, I think, is not right.</p>
<p>GRATTAN: He’s a great one for the telephone. Have you heard from him over the weekend?</p>
<p>CHALMERS: I don’t think I spoke to him this weekend but I typically speak with him pretty frequently, and I’m comfortable that he knows and appreciates my approach to these things, which is - it’s possible to have your heroes and it’s possible at the same time to recognise that you’ve got to do your own thing. And I suspect - again, not speaking for him, he’s capable of speaking for himself - if he was sitting in my office as Treasurer right now, he’d be grappling with a lot of the same things that I am.</p>
<p>GRATTAN: You write that values based capitalism is not about picking winners and you’ve reiterated that, but it is pushing economic decisions in particular directions. Couldn’t this be said as a broader version of picking winners, or if one wanted to really stretch the point, as economic engineering?</p>
<p>GRATTAN: No, I don’t see it that way because the kinds of economic objectives that we’re talking about in energy and technology and human capital and the care economy and all of these sorts of things. I’m saying that they rely on well designed, well informed markets as we were talking about a moment ago. I’m not talking about a kind of 1950s style approach to industry policy, I think the world’s moved on. But nor am I talking about this kind of approach, which has served us incredibly poorly for the best part of a decade, which says that we have to make this false choice between our social objectives for our community and our economic objectives. I think the pandemic and in other ways have taught us that a healthy, robust economy relies on healthy robust people and communities. And that’s why I do talk about well-being, unapologetically so, I do talk about progress. I do talk about how we line up our values with our budgets and the economy because I think that there’s an appetite for that. For a decade we’ve been pretending these two things are at conflict. As a consequence of that we’ve not really satisfied our economic objectives or our social objectives, for the best part of a decade. I think we can neatly line them up. I think there’s an appetite in the investor community for a bit of that, so long as there are decent returns - and we’re not messing with that, and we’re not proposing to. And so that’s the approach that I’ve taken, it’s wrongly caricatured, I think, deliberately so, as some kind of old-style industry policy, it is nothing of the sort.</p>
<p>GRATTAN: What sort of reactions have you had from the business community and are you planning to follow up the essay with any other writing or talking, I guess, to promote these ideas?</p>
<p>CHALMERS: Well, as the year gets galloping again, I think it’ll be difficult in the lead up to the Budget to find room for another big writing project but certainly already even in the course of today I’ve had a number of conversations with the business community about the essay. I’ve even had a meeting with the Business Council of Australia today where it was part of our conversation.</p>
<p>GRATTAN: What was the reaction?</p>
<p>CHALMERS: Again, I don’t want to talk for Jennifer Westacott but I think that business has been - in welcome ways - a leader in this conversation about energy, for example, about technology, about the care economy, and we’ve all got different ways that we describe our objectives. But I think we’ve actually got a neat opportunity here for some common ground and a common cause when it comes to modernising our economy and lifting living standards in that economy. And so we describe it in different ways but I think our objectives are pretty nicely lined up as I keep saying and so I like engaging with business on some of these sorts of things. One of the reasons why I’m optimistic about the future of our country and the future of our economy is because I think people share this recognition that investment can flow into areas which satisfy our economic objectives but also our objectives as a community. And that in lots of ways is one of the reasons why I’m here in the first place.</p>
<p>GRATTAN: Let me just finish on a Budget issue. You will soon be considering a report from the Economic Inclusion Advisory Committee that’s been looking at the adequacy of welfare and they’ll obviously recommend that more should be done. Is there any way that a Treasurer who advocates values based capitalism could say no to that?</p>
<p>CHALMERS: Well, let’s see what they recommend but I think there’s a recognition even amongst some of those wonderful advocates that we’ve appointed to this committee, I think they understand that my job is to weigh up all of the various considerations in the Budget. You think about the May Budget - we’ll be funding the reorientation most likely of some of our defence spending, we’ll be funding a big increase in aged care wages, we’ll be funding electricity bill relief in a responsible way. And so there’s a lot of pressures on the Budget, I think people know that. Obviously people have different views about the relative priority we place on these different things.</p>
<p>GRATTAN: You’ll also have a lot of revenue from commodity prices, right?</p>
<p>CHALMERS: In the near term. But what we know about the way the Budget works is even when we get that decent lift in commodity prices, we get a near term lift in the Budget this year, and sometimes the following year. But over the medium term, the pressures on the Budget are actually intensifying, rather than easing. And so in areas like defence, borrowing costs, the NDIS, aged care and health, those pressures are intensifying.</p>
<p>As we speak, Standard and Poor’s have put out an assessment of our Budget where they’ve reaffirmed our AAA credit rating. And one of the reasons why I find that so satisfying is because they specifically mention the restraint that we showed in banking the big upward surge in revenue that we got in the last budget - 99 per cent of that over this year and next year, we let that flow through to the bottom line, and that’s good for debt, it’s good for borrowing costs, it’s good to take pressure off inflation and Standard and Poor’s have recognised that today. And I really welcome their endorsement, their vote of confidence in our Budget in October and in our economic plan.</p>
<p>GRATTAN: So is this a negative signal on social security?</p>
<p>CHALMERS: I wouldn’t read it that way. I think people know that I and our Cabinet, our government under Anthony will always do what we responsibly can. But our job is to look right across the Budget and to weigh up all of the various pressures and opportunities and bids and asks on the Budget. We will take incredibly seriously what this committee recommends to us, but we will consider it in the usual way via the Expenditure Review Committee and the Cabinet and we’ll weigh it up against all these other things.</p>
<p>GRATTAN: So maybe a little not a lot.</p>
