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Abbottville by Boris Frankel

Visions of society and democracy in the Abbott/Hockey budget

Tony Abbott’s twenty-first-century Australia could be an updated incarnation of the film Pleasantville. Instead of 1950s America, Abbottville is a sanitised, stable suburban and rural world based upon existing forms and levels of consumption and production. It is free of climate-change concerns, ‘boat people’, political dissidents and unassimilated Indigenous Australians. Yet, unlike Pleasantville, Abbottville can’t always be pleasant. Sacrifices must be made by society, especially by workers and welfare recipients if the loyal business defenders of the realm are not to be undermined. Is Abbottville new or merely an extension of previous forms of socio-economic policy in Australia?

Looming over the Abbott government and Australian society is a genuine crisis that makes the dispute over the phoney ‘budget emergency’ look insignificant. The highly ideological 2014 budget completely ignores, as David Spratt warns, the ‘real budget emergency’. Leading climate scientists are alarmed that carbon emissions are already so high that the global carbon budget for burning fossil fuels has run out and with it the possibility of preventing a dangerous 2-degree-Celsius degree rise in the earth’s temperature. Unfortunately, our blinkered major political parties, business lobbies and media refuse to see the global carbon-budget emergency because they are preoccupied with the self-interest of parochial budget figures.

Untroubled by environmental concerns, Hockey’s budget rests on traditional ‘back to the future’ scenarios. The mining industry will continue driving fossil-fuel exports and domestic energy consumption. Agribusiness is also firmly in place, as is a dangerously myopic infrastructure program that promotes the road lobby and the property-industrial complex fuelled by the finance sector. Previous ALP governments made token gestures to a knowledge economy, public transport and green capitalism based on a small renewable sector. Abbott and Hockey reject subsidies for manufacturing and dislike renewables and scientific research. Tellingly, as admirers of market innovation their punitive cuts to education are counterproductive. This worries them little as, so far, they envisage only budget savings but no new industries.

After Kevin Rudd’s all talk and chaos and Julia Gillard’s calculating conservatism, Abbott promised ‘government by adults’. Instead we see incompetence, breathtaking arrogance and old-fashioned bad government. Abbott’s first year has been characterised by vindictive ‘payback’, unbelievably embarrassing political mistakes and broken promises. There is a dearth of original ideas. Even their signature idea of ending ‘the age of entitlement’ was borrowed by Joe Hockey from Republican Mitt Romney’s anti-entitlement strategy announced in 2011. Still, one does not need original ideas if your business and media allies help frame your policy agenda and the goal is to shore up privileges while inflicting pain on workers, the unemployed and disadvantaged minorities.

Much is made of Abbott’s Catholicism. Certainly, right-wing Catholics now dominate cabinet positions and policy advisory positions in a formerly Protestant party, but Catholicism is far too limited as an explanation. Abbott’s mentor, B. A. Santamaria, was strongly opposed to the free market and finance capital, women’s equality and cultural liberalism. By contrast, Abbott and other Catholic ministers largely subordinate the vestiges of pre-1980s Catholic doctrine to the pursuit of market values. While Catholic anti-Communism lives on in the form of loyalty to the American alliance, there is no unanimity among the Catholics in the Coalition government on a range of issues such as the monarchy, gay marriage, the parental-leave scheme, subsidies for manufacturing, foreign takeovers of Australian companies or the harsh treatment of unemployed youth.

Abbott the patriarch may preside in private. However, his public role as personal fitness fanatic makes him the standard bearer of the modern market individualist health regime. No ‘molly coddling state’ to protect public health for him. Instead, market ideology demands that individuals take care of themselves, thus leaving the dominant food-processing, alcohol, pharmaceutical and ‘natural therapies’ industries free to sell and promote unhealthy products with minimal regulation. Similarly, any religious values concerning the welfare of animals and the environment come second to profitable factory farming, live animal exports and genetically modified food.

