Australian liberalism: ideas from across the political spectrum

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.

While the economic Right highlights how competitive economic policies have aided business investment, employment, and even lower prices for many manufactured goods, one cannot deny the enormous difficulty ahead for policy-makers as an ever-increasing minority of Australians face record home unaffordability and higher prices for food, electricity and utilities.

Quite clearly, any ongoing move towards lower taxation levels as a percentage of GDP, further industrial relations reform to lower wages in time, and a higher reliance upon debt - give that Australia’s household debt to disposable income ratio has already increased from about 38 per cent in 1983 to 160 per cent by December 2007 - can only go so far.

A decline in the standard of living for many Westerners is likely to lead to greater demands for greater government intervention.

This is despite the US, EU (25 nations), Japan, Canada and Australia still comprising about 69 per cent of world GDP (nominal terms) in 2007 compared to 13 per cent for the four largest developing economies (China, Brazil, Russia and India) with their large populations.

But whether Australia can maintain its level of wealth through a greater adherence to freer trade or not, it will be the ongoing interaction between interest groups, political parties and public opinion that will decide the economic, social and environmental needs that are deemed most important to any nation.

Contrary to the assertion by Professor Kishore Mahbubani in his 2008 book The New Asian Hemisphere that the East has now surpassed the West in terms of implementing best practices in many areas including adherence to free-market economics, technology, meritocracy, and the rule of law, Australia can continue to provide a positive Western national example that demonstrates how a democratic society can achieve consensus and address a variety of policy needs.

As the rich of Russia, China and India will hopefully realise sooner rather than later, it is the acceptance of pluralism which is indeed the strength of any Western society.

And contrary to the views of the economic Right who mock or downplay government intervention, a clear majority expects government policies that can balance a nation’s economic competitiveness with compassion in order that battlers are not excluded. This is why the Coalition - despite its greater willingness to promote the needs of business when compared to Labor - has sought to increase its popularity in recent weeks by pushing Labor to increase the single pension by $30 a week.

But we can never assume that Australia’s economic success will continue, or that Labor and Coalition governments will always meet Australia’s social welfare needs, as has been evident in recent decades by child-related payments and assistance to low-income families increasing from 60 per cent of the OECD average in 1980 to 160 per cent in 2001 after being 140 per cent in 1994.

We only have to look to the US to understand why Australia’s liberal democratic potential can never be taken for granted, although we should never downplay the crucial role that the US has played in providing military security and the biggest economic market for many decades.

Though the US has one of the higher per capita levels of GNI in the world (25 per cent higher than Australia in 2006 even in purchasing power parity terms), it has the highest rate of prison incarceration in the world with more than 1 per cent of adults in jail or prison by the end of 2007, low minimum wages, and no universal health care system with an estimated 47 million Americans under the age of 65 still without health cover despite US spending on health comprising 16 per cent of its GDP.

The need for commentary which supports the virtues of pluralism - which after all has allowed various interest groups to promote ongoing interest in various social welfare issues - is why any biased political commentary should be exposed for its simplicity, especially when it expresses anti-democratic sentiment.

For example, what was actually achieved by a recent blog by Janet Albrechtsen in The Australian (September 7, 2008) when she mocked the New South Wales Labor government and Liberal Party for their decision not to support the privatisation of NSW electricity in line with public anger?

While Albrechtsen notes that the business sector wanted the privatisation and the trade unions did not, as if they both or either ran NSW, it may well be that the NSW public opposed the sale due to a belief that governments should not simply sell off utilities or anything else to find enough resources to meet various policy needs.

So let us have the debates between those who support less or greater government intervention in regard to different issues, whether it be on the Internet, newspapers or electronic media, as we can never rely on political leaders or biased individual arguments alone to provide the answers.

In truth, a sophisticated economic, social and environmental policy mix will only emerge from extensive debate that will help voters adopt their own eclectic policy mix: best served by a political party or independent also reflecting such diverse policy needs.

After all, the reality is that all Western societies remain mixed economies with government intervention an important feature as the OECD average for government outlays changed little between 1993 and 2006 from 42.9 to 40.6 per cent of GDP, although some nations reduced their level dramatically led by Sweden from 72.4 to 56.7 per cent.

If Labor and the Coalition were not to make every effort to balance and address a variety of economic, social and environmental policy needs, then they will struggle to collectively maintain more than 80 per cent of the primary vote in elections, as has been evident in recent decades.

While there are important reasons why Australian governments adopted the economic reforms they did during recent decades - as measures were adopted to promote the private sector and attract important investment - no one should make the false assumption that the general public has supported less government intervention, as evident by record Commonwealth spending towards various social welfare needs.

The validity of a variety of arguments from across the political spectrum remains, notwithstanding the eclectic views of individuals. Hence, Australian political leadership will long need to reflect this reality. If not, then we run the risk of being a divided nation somewhat incapable of dealing with complex issues.