<p>CHALMERS: Well, let’s see what they report. I genuinely don’t know that they’ve reached a conclusion yet. I mean, I went to the first meeting and had a good chat with them, but they’ve met subsequent to that. I think we receive a report either in February or March from memory. We’ll take it seriously when we get it. We’ll weigh it up against all of the other priorities that we have, and we’ll always try and do the right thing by people where we can afford to.</p>
<p>GRATTAN: Jim Chalmers, thanks very much for talking with us today about the essay - an impressive piece of work and worth the loss of some Christmas time.</p>
<p>CHALMERS: I hope so. Thanks, Michelle.</p>
<p>GRATTAN: That’s all for today’s podcast. Thank you to my producer, Mikey Burnett. We’ll be back with another interview soon, but goodbye for now.</p>
<p>ENDS</p><img src="https://counter.theconversation.com/content/198790/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Michelle Grattan does not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>In this podcast Chalmers also reveals he spoke with Paul Keating while writing of the essay, published in The Monthly.Michelle Grattan, Professorial Fellow, University of CanberraLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/1956512022-12-01T19:03:24Z2022-12-01T19:03:24ZHalf a century on, it’s time to reassess the Whitlam government’s economic legacy<figure><img src="https://images.theconversation.com/files/498207/original/file-20221130-12-t67ynz.jpeg?ixlib=rb-1.1.0&rect=0%2C121%2C898%2C454&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">
</span> <span class="attribution"><a class="source" href="https://commons.wikimedia.org/wiki/File:Third_Whitlam_Ministry.jpg">National Archives of Australia/Wikimedia Commons</a>, <a class="license" href="http://creativecommons.org/licenses/by-sa/4.0/">CC BY-SA</a></span></figcaption></figure><p>After leading the Australian Labor Party to its first federal election victory in 23 years, Gough Whitlam wasted no time.</p>
<p>The Tuesday after his election on December 2 1972, he formed an interim two-man cabinet – a duumvirate – with his deputy Lance Barnard, and set about changing the nation.</p>
<p>Modestly, he took only 13 portfolios, while Barnard got 14. The pair governed the country for two weeks until the results of the election were formally declared and a full ministry sworn in. None of this, however, <a href="https://theconversation.com/view-from-the-hill-scott-morrison-makes-parliamentary-history-for-the-worst-of-reasons-195648">was secret</a>.</p>
<p>The Whitlam government’s enthusiasm for reform has left a lasting legacy. It introduced universal health insurance. It made tertiary education free. It lifted pensions. It abolished conscription. It established diplomatic relations with China. It began the process to recognise Indigenous land rights.</p>
<p>But it is also generally remembered for poor economic management. Many would regard this perception as the main reason Labor, having won a second election in May 1974, was trounced in December 1975.</p>
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Read more:
<a href="https://theconversation.com/australian-politics-explainer-gough-whitlams-dismissal-as-prime-minister-74148">Australian politics explainer: Gough Whitlam's dismissal as prime minister</a>
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<p>Whitlam <a href="https://treasury.gov.au/publication/economic-roundup-issue-2-2013-2/economic-roundup-issue-2-2013/frank-crean-a-long-wait-for-a-turbulent-tenure">himself admitted</a> his “preoccupations and predilections lay beyond the narrower field of economic theory”. </p>
<p>Certainly the Whitlam government’s economic performance was far from perfect. But it deserves a better reputation than it has. Fifty years on, we can now see how much the circumstances of the time coloured perceptions.</p>
<h2>Economic growth</h2>
<p>Campaigning in 1972, Whitlam scoffed at the 3% annual economic growth achieved under the incumbent McMahon government. He aspired to <a href="https://electionspeeches.moadoph.gov.au/speeches/1972-gough-whitlam">achieving 6-7%</a>. But he ended up actually achieving less than 3%.</p>
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<p>We can now see this wasn’t the failure it seemed at the time. The growth rates of the 1950s and 1960s were atypical, and set unrealistic expectations. Since federation, in fact, average annual economic growth has been 3%.</p>
<h2>A time of crisis</h2>
<p>Like two other Labor governments – that of James Scullin in 1929 and Kevin Rudd in 2007 – Whitlam had the bad luck of taking office just before a large global economic downturn. </p>
<p>This was precipitated by the 1973 oil crisis, when Saudi Arabia and other OPEC nations refused to sell oil to the United States and nations that supported Israel in the Yom Kippur war.</p>
<p>Global oil prices tripled, supercharging inflation and weakening economic activity, creating the conditions for “<a href="https://www.rba.gov.au/education/resources/explainers/pdf/causes-of-inflation.pdf">stagflation</a>” (inflation with stagnating growth).</p>
<h2>Inflation</h2>
<p>Inflation peaked at almost 18% during the Whitlam years. It had been higher – almost 24% in 1951, under the Menzies government – and it had started climbing before Whitlam was elected. This was also due partly to global factors and partly to the McMahon government <a href="https://treasury.gov.au/publication/economic-roundup-issue-1-2013/economic-roundup-issue-1-2013/billy-snedden-the-challenge-of-incipient-inflation">spending big</a> to curry favour with voters. </p>
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<p>Unlike the Hawke-Keating government, which kept union demands for higher wages in check in exchange for “social wage” improvements, Whitlam failed to convince the unions to curb their wage demands. This made stagnation worse. </p>
<p>But his government did take steps to fight inflation. It revalued the Australian dollar and raised interest rates. It established a <a href="https://onlinelibrary.wiley.com/doi/epdf/10.1111/j.1467-8462.1974.tb00972.x">Prices Justification Tribunal</a> to discourage large companies from raising prices. </p>
<p>By the end of its term inflation was declining – though it was not until after the Reserve Bank <a href="https://www.tandfonline.com/doi/full/10.1080/10370196.2019.1615401">adopted inflation targeting</a> in the early 1990s that it was really back under control. </p>
<h2>Employment</h2>
<p>The unemployment rate rose – but perceptions of the severity of that rise were also coloured by comparisons with the historically low rates of the 1950s and 1960s. </p>
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<p>At the end of 1975 the unemployment rate was 4.6% – less than the 5% long-term average. </p>
<h2>Budget spending</h2>
<p>Spending under the Whitlam government rose to its highest share of GDP since World War II. At the time, the opposition attributed this <a href="https://electionspeeches.moadoph.gov.au/speeches/1975-malcolm-fraser">to waste and extravagance</a>. </p>
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<p>But no government since has returned spending levels to pre-Whitlam levels. This suggests the higher spending has mostly gone to things that are popular with the public.</p>
<p>The budget balance moved into deficit. This was unsurprising as the economy slowed under the impact of the oil shock.</p>