Abbottville’s Genealogy

While it is necessary to highlight the Abbott government’s specific ideological priorities, it would be a serious mistake to ignore the unpalatable truth that the Abbott agenda is merely a sharp extension of policies previously pursued to a lesser or greater degree by both Coalition and ALP governments since 1976. This is because there has never been a truly universal social-welfare, health and education system that Abbott could tear apart. Recall that Malcolm Fraser dismantled Whitlam’s Medibank and also specific federal assistance for housing, community welfare and education by creating block grants for the states. From Hawke and Keating via Howard to Rudd and Gillard, means-tested policies and a two-class health, education, housing, aged-care and retirement-income system have prevailed. Abbott’s attempt to abdicate federal responsibility is merely a variation of the long Coalition tradition of thwarting progressive national legislation by hiding behind states’ rights.

Like earlier governments, Hockey maintains macro-economic settings of low tax revenue and expenditure levels as a proportion of GDP. For decades, Australia has consistently collected 7 per cent to 8 per cent less revenue than average rates in OECD countries. This translates into a loss of approximately $105 to $120 billion in additional revenue per annum that could comfortably fund a raft of urgently needed social policies while making our cities environmentally sustainable.

Instead of inaugurating a fundamentally new public-policy era, Abbottville is the logical conclusion of a disastrous policy framework first inaugurated in 1983 by Hawke and Keating. For thirty years this policy framework has led to the marketisation and pricing of nearly all social activities. While Menzies, Whitlam and Fraser look like socialists with their top marginal tax rate of 65 cents, it was Hawke and Keating who launched the long, crazy race to the bottom with tax cuts and the substantial shift to regressive user-pay practices. After Howard and Rudd pitched in, revenue decreased as a percentage of GDP and increased debt is now used as an ideological weapon to constrain the delivery of vital public programs. Despite clamouring for tax cuts for decades, business groups now recognise this revenue shortfall. Yet, with breathtaking audacity they still demand a reduction of company tax rates while passing the main tax burden on to low- and middle-income people in the form of an extended GST.

Hawke and Keating naively believed that a neoliberal ‘modernisation’ of the economy would provide a durable safety net for disadvantaged Australians. Unfortunately, Australian society has experienced three decades of the hollowing out of public services and civic life. Voters can barely remember when society was still something distinct from the economy, when education, health, the arts and sport were not ‘industries’, or when childhood and old age were not measured in dollars and cents and measured by the market as merely aiding or impeding productivity. Short-sighted commentators and ‘true believers’ ignore these fundamental changes and are dazzled by Paul Keating’s style and sharp tongue. Abbott may look like a crude bogan next to the suave Keating, but despite their differences on a range of issues, Abbott still operates within the political-economic framework created by Keating and embellished by Howard, Rudd and Gillard.

The post-1983 restructuring of the public and private sectors has not only helped produce the crises we face today. More alarming is that this policy framework is fundamentally obsolete and is a profoundly dangerous impediment to the ability of Australia to cope with environmental and socio-economic challenges. Singling out Abbott for criticism is misleading when previous governments slashed public-sector jobs and cut or froze welfare entitlements, such as those for sole parents and the unemployed. Thirty years of either half-hearted policies or profound opposition to moving our industries and cities away from dependence on fossil fuels is the legacy bequeathed to Abbott. Today, we witness the final round of federal and state public-asset sales. With few federal assets left to sell, Abbott is reducing dozens of publicly funded programs, thereby ending the last vestiges of the pre-1980s ‘mixed economy’. He is particularly eliminating advisory bodies that interfere with corporate practices, especially in areas such as food, health, environment, the arts, assistance to refugees and justice for other marginalised groups.

Why the attack on social welfare?

