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Denial to celebration: political responses to class in Australia

Issues around ‘who gets what’ in Australia may soon become much more central to political debate than under previous governments. AAP/Alan Porritt

The Conversation is running a series, Class in Australia, to identify, illuminate and debate its many manifestations. Here, Geoffrey Robinson traces the history of Australian political debate on class.

Federal health minister Peter Dutton’s recent comments on health care symbolise an emerging shift in Australian politics. Dutton told the ABC’s 7:30 program that:

…we do have to have a national discussion about who pays for what and how the government pays going forward and how consumers pay for those health services.

Issues around “who gets what” may soon become much more central to political debate than they were under the prime ministership of John Howard.

A difficult economy poses political challenges for the current Coalition government, but it also offers opportunities to achieve traditional conservative goals: the defence of what 18th century Irish philosopher Edmund Burke called natural inequality against the levelling trends of a contemporary democracy.

Early political moves

The current debate about inequality is an instalment of a long war that began in the 1940s. World War Two brought about a social revolution in Australia, and in the United States it strengthened unions and increased taxation.

Australian conservatives were appalled. Robert Menzies fumed about the power of the “organised” (that is, unionised) masses and fretted about overpaid munitions workers and the tax burden on the middle class.

But by 1949, Menzies had come to align himself with the “moderates” within the conservative ranks that his admirers had opposed in 1943. Communism was now the great threat and the political Right needed to appeal to the middle ground. The Menzies years, although later deplored by the Left (who were unwilling to admit Labor’s political ineptitude), were an era of remarkable economic egalitarianism, as economist-turned-Labor MP Andrew Leigh has shown.

The 1970s and beyond

The economic upheavals of the 1970s provided an opportunity for the wealthy to reverse these egalitarian trends. This reversal started under a Labor government, and although Labor pursued policies that increased income equality (such as encouraging the growth of the finance sector), it sought to compensate by a redistributive social policy.

After winning government in 1996, John Howard – like Menzies – worked within the parameters left by Labor. The economic boom meant that lower-income earners could be looked after, while the wealthy were favoured by tax reductions and social policies such as the private health insurance rebate.

Robert Menzies’ views on inequality and class were shaped by the ‘threat’ of communism. AAP

Howard taunted Labor with the real wage increases under his watch – often delivered by enterprise bargaining – and he avowed his love for Medicare. Some observers argued this record reflected a specifically egalitarian commitment on Howard’s part, yet the anti-egalitarian focus of Tony Abbott, the self-proclaimed keeper of the Howardian flame, makes this doubtful.

The political context was probably more important for both Menzies and Howard. The former feared the rise of communism; the latter faced an electorally competitive Labor Party (compared to the Menzies era).

The social policy structures that Labor bequeathed are now being challenged. Trends towards market inequality have now advanced so far that social policy has struggled to correct them. Economic growth has slowed due both to the refocusing of Chinese economic policy and longer term trends such as “secular stagnation” and the slowing pace of technological innovation.

The real value of the minimum wage in Australia has hardly increased in over 20 years, but low-paid workers have seen their living standards substantially improve due to the provision of family benefits and government support.

If employment levels and relative living standards for low-skilled workers are to be maintained in the future, more will have to spent – possibly by a tax credit system – to support their incomes. The possible impact of automation on service sector jobs is a particular concern for the lowly paid.

Current context

Treasurer Joe Hockey’s rhetoric of ending the age of entitlement takes for granted the income of the wealthy as an indication of moral desert. With Australian social policy already highly redistributive, reductions in social expenditure will most likely reduce the incomes of poorer Australians. Conservative elite commentary on social policy now defines its task as not broadly concerned with the “battlers”, but as the provision of minimal support to the absolutely indigent.

In this context, forgotten ideas are retrieved from the bottom of the drawer by some conservative commentators, such as the abolition of collective workplace bargaining, and real reductions in social benefits. Recent comments by Peter Dutton on Medicare suggest an aspiration for the erosion of public health insurance to cover only the very poor.

Will Tony Abbott continue on the same path in responding to class as that of his political mentor John Howard? AAP/Alan Porritt

The Grattan Institute’s John Daley has advised that budgetary tightening must include lower-income earners so as to secure the acquiescence of the wealthy. The dream evoked by many commentators of a Labor Party without unions is of a Labor Party with an even weaker commitment to egalitarian policies.

What now?

Will the return of distributional debates and stagnant living standards shift politics to the left? It is unlikely. It is true, as many on the Left insist, that voters are concerned about inequality, but their focus is narrowly on the ultra-rich and the bogeymen of “big corporations”. These provided targets for Labor’s unsuccessful tilting at populist windmills during the Gillard years.

There is no sign that Labor might support egalitarian reforms such as the reversal of the capital gains tax reductions of the Howard government, despite the advice of economist Ross Garnaut.

Labor’s response to the decline of secure working-class jobs has been to champion industry support. Protectionism was once the Right’s response to economic crisis. It was a conservative alternative to socialism, but now with socialism an unhappy memory, industry support is all that the Left has to offer.

See the other instalments of the series Class in Australia here.

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