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<p>This deficit no longer stands out, given those incurred in subsequent economic crises – the early-1990s recession, the global financial crisis of 2008, and the COVID-19 recession. It’s also worth remembering that some of the subsequent surpluses reflected the sale of public assets such as Telstra. </p>
<h2>The start of economic reform</h2>
<p>In some ways, the Whitlam government represents the start of the economic reform process that peaked during the Hawke-Keating years (1983-96). </p>
<p>Whitlam was sceptical of protectionism and started cutting tariffs. This was partly to reduce inflation by lowering import prices, but there was also a long-term goal to develop a more efficient economy. </p>
<p>His government implemented a new Trade Practices Act and reformed government entities such as tthe Post-Master General’s Department, which was replaced by the more commercially focused Telecom Australia and Australia Post.</p>
<p>The Whitlam government’s economic performance was certainly not perfect. But it deserves a better reputation than it has.</p><img src="https://counter.theconversation.com/content/195651/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>John Hawkins does not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>The Whitlam government’s economic performance was certainly not perfect. But it deserves a better reputation than it has.John Hawkins, Senior Lecturer, Canberra School of Politics, Economics and Society, University of CanberraLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/1838182022-06-01T01:11:23Z2022-06-01T01:11:23ZThere’s one big reason wages are stagnating: the enterprise bargaining system is broken, and in terminal decline<p>Real wages in Australia have been stagnating for the better part of a decade. Now, with higher inflation, they’re declining. So what can the new Albanese government, having campaigned hard on the previous government’s failures, do about it?</p>
<p>Making a submission to Australia’s industrial relations umpire, the Fair Work Commission, to lift the minimum hourly wage from A$20.33 to A$21.36, is one thing. If that push is successful, it would help the 2% of workers paid the minimum wage, as well as the 23% (about 2.2 million workers) on awards, whose rates would also lift. </p>
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Read more:
<a href="https://theconversation.com/lifting-the-minimum-wage-isnt-reckless-its-what-low-earners-need-183643">Lifting the minimum wage isn't reckless – it's what low earners need</a>
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<p>But there’s a bigger systemic problem the Albanese government needs to address – a flaw designed and implemented by a previous Labor government. Enterprise bargaining, the mechanism introduced 30 years ago for workers to collectively negotiate better wages and conditions, is broken. </p>
<p>It’s failing low-paid workers lacking bargaining power in particular, and is a big part of the reason for such poor wages in female-dominated professions such as aged care and child care.</p>
<h2>Origin of enterprise bargaining agreements</h2>
<p>Enterprise bargaining was introduced during the Hawke-Keating Labor era in the early 1990s, in partnership with the Australian Council of Trade Unions and the support of employer groups.</p>
<p>The Business Council of Australia had lobbied strongly for an enterprise focus for negotiating employment conditions, on the basis it`was the best way to tie wage claims to gains in productivity.</p>
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<figcaption><span class="caption">Prime Minister Paul Keating extols enterprise bargaining in parliament on June 24 1992.</span></figcaption>
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<p>After 30 years, though, enterprise bargaining is in terminal decline, with ten years of shrinking agreement coverage in line with stagnant wages growth. </p>
<p>Research by labour law and policy experts Andrew Stewart, Jim Stanford and Tess Hardy <a href="https://australiainstitute.org.au/report/the-wages-crisis-revisited/">published in May</a> shows the total number of enterprise agreements fell by more than half between 2013 and 2021 (from 23,500 agreements to 10,000). </p>
<p>Worse, the share of employees covered by a current enterprise agreement declined from an average of 27% in 2012 to just 15% by late 2021. This is shown in the following graph.</p>
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<img alt="" src="https://images.theconversation.com/files/466199/original/file-20220531-14-9c8cg6.png?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/466199/original/file-20220531-14-9c8cg6.png?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=600&fit=crop&dpr=1 600w, https://images.theconversation.com/files/466199/original/file-20220531-14-9c8cg6.png?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=600&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/466199/original/file-20220531-14-9c8cg6.png?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=600&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/466199/original/file-20220531-14-9c8cg6.png?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=754&fit=crop&dpr=1 754w, https://images.theconversation.com/files/466199/original/file-20220531-14-9c8cg6.png?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=754&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/466199/original/file-20220531-14-9c8cg6.png?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=754&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
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<span class="attribution"><span class="source">Australia Institute, The Wages Crisis Revisited</span>, <a class="license" href="http://creativecommons.org/licenses/by-nd/4.0/">CC BY-ND</a></span>
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<p>The Australian Industry Group and other business representatives blame this on the Fair Work Commission’s strict approach to the “better off overall test” and other statutory protections of employees’ interests in agreement-making.</p>
<p>Unions see it differently. In their view, enterprise bargaining is in free-fall because of design flaws in the current laws, meaning workers have very limited negotiating power and employers can “game” the system to avoid their obligation to bargain.</p>
<p>The main problem: enterprise bargaining was designed for an economy that no longer exists. </p>
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Read more:
<a href="https://theconversation.com/cabinet-papers-1992-93-the-rise-and-fall-of-enterprise-bargaining-agreements-70139">Cabinet papers 1992-93: the rise and fall of enterprise bargaining agreements</a>
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<h2>Workplaces have changed</h2>
<p>Allowing employees and unions to only bargain and take industrial action for an agreement with a single business, or part of a business, works fine with large worksites, such as factories, with hundreds or thousands of workers with the same employer. </p>
