Despite the hype, the Sydney Morning Herald has reported that only 2.7 per cent of all schools engaging in infrastructure projects funded by Labor's BER program have reported problems with the program! And meanwhile the BER program provided economic stimulus when it was desperately needed: with school communities all over the country now enjoying vital infrastructure which will enhance education processes and outcomes for generations.
Tim Colebatch - economics editor of The Age - has also blown Liberal claims to the “high ground” on debt out of the water. Writing on August 12, Colebatch claimed that the Coalition “has used up almost all its budget savings for new spending and tax cuts, leaving it with a bit over $1 billion of net savings over the next four years - on its own costings”. To put that in context, with an economy valued at over AU$1.1 trillion, we’re referring to less than 0.0025 per cent of GDP in additional surplus for the Coalition as opposed to Labor.
Here would-be-PM-Abbott is playing upon negative preconceptions built up regarding Labor’s economic management: but the reality is that the Labor stimulus package prevented recession. Coalition claims on debt management simply have no substance.
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Recession under Abbott would have meant a downward spiral of unemployment, falling public revenue and government debt.
Under Labor Australia has maintained its “AAA” credit rating, aiming for a return to surplus - after the critically-required stimulus - within three years. And drawing on Treasury statistics the “Australian Government net debt is expected to peak at 6 per cent of GDP in 2011-12 compared with a peak of 94 per cent of GDP for the G7 economies.” No wonder Abbott has been running scared from a proper debate with Julia Gillard on the economy.
Regardless of this, fears about public debt need to be placed into perspective.
Reduction of public debt under the Howard government came from privatisations - asset sales which saw reductions in debt matched or outstripped by reductions in government revenue. And neglecting to modernise infrastructure and invest in education - as typified under Howard - costs the economy in the long-run. Obviously what’s needed is a balance between managing debt, and investing for the future.
Neglected issues and final observations
There are other issues which also have been neglected during the campaign, and in media analysis of policy.
First: affordability and availability of housing. Under Howard a housing bubble developed which grossly inflated property values. This means that even modest movements in interest rates have a greatly magnified effect on mortgage repayments. Many can no longer afford home ownership.
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What is needed is a massive investment in social housing; not only to provide for the poor and vulnerable; but crucially - to increase supply and make housing affordable again. Simply releasing new land alone isn't enough, though - because there is the added cost of new infrastructure. Neither major party is leading on this issue, afraid to make an investment of the necessary scale to make a real difference. Greens policy on this issue seems deeply-thought-out; but on their policy websites they provide no costings.
Second, there is the demographic challenge, and the need for a reformed social wage. Australia has an ageing population; which means in the future we'll have lower labour market participation. This will effect revenue and squeeze funds for services, infrastructure and welfare. We also have tendencies towards labour market polarisation (with more low-paying jobs) which means we need a stronger social wage in areas such as health, education, welfare and transport - for all of us, but also to support the disadvantaged. This also needs to be complemented with subsidies for energy and water, as well as communications and intervention to support social participation. The consequence is that we need progressive tax reform to maintain welfare, infrastructure and services. Who will do the right thing and progressively reform tax?
Finally, there is the matter of a National Disability Insurance Scheme (NDIS). Australian Medical Association (AMA) President, Dr Andrew Pesce, stated in July of this year:
Labor’s draft National Disability Strategy is based on the right for people with disability to enjoy full and effective participation and inclusion in society, and the right to have respect for inherent dignity, individual autonomy, including the freedom to make one’s own choices, and to be independent.
According to the Australian Institute of Health and Welfare estimates there are 1.5 million people [in Australia] with a severe disability and that will grow to 2.3 million by 2030. All of us; and all our families are potentially at risk. Therefore: providing dignity, security and participation for those affected is a matter of personal interest to all of us. It is also a matter of human decency.
According to The Australian a NDIS would come “with a price tag: a net $4bn to $5bn a year to cover people aged under 65.” That’s about half of what it would cost for Abbott to cut the resource rent (mining) tax.
And of course the elderly must be fully covered also. A new levy similar to the Medicare Levy could be established at a rate of 1 per cent or 1.5 per cent for taxpayers.
But regardless of the human need it appears the major parties are shying away from such fundamental and urgently needed reform because of the price tag.
Again, the Greens have supported an NDIS type scheme in principle, but haven’t put a dollar-amount on that commitment. I am is still hoping Labor will announce a NDIS as a last minute “drawcard” establishing Labor’s superior credentials in welfare and health, and providing scope for enhancement of mental health services.
Conclusion
There are many important issues facing voters in this election. Labor acted quickly in response to the global financial crisis. Labor stimulus was swift - as necessary - but moving so quickly inevitably involved some waste. The alternative was recession.
Although forced to compromise, Labor’s resource-rent tax will take in about $10 billion a year: providing scope for the Company Tax cuts that underpin an increase in employer superannuation contributions to 12 per cent.
Labor rolled back the worst of WorkChoices - but there is more to be done. No worker should be worse off under Award modernisation; and workers deserve the right to pattern bargaining.
There are many other issues as we have discussed here also.
In the face of Liberal deception on debt, waste and stimulus, the real choice for socially and economically-conscious voters is between parties of the Left and Centre-Left. There’s the choice of rewarding Labor for what reform it has achieved; or trying to nudge Labor into further action by voting for the Greens.
Some will not be able to stomach the kind of pragmatic electorally-driven decisions Labor has made: for instance with regard to refugees. And a Greens balance-of-power in the Senate may spur more of the kind of reform as we saw with Labor and the Greens having worked out reform of Disability and Aged Pensions in response to a rising cost of living. But rewarding Labor for what it has done right may provide the motivation - and the self-interest - for more reform as well.
This election will be close. Every vote matters. Make your vote count on August 21.
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