Australia never had a comprehensive universal welfare system, let alone a socialist redistributive system. Hence, during the period 1983 to 2013 it was relatively easy to implement what Ruth Levitas (The Inclusive Society? Social Exclusion and New Labour) calls the social integration model. Hawke and Keating pioneered this model before Blair, while Howard, Rudd and Gillard continued this policy to a lesser or greater degree. The social-integrationist model is fundamentally work-centred. Social exclusion is narrowed to those out of paid work, thus masking or ignoring large income inequalities between those in paid work, let alone the larger social inequalities based upon class, gender and race. It ignores unpaid care work in the home and society and the deep inequality of power flowing from the fact that some own and manage capital and most do not.

The Coalition combined social integration with the ‘moral underclass model’ that centres on the moral and behavioural delinquency of the socially excluded. According to Levitas, this is a highly gendered discourse whose demons are the so-called criminally inclined unemployed young men and sexually and socially irresponsible single mothers for whom paid work is considered necessary as a means of social discipline, and as a means of inclusion in the moral and cultural aspects of society. Their self-exclusion is seen as unacceptable (and threatening), both economically and morally. The generalised label ‘underclass’ has long thrown together the drug-addicted, sole parents, homeless youth and other social groups who often have little in common except their low income and political and cultural marginalisation. While the ALP emphasised work-centred social integration, the one clear exception was the use of the moral-underclass discourse by Howard, Rudd and Gillard to justify the Intervention against Indigenous communities.

Now Abbott combines a budget savings strategy and the moral-underclass discourse as a justification for harsh policies for unemployed youth and families with children over the age of six. Abbott has broken with Howard’s electoral strategy of using family tax benefits as a means of maintaining a conservative vision of families behind the white picket fence. Why? One reason is the economic pressures coming from business lobbies wanting significant cuts to welfare as part of their obsession with the size of the deficit. The other reason is that Australia never fitted into what Esping-Anderson called the three worlds of welfare (Scandinavian social democracy, Anglo-American liberalism and the social conservative model in the Netherlands and Germany). Australia had its own ‘wage earners’ welfare system (Castles) where central wage fixing spread income to most workers. This no longer exists except for those on the minimum wage.

In 2000, Ian Holliday argued that there also existed a growing ‘productivist world of welfare’ in Asian countries. Member countries of this ‘productivist world’ share an overt subordination of social policy to economic and industrial objectives. These countries have authoritarian and colonialist traditions, and lack a history of strong democratic social policy rights. As Australia’s relationship with these countries is now paramount in economic terms (although militarily and diplomatically still subordinate to the United States), Abbott and his key business allies now wish to implement a mixture of the productivist and moral-underclass models as a modification of the previous social-integrationist approach. The parliamentary ALP attacks the unfairness of Abbott’s policies, but it fails to acknowledge that its own social-integrationist approach is merely a softer version of the unjust productivist and moral-underclass approaches.

Abbott and Hockey’s authoritarian demand to end ‘the age of entitlement’ is also linked to a cost-cutting strategy to devolve education, health and welfare delivery back to the states, just as in the United States where there is significant disparity between the fifty states on levels of government support for social welfare, health and education. Other industry groups prefer national welfare, education, training and industrial-relations systems to facilitate efficiencies and standardise policies.

Previously, the Business Council of Australia was happy to use the ACTU/ALP Accord as the vehicle for implementing a neoliberal socio-economic agenda. Today, business has no need for even the facade of an Accord, given weak unions, high levels of precarious casual labour, self-employed contractors and imported contract workers. The ALP also rejects a new Accord, as the parliamentary party does not want to be painted by the media as a puppet of the ACTU.

Globally, many business leaders and politicians admire the economic record of authoritarian regimes like China, which are unimpeded by democratic elections. This is a retreat to the 1930s, when conservative politicians like Menzies voiced their admiration of fascist regimes. As a character in President Obama’s favourite TV show, House of Cards, comments: ‘Democracy is so overrated’. Little wonder that Abbott’s ministers such as Scott Morrison have contempt for the electorate being kept informed while immigration policy is militarised (like the Intervention against Indigenous Australians), and George Brandis champions the right of people to be bigots.