<p>But these types of workplaces are increasingly rare. Now, many employers in sectors such as food production, logistics, warehousing, building management and “big box” retail stores have hived off large parts of their operations, and workers, to other entities. </p>
<p>They’ve used labour hire, independent contracting and outsourcing to distance themselves from responsibility for minimum employment standards – and collective bargaining. </p>
<p>To lift wages, workers need the boost to bargaining power that comes from being able to negotiate – and strike – across entire industries. </p>
<p>Labour hire workers must be able to bargain not just with the agency that technically employs them, but with the business for whom they are working – <a href="https://www.theguardian.com/australia-news/2018/jan/20/amazons-labour-hire-deal-and-the-impact-on-collective-bargaining">such as Amazon</a>, which has relied heavily on outsourced labour in its Australian operations.</p>
<p>Workers who clean and provide security services in commercial buildings need to have the capacity to pursue pay increases from the lead firms that ultimately control labour’s share of profits. </p>
<h2>What Labor has promised to do</h2>
<p>Federal Labor’s 2021 <a href="https://alp.org.au/media/2594/2021-alp-national-platform-final-endorsed-platform.pdf">national policy platform</a> contains a commitment to “improve access to collective bargaining, including where appropriate through multi-employer collective bargaining”. </p>
<p>It notes this access is a particular issue for low-paid employees lacking industrial power, and that the Fair Work Act does not adequately facilitate it. </p>
<p>These points, however, were not mentioned in the run-up to the election. Nor did the Australian Council of Trade Unions make an issue of it, in contrast to its “Change the Rules” campaign <a href="https://www.tandfonline.com/doi/abs/10.1080/10301763.2021.2009628">between 2017 and 2019</a>. </p>
<p>Instead, Labor pledged to address other problems in the enterprise bargaining system: the weak requirements for employers to negotiate in “good faith”, and the ease with which employers can have agreements terminated. </p>
<p>However, the Albanese government may well be pushed to “go bolder” – not just by unions but also the Australian Greens, whose <a href="https://greens.org.au/sites/default/files/2022-01/Greens-2022-Policy-Platform--Jobs--Rights.pdf">2022 election policy</a> states: </p>
<blockquote>
<p>Workers should be free to collectively bargain at whatever level they consider appropriate and with whoever has real control over their work, whether at a workplace, industry, sector or other level. </p>
</blockquote>
<p>The Greens’ platform also states: </p>
<blockquote>
<p>Workers should have the right to engage in industrial action, including the right to strike, consistent with international law and not limited to artificially restricted bargaining periods.</p>
</blockquote>
<p>The government may not need Greens’ support to pass legislation in the House of Representatives, but it will need it in the Senate.</p>
<p>So expect the future of enterprise bargaining, along with properly tackling insecure work, to be a hot topic for the government’s planned jobs summit.</p>
<p>With employers already talking up the need for productivity gains to underpin any changes, we’ll have to wait and see how serious the new government is about fixing a broken bargaining system.</p><img src="https://counter.theconversation.com/content/183818/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Anthony Forsyth is affiliated with the Centre for Future Work (Australia Institute) and the Migrant Workers Centre in Victoria. He has received funding from the Australian Research Council Linkage Program (industry partners: Australian Council of Trade Unions & The Union Education Foundation). </span></em></p>Beyond arguing for an increased minimum wage, the new Albanese government needs to fix an outdated system that’s failing our lowest-paid workers – especially women.Anthony Forsyth, Distinguished Professor of Workplace Law, RMIT UniversityLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/890132017-12-31T14:19:05Z2017-12-31T14:19:05ZKeating’s Working Nation plan for jobs was hijacked by bureaucracy: cabinet papers 1994-95<p>The White Paper called Working Nation became the Labor government’s major economic statement in Paul Keating’s second term. However, the policy was principally an after-the-fact attempt to clean up a mess in the labour market and be seen to be doing something even if a little belatedly.</p>
<p>Cabinet papers released today by the National Archives of Australia show the white paper began as a rational exercise but was soon overtaken by pressing contingencies and the desire to make the policy everything to everyone. While concerned ministers were anxious to reposition the government in the midst of an ongoing recession, the process of preparing the new White Paper became an exercise in opportunism and bureaucratic capture. </p>
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<p>
<em>
<strong>
Read more:
<a href="https://theconversation.com/cabinet-papers-1994-95-how-the-republic-was-doomed-without-a-directly-elected-president-88394">Cabinet papers 1994-95: How the republic was doomed without a directly elected president</a>
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</em>
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<h2>How Working Nation was formed</h2>
<p>On 15th December 1993 the Keating government released a significant draft policy entitled <a href="https://www.aph.gov.au/binaries/library/pubs/cib/1994-95/95cib01.pdf">Restoring Full Employment</a> – a nostalgic resonance to the original war-time <a href="http://www.billmitchell.org/White_Paper_1945/index.html">Full Employment paper of 1945</a>. Australia’s unemployment rate at the time was a staggering 10% and while younger school leavers found it hard to find work or were actively discouraged, many older workers (especially males) were being thrown out of jobs, many never to work again. </p>
<p>Paradoxically, unemployment had not featured significantly in the 1993 election (which was fought on the GST), but Labor was now worried that if nothing was done about the deterioration in the labour market (and specifically job creation) then the government would not hold onto office in 1996.</p>
<p>In early February 1994, the Keating cabinet began work on a follow up government policy statement provisionally entitled: a White Paper on Employment and Industry. </p>
<p>The resulting Working Nation paper was one of five “Nation” statements favoured by the two Keatings (Paul the PM and Mike his head of department, not related). The cabinet papers show it began life with the worthy goal of “achieving sustainable high economic growth,” but soon became a “jobs and training compact” to reduce long-term unemployment. </p>
<h2>What Working Nation was designed to do</h2>
<p>Working Nation was meant to provide an employment strategy, stimulate regional development, introduce a new industry policy, and assist Australia “going global” in expanded trade opportunities. Ministers hoped the policy would lead the economic transformation of Australia. </p>
