As indicated by forum responses to previous On Line Opinion articles by myself (September 1, 2008 and September 16, 2008), there are ongoing differences over what should be the appropriate level of government intervention, although others correctly note the difficulty of anyone reflecting a particular perspective given that most individuals possess an eclectic range of views in regard to the many issues.
But though certain generalisations may help explain and address past and present policy trends, it is the arguments offered by a variety of altruistic and self-interested interest groups that have encouraged Australian governments to adopt a pragmatic policy mix to deal with old and new issues.
This was the prime purpose of the September 1 On Line Opinion article to suggest that balanced political commentary can emerge to highlight the strengths and weaknesses of all arguments in order to incorporate the important role played by various societal players as Australia seeks to benefit from its economic interaction with the world.
This is despite Australian governments having less economic policy choice since the early 1970s as Australia could no longer protect its industries through high tariff protection and regulation. Along with other key reforms adopted since the early 1980s (such as financial deregulation and a lower corporate income tax rate), if Australia wanted greater access to foreign markets for its own exports in an expanding international economy, then it too had to open up its own domestic economic sectors to greater competition from foreign competitors.
But contrary to what free trade thinks tanks (such as the Centre for Independent Studies and the Institute of Public Affairs) suggest with their promotion of the supposed virtues of minimal government, the major political parties have long been encouraged to give greater resources to various social welfare needs both in gross terms and as a proportion of GDP (including Aboriginal and environmental needs).
As recent opinion polls and elections indicate, many Australians do not accept the arguments put forward that the answers to Australia and humanity’s woes simply rest with less government intervention, although a clear majority has accepted the need for extensive economic reform in recent decades with their ongoing support for the major political parties (Labor and the Coalition).
For instance, while Andrew Bolt declared on the ABC’s Insiders program (August 3, 2008) that reducing per capita greenhouse gas emissions was a waste of time as gross global pollution levels will rise because of high economic growth in developing nations - one of the strangest comments I have ever heard from a high-profile commentator - the Greens narrowly lost a federal by-election in the formerly safe Liberal Party federal seat of Mayo.
But the degree which Australia can remain a progressive society may depend on a number of factors.
On the one hand, this concerns whether there will be the same level of support by all Western nations for freer trade in coming decades, although slower growth of the international economy will cause pain to many nations (including Australia) which have increasingly relied on trade for its economic fortunes. Between 1993 and 2006, the importance of trade in goods and services increased in every OECD nation with the average level rising from 16.9 to 22.3 per cent of GDP (Australia from 18.3 to 22.3 per cent).
And the present international credit crisis may long threaten to complicate borrowing possibilities to slow wealth possibilities and innovation, despite the US Treasury’s August 7 decision to take over two mortgage financiers, Fannie Mae and Freddie Mac, responsible for $5 trillion worth of home loans.
As Steve Keen noted on his DebtWatch online site (September 2, 2008), whereas previous deregulation and greater competition in the financial sector helped lower the gap between the mortgage and RBA rate from 4 per cent in 1994 to 1.8 per cent by mid 1997, the recent financial crisis has seen the margin increase to 2.35 per cent.
With manufacturing jobs now less important to many developed nations, often replaced by lower paid service jobs, it remains to be seen how long public opinion will tolerate extensive economic reform towards lower taxation rates and industrial relations reform.
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