<p>It began life under ministers Kim Beazley (then head of the Department for Employment, Education and Training) and Peter Baldwin (Department of Social Security). The focus was on the job seekers who would be helped by individual case management, but with the insistence on “reciprocal obligation” - that those on income support had a responsibility to stay in education, be in training or doing other productive work.</p>
<p>But this obligation could easily be evaded through the misuse of medical certificates. Only women over 40 whose partners were unemployed were spared these expectations.</p>
<p>In its implementation by the federal bureaucracy, and the beleaguered Commonwealth Employment Service in particular, the policy descended into a treadmill of labour market programs. There was a saturation of jobs advertisements in the media – that even <a href="https://www.allenandunwin.com/browse/books/academic-professional/social-work/Social-Policy-Public-Policy-Meredith-Edwards-Cosmo-Howard-and-Robin-Miller-9781864489484">according to senior administrators</a> led to considerable “churning” of people through 12-18 month job compacts back onto the unemployment queues. </p>
<h2>Cost blow outs</h2>
<p>Cabinet deliberations at the time show two prominent political aspects of the policy. First, when money was up for grabs the policy intent expanded exponentially and ministers from tangential portfolios rushed to put their hands up for a share of the proceeds.</p>
<p>Second, fiscal circumstances were tight at the time, but costings for the multi-faceted White Paper went from estimates of A$200 to A$300 million for income support, to A$1 billion to A$1.4 billion a few days later. Then it became a maximum of A$1.7 billion. </p>
<p>When the program was announced in May 1994 it came in at an annual cost of A$2 billion, with claims of a total cost of A$6.5 billion before it was wound up in 1996.</p>
<figure class="align-center ">
<img alt="" src="https://images.theconversation.com/files/200289/original/file-20171220-4997-hqq82l.jpeg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/200289/original/file-20171220-4997-hqq82l.jpeg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=604&fit=crop&dpr=1 600w, https://images.theconversation.com/files/200289/original/file-20171220-4997-hqq82l.jpeg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=604&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/200289/original/file-20171220-4997-hqq82l.jpeg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=604&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/200289/original/file-20171220-4997-hqq82l.jpeg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=759&fit=crop&dpr=1 754w, https://images.theconversation.com/files/200289/original/file-20171220-4997-hqq82l.jpeg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=759&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/200289/original/file-20171220-4997-hqq82l.jpeg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=759&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
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<span class="caption">Ministers like Simon Crean were largely left out of the process of forming the policy.</span>
<span class="attribution"><span class="source">National Archives of Australia</span></span>
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<p>The formulation process showed how a determined bunch of policy entrepreneurs, senior bureaucrats led by the head of Department of Prime Minister and Cabinet and academic economists, were able to drive a policy response based on detailed research and theoretical propositions. Social Security bureaucrats were also able to exploit the opportunity to implement their own preferred policy adjustments, almost unrelated to the main thrust of the policy statements. At the same time these bureaucratic players largely marginalised ministers in the process. Indeed, the 1994 Employment Minister Simon Crean had to be briefed by officials on the content of the policy when Working Nation was released. </p>
<p>Moreover, these insider policy entrepreneurs carefully sidelined the government’s main economic adviser, the Treasury department, during the whole process. This perhaps reflects the deep suspicion of some of these actors to the ideological bent of the then Treasury officials. </p>
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<p>
<em>
<strong>
Read more:
<a href="https://theconversation.com/cabinet-papers-1994-95-how-a-security-agreement-allayed-australian-anxiety-over-indonesia-89143">Cabinet papers 1994-95: How a security agreement allayed Australian anxiety over Indonesia</a>
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</em>
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<p>While a jobs training package sounded a simple response to a pressing problem, the Working Nation policy created more headaches for a government with umbilical links to the trade union movement. There was contention over a “training wage,” whether it should be greater than the Newstart allowance and how it related to the minimum wage. There was also debate on whether workers could jobshare (which was not endorsed by cabinet) and how increased income support impacted on housing and rental relief measures. </p>
<p>Working Nation was a classic case of just how complex and interrelated such well-intentioned policy statements can become when they cut across other areas of established policy. </p>
<p>Even before it was wound up, there were concerns, noted by cabinet, that the program was not achieving its objectives and that those on the Job Compacts program remained without work when their program entitlements expired. </p>
<p>Even after economic growth in Australia improved, the unemployment rate remained stubbornly stuck at 8.5% before the 1996 election, - an election at which Labor suffered a heavy defeat. Working Nation led to the Commonwealth Employment Service being disestablished and replaced by the now familiar network of private or community job-seeker agencies delivering services under competitive contracts. </p>
<p>While Working Nation was a major economic and social policy statement of the government, it was an inadequate response (too late and too slow) to the imperatives of the 1991-92 recession. And in the process of producing the White Paper, strategically placed insiders grabbed the opportunity to flex their own policy muscles inserting their preferred options into the statement. </p>
<p>Once released, Working Nation had a short-lead in time for implementation (eight weeks) placing huge burdens on a centralised bureaucracy, not generally equipped to respond so receptively to such demands. Working Nation highlighted not only the policy-making inadequacies of the federal government but also the tardy delivery capacity of large unwieldy bureaucratic organisations.</p><img src="https://counter.theconversation.com/content/89013/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>John Wanna does not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>Cabinet papers released today by the National Archives show Working Nation began as a rational exercise but was soon overtaken by a desire to make the policy everything to everyone.John Wanna, Sir John Bunting Chair of Public Administration, Australian National UniversityLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/519012015-12-31T21:23:49Z2015-12-31T21:23:49ZCabinet papers 1990-91: leadership scrutiny distracts from historic Hawke reforms<figure><img src="https://images.theconversation.com/files/107010/original/image-20151224-27851-1uxtj1f.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">Hawke said his government passed more legislation in 1990 and 1991 than any other since federation.</span> <span class="attribution"><span class="source">National Archives of Australia</span></span></figcaption></figure><p>We have become accustomed to the corrosion leadership uncertainty brings to Australian politics. Selected key cabinet records for 1990 and 1991, released today by the <a href="http://www.naa.gov.au/">National Archives of Australia</a>, highlight the enduring tensions generated by perhaps the first in the modern cycle of such contests, and also reveal the distortions they introduce into our sense of government. </p>
<p>At a December 2015 media briefing before the release of those records, Bob Hawke urged reporters of the need </p>
<blockquote>
<p>to destroy the myth that has been peddled in some quarters that this was a period of do-nothing government.</p>
</blockquote>
<p>Hawke dismisses arguments that his government was paralysed in the period from its re-election in March 1990 and Paul Keating’s second, successful leadership challenge on December 19, 1991. </p>
<p>That “myth”, however, is well entrenched, especially in the biographies and autobiographies that have increasingly shadowed the recent past of Australian politics. </p>
<h2>Behind the Punch and Judy show</h2>
<p>There is, no doubt, an interdependence between the appetites fed by the itch of leadership unrest and the bullish market for personalised accounts of politics.</p>
<p>But those appetites can foster a disconnect between the public narrative of a government’s performance and the policy agenda that fundamentally shapes the life of the nation. This disconnect is particularly marked in relation to the events of 1990-91.</p>
<p>As Hawke reminded journalists, in those years his government passed more legislation - 144 acts in 1990, 204 in 1991 – than any other since federation. While the press focused on what Keating called “the Punch and Judy show”, this government was working at an astonishing pace on reforms that are still felt today: cutting tariffs, privatising state assets, reforming telcos, breaking industrial orthodoxies in moving to enterprise bargaining, introducing the “activity tests” of Newstart, ramping up targeted policies on child care and aged care, and much else.</p>
<p>In May 1990, Keating as treasurer congratulated colleagues on returning to their offices “unencumbered by costly and unnecessary campaign promises”. Many ministers might have doubted their prospects of re-election, but now was the opportunity to press harder into the reconstruction agenda the government had pursued since 1983.</p>
<p>More than ever, the government’s mantra was micro-economic reform: broad-brush deregulation of financial and industrial sectors was to be focused down onto the workers, employers and institutions that had increasingly to play their part in transforming the world of work in Australia. Bargains were struck over workforce participation, workplace culture, occupational transformation and flexibility and investment. </p>
<p>Cabinet submissions emphasised that the pressure of market exposure should be increased and public spending restrained. Even with the first signs of recession, the drive was to break through the last barriers to efficiency. </p>
<p>Car manufacturers needed the discipline of “more than gradual adjustment pressure”. Clothing manufacturers, proving resistant to regimes of “restructuring pressure”, needed “accelerated” strategies. </p>
<p>Hawke’s drive to recast federalism around a more co-operative approach to providing services gained early support and bureaucratic action. The Building Better Cities agenda of 1991 coupled a fresh approach to the spatial dimensions of disadvantage while emphasising the micro-economic goals of “enhancement of access to employment, education and training”.</p>
<h2>Unforgiving leadership scrutiny</h2>
<p>But critics outside the government found the focus on process in such policies less interesting than the programs with which the government had once held their attention. Economic downturn also sapped these initiatives of resources and strained administrative systems. As leadership divisions deepened within the government, these elements were readily seized upon by those wanting change at the top. </p>
<p>In this context, some changes, such as the introduction of a Medicare co-payment for visits to the doctor, played into intensifying factional jockeying as much as they challenged Labor Party principles. </p>
<p>And, with a fix on economic outcomes, there was less tolerance for the values of special interests, as Hawke found when he effectively staked his leadership on preventing mining on a <a href="http://www.jawoyn.org/governance/history">site sacred to the Jawoyn people</a> in Kakadu National Park.</p>
<p>The coupling of the government’s micro-economic agenda with this leadership scrutiny was unforgiving. But that agenda was integral – and these years perhaps decisive – to consolidating the transformations we are told made Australia more resilient through the economic crises to come. </p>
<p>However unguarded, Keating’s reference to the “recession we had to have” runs through much of the government’s actions through 1990 and even well into 1991. The decision was made not to “throw money at the problem” by stimulating recovery through public investment. </p>
<p>The treasurer assured cabinet in May 1991 that his intent was not “keeping the economy comatosed” by maintaining restraint, but guaranteeing that when business picked up it would be on better foundations for the future. </p>
<h2>A changing world</h2>
<p>By then, however, cabinet submissions were reflecting an awareness that the recession of 1990-91 was not only forcing through necessary changes. It was also hitting a society – and especially a labour market – that had not fully recovered from the 1982-83 recession and was less able to adapt to change. </p>
<p>Cabinet papers began to document a world that was being lost as much as promises of a world to come. Soon after becoming treasurer with Keating’s departure to the backbench in July 1991, John Kerin delivered a budget conceding that the past year had been one of “lost jobs, squeezed profits, and dashed hopes”. Kerin, too, would quickly become a victim of the disconnect between reality and message.</p>
<p>And in ushering in elements of the revolution in telecommunications, this period of government was also on the cusp of an age in which leaders are judged on their performance in an unforgiving 24-hour media environment as much as by their longer-term policy outcomes.</p><img src="https://counter.theconversation.com/content/51901/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Nicholas Brown receives funding from the ARC.</span></em></p>While the press at the time focused on what Keating called “the Punch and Judy show”, cabinet papers reveal that the fourth Hawke government was working at an astonishing pace at reforms still felt today.Nicholas Brown, Professor in History, Australian National UniversityLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/374072015-02-12T20:45:12Z2015-02-12T20:45:12ZCalls for clear political narratives ultimately demand greater honesty<p>Whenever an Australian government runs into trouble we hear calls for a clearer narrative. The latest contribution comes in a <a href="http://www.theage.com.au/comment/coalition-needs-a-heart-transplant-not-a-facelift-20150205-136hjx.html">thoughtful article</a> from Waleed Aly.</p>
<p>Aly points to the similar undermining of our last three prime ministers, all of whom seemed unable to combine public trust with the respect of their colleagues. And all of whom, he argues, sacrificed principles for short-term expediency.</p>
<p>Tony Abbott won office because of the seeming dysfunction of the Rudd-Gillard-Rudd governments, having held his party together through the repetition of simplistic slogans and <a href="http://www.abc.net.au/news/2014-05-07/abbott-promises-no-cuts-to-education-health/5436224">promises to maintain government programs</a>, which are now under threat.</p>
<p>This tactic has paid off handsomely for oppositions across the country. The exception is the South Australian Liberals, who failed to unseat the <a href="https://theconversation.com/labor-lives-to-fight-another-day-in-south-australia-24222">Labor government</a> last year. It follows the pattern across Western democracies; the only major political survivor is German Chancellor <a href="http://www.theguardian.com/world/2015/jan/07/ten-reasons-angela-merkel-germany-chancellor-world-most-powerful-woman">Angela Merkel</a>, who has held office since 2005.</p>
<p>Such longevity now seems almost an aberration; maybe many Australians support the monarchy from a sense that it survives the short-term nature of the political process. Calls for a convincing narrative are common across the Western world, as traditional political parties struggle to reposition themselves in a rapidly changing environment.</p>
<h2>Parties struggle for consistency</h2>
<p>Australian political parties emerged as essentially class-based. Labor, centred in the unionised workforce, faced a series of conservative parties representing business, which were able to appeal to those who identified as middle class and maintain an alliance with the rural-based Nationals. Since the Second World War no minor parties have been able to break the dominant story of politics as built around class and the role of the state, though the Greens have come closest.</p>
<p>As the workforce has changed radically – more women, fewer blue-collar workers, an expansion of service jobs and small businesses – so too has the nature of political discourse. An increasingly complex society demands more of the state while the dominant language of neoliberalism means constant pressure to reduce taxes and the ability of governments to deliver.</p>
<p>The Hawke-Keating Labor governments introduced a number of neoliberal measures, but with some concern to maintain safety nets and keep the union movement on side. The Howard Coalition government was able to introduce a GST, one of the most far-reaching tax reforms of the past few decades. But it <a href="http://www.crikey.com.au/2007/09/21/south-korea-versus-australia-our-pathetic-savings-record/?wpmp_switcher=mobile">squandered much of the gain</a> from the minerals boom in unnecessary perks for well-off voters.</p>
<p>The call for new narratives is in effect a call for greater honesty about the role of the state. Treasurer Joe Hockey touched on this when <a href="https://theconversation.com/hockeys-first-budget-redefines-the-role-of-government-in-australia-26573">he declared</a> the <a href="http://www.smh.com.au/national/the-end-of-the-age-of-entitlement-20120419-1x8vj.html">“age of entitlement”</a> over. Yet he then failed to acknowledge that a balanced budget requires far greater cuts to the <a href="https://theconversation.com/to-cut-fairly-commission-of-audit-should-look-at-tax-expenditures-23769">benefits built into our tax system</a> – for example, superannuation tax breaks and negative gearing – than his constituency would wear.</p>
<h2>Reducing the big issues to individual impact</h2>
<p>Thirty years of neoliberal rhetoric has poisoned political discussion, by reducing major issues to immediate impact on individual incomes. Abbott’s sustained <a href="https://theconversation.com/abbotts-big-victory-on-carbon-tax-has-a-tart-taste-29327">attack on the carbon tax</a>, which was designed to help combat climate change, drowned out sensible discussion of the bigger issues. </p>
<p>Labor is following suit in not acknowledging that to maintain and improve government programs will require a major overhaul of taxation. While the Gillard government took some important steps towards shifting the balance, particularly through the national disability scheme and greater funding for schools, she failed to explain clearly that this would require greater government revenue.</p>
<p>The current Coalition government has sought to spell out the costs, but its solutions are so clearly short term and biased in favour of the well-off that they have backfired.</p>
<p>Menzies and Howard benefited from a growing economy, which allowed them to satisfy their supporters without inflicting too much pain. With an ageing population and a slowing global economy, it is less clear how a party deeply connected with the interests of business can retract some of its most unpopular promises and pay for increasing demands on government.</p>
<p>A Labor narrative would involve a coherent defence of the continuing role of the state. This would be, in effect, a return to the ALP’s social democratic roots (as Andrew Scott <a href="https://theconversation.com/we-can-learn-a-lot-about-public-policy-from-the-nordic-nations-32204">has argued</a> in his book <a href="http://www.challengemagazine.com.au/northern_lights_the_positive_policy_example_of_sweden_finland_denmark_and_norway">Northern Lights</a>). Not only has the ALP ceded important moral ground to the Greens – especially in the case of asylum seekers – but the party has failed to construct a meaningful story about creating a better society which voters might trust.</p>
<p>For both sides a better narrative means more than a set of specific policies and promises of government savings and reform. It means restoring trust in the ability of government to deliver what we cannot deliver for ourselves. And that requires a defence of the public sphere, which <a href="https://theconversation.com/what-price-the-public-good-when-governing-parties-bow-to-markets-37046">neither side seems able to articulate</a>.</p>
<hr>
<p><em>Other articles in The Conversation’s ongoing series, “New Politics”, can be read <a href="https://theconversation.com/au/topics/new-politics">here</a>.</em></p><img src="https://counter.theconversation.com/content/37407/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Dennis Altman does not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>Whenever an Australian government runs into trouble we hear calls for a clearer narrative. The latest contribution comes in a thoughtful article from Waleed Aly. Aly points to the similar undermining of…Dennis Altman, Professorial Fellow in Human Security, La Trobe UniversityLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/323912014-10-13T03:33:24Z2014-10-13T03:33:24ZThe economic crisis a complacent Australia has to have<p>In November 1990, then treasurer Paul Keating announced that Australia was in recession – and that it was <a href="http://books.google.com.au/books?id=gKLGAgAAQBAJ&pg=PA70&lpg=PA70&dq=29+november+1990+keating+recession&source=bl&ots=6aZRTL48KL&sig=4dQUHO3DFs25vG3wjzXW731cQJg&hl=en&sa=X&ei=sO01VPmyG8nj8AWAnYCwAQ&ved=0CEcQ6AEwBg#v=onepage&q=29%20november%201990%20keating%20recession&f=false">“the recession we had to have”</a>. </p>
<p>Today, there are growing calls for serious, structural economic reform of the kind we haven’t seen in Australia since the Hawke-Keating years. But there appears to be little appetite for it.</p>
<p>Unfortunately, it seems that reform will be postponed until we experience the crisis we have to have.</p>
<h2>Advocates for reform</h2>
<p>Former Treasury secretary <a href="http://news.anu.edu.au/2014/09/18/public-policy-resilience-and-the-reform-narrative/">Ken Henry</a> has been among the leading voices warning that Australian politicians need to do a better job of selling the case for bigger-picture reform to the public. </p>
<p>He has criticised Australia’s obsession with exports and argued that governments are too afraid to support the “winners” in the economy.</p>
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<figcaption><span class="caption">Ken Henry on Australia’s economic future, in a co-production between SBS and The Conversation.</span></figcaption>
</figure>
<p>Others calling for widespread change include the <a href="http://www.oecd-ilibrary.org/economics/economic-policy-reforms-2013_growth-2013-en">OECD</a>, <a href="http://www.bca.com.au/Content/102212.aspx">Business Council of Australia</a>, <a href="http://grattan.edu.au/report/game-changers-economic-reform-priorities-for-australia/">Grattan Institute</a>, <a href="http://www.pwc.com.au/tax/assets/Protecting-prosperity-22Jul13.pdf">PricewaterhouseCoopers</a> and the <a href="http://www.pc.gov.au/__data/assets/pdf_file/0010/96076/compendium.pdf">Productivity Commission</a>.</p>
<p>While still Treasury Secretary, <a href="http://www.treasury.gov.au/%7E/media/Treasury/Publications%20and%20Media/Speeches/2011/Australia%202011%20Opportunities%20Challenges%20and%20Policy%20Responses/Downloads/Ken_Henry_Giblin_Lecture.ash">Dr Henry argued</a> that the “right answers” for long-term reform in Australia included: </p>
<blockquote>
<ul>
<li>maintaining fiscal policy settings that lift national saving, including private saving, over time; </li>
<li>pursuing further micro-economic reform, including tax reform, encouraging competition and improvements in education and health policies, to expand the nation’s supply capacity by lifting participation and productivity and to promote economic flexibility; </li>
<li>and constructing policy settings relevant to population that support an expansion of the nation’s supply capacity, but in a socially and environmentally sustainable way.</li>
</ul>
</blockquote>
<p>Australia is facing a shrinking tax base, an ageing population, a lack of infrastructure, productivity challenges for workers and companies, and a widening gap between rich and poor.</p>
<p>Any reforms need to remember our egalitarian background. A crisis or a boom should not be an excuse to dump the idea of a “fair go”. A move away from this concept will risk our social unity and expand the gap between rich and poor.</p>
<p>Yet economist and former Labor government adviser <a href="http://books.google.com.au/books?id=YW30AQAAQBAJ&printsec=frontcover#v=onepage&q&f=false">Ross Garnaut</a> says Australians and our political leaders have become complacent. Two decades of unbroken economic growth has made us forget about meeting the challenges of the future. </p>
<h2>The crisis hypothesis</h2>
<p>What will ultimately drive reform is another crisis. <a href="http://158.121.110.113/%7Epubpol/documents/Rodrik--Week7.pdf">Crises are able to advance policy changes</a> that have otherwise seemed impossible. </p>
<p>Unfortunately, <a href="http://econweb.umd.edu/%7Edrazen/Hard_To_Find_Papers/DrazenEasterly.EP72001.pdf">the crisis often needs to be very bad</a> before real change can occur. </p>
<p><a href="http://www.researchgate.net/publication/228497322_When_do_crises_induce_market-oriented_reform">What represents a crisis</a> also varies from country to country. </p>
<p>A crisis for Australia might include a combination of problems. This may be low gross domestic product or poor economic growth, big current account deficits and high government debt.</p>
<p>As Dr Henry argues, it is time for a new reform story. </p>
<h2>The reform battle ahead</h2>
<p>The Gillard government had trouble developing its argument for reform. The current government is yet to properly develop such a story – though Treasurer Joe Hockey has been working on it. He has flagged that he plans to use the latest <a href="http://archive.treasury.gov.au/igr/">Intergenerational Report</a> to push much harder on this issue early next year.</p>
<p>In an interview with the Treasurer last week, <a href="http://www.theaustralian.com.au/national-affairs/treasury/intergenerational-report-will-reveal-massive-cost-growth-hockey/story-fn59nsif-1227080839262">The Australian reported</a>: </p>
<blockquote>
<p>A massive spending burden threatens to tip the nation into decades of deficits, according to new government findings that will be released early next year to jolt parliament — and the public — into accepting another wave of budget reform. Setting a new strategy in the political fight over difficult savings, Joe Hockey has decided to hold back the official analysis to maximise its impact on national debate when parliament sits in February.</p>
</blockquote>
<p>However, if the report and the government focus primarily on spending cuts, it still won’t be enough for Australia’s economic and social future. </p>
<p>Until we have a crisis, the road to reforming Australia’s economy will not be an easy one. We all have self-interested demands and many prefer the status quo.</p>
<p>Another challenge is the belief that we are an exceptional case and that recessions are things of the past. Yet one day a crisis will visit us again. Our window of opportunity to embrace change is now.</p><img src="https://counter.theconversation.com/content/32391/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Sean Barry does not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>In November 1990, then treasurer Paul Keating announced that Australia was in recession – and that it was “the recession we had to have”. Today, there are growing calls for serious, structural economic…Sean Barry, PhD Candidate, School of Government and International Relations, Griffith UniversityLicensed as Creative Commons – attribution, no derivatives.