Friends and enemies—strategic implications

There is much invested in the Abbott government by business groups and cultural warriors. A ruthless strategy to restructure social welfare, enhance the power of the finance sector and further marketise key policy areas is under way. Remember: Thatcher’s agenda was not merely to restructure the British economy. She set out to either destroy British Labour or at least make it extremely difficult for Labour to reverse her policies. So, too, Abbott and his allies recognise that the Coalition’s future success depends on the ALP and the Greens being unable to challenge or reverse Abbott’s strategy without proposing significantly unpopular tax increases or threats to the entitlements of business and sections of the electorate.

Being an anti-ALP and anti-Greens government, Abbott’s government knows what it does not like and has carefully prepared a timetable to dismantle the ALP’s signature policies and parts of its cultural agenda. Rudd and Gillard made it very easy for Abbott to come to power because they largely squandered their six years of power. In particular, they utterly failed to increase significantly the tax base (the botched mining tax being only a minor element). Hence, they juggled the budget forward estimates so that big spending programs only started to have an impact two or three electoral cycles later in some distant future. None of their big-ticket items—whether Gonski, National Disability, reducing carbon emissions—were funded adequately or designed to really tackle deep-seated problems. Consequently, electoral coalitions could not be built to defend the government well before 2013. Abbott has learnt from Labor and adopts the same forward-estimates strategy. However, instead of increasing funding in the next electoral cycle, Abbott deepens his regressive funding cuts from 2017 onwards.

‘Friends’

The impoverishment of the Abbott vision makes the pursuit of the austerity state a very fragile electoral proposition. It will succeed, however, if Abbott is lucky, and especially if his fair-weather ‘friends’ do not desert in the face of escalating popular resistance. The luck I refer to is the absence of another major global economic crisis of the sort that blew the Rudd and Gillard governments off course. Financial analysts forecast 2015 to be a volatile year economically, followed by rapid growth in Europe and the United States in 2016. However, bets are off for China. A Chinese medium-to-hard landing cannot be ruled out. Any decline in Chinese growth from 7.5 per cent to 6.8 or 5 per cent would result in Australian unemployment reaching as high as 10 per cent, investment properties dropping 25 per cent, the dollar slashed to $US0.80 (causing rising inflation due to more expensive imports), and the Reserve Bank cash rate falling to near zero levels as in the EU and Japan. Abbott’s obsession with the surplus would be blown apart and, combined with a decline in consumer confidence, would spell electoral disaster. It is foolish enough that Abbott has already antagonised his formerly strong electoral base among the over sixties. A low or zero cash rate would anger self-funded retirees, whose investment income would seriously decline.

Similarly, the Hockey strategy of delivering a future budget surplus rests on tax revenues flowing due to projected growth rates. Two crucial factors will undermine this optimistic scenario. Any increase in unemployment or household savings (because people fear becoming unemployed) will reduce tax collections. Discretionary consumption would decline, thus alarming Abbott’s allies in exposed sectors, especially small businesses in retailing, property, tourism, hospitality and personal services. Secondly, as Steve Keen points out, regular budget surpluses based on expenditure cutbacks reduce public debt but force up household and business private debt. Assuming there is no recession to upset Hockey’s forecasts, Australia’s private debt would balloon from 145 per cent in 2013 to 250 per cent of GDP by 2025. So much for the Abbott mantra of reducing debt!

Perhaps the most revealing aspect of the Abbott policy strategy is the myopic and narrow agenda promoted by the Coalition’s business allies. Reading the pre-budget submissions and the submissions to the Financial System Review is an illuminating testament to narrow selfish interests combined with contempt for broader social and environmental needs. Clear winners in terms of policies adopted in the Hockey budget were the Business Council of Australia (BCA), the Australian Chamber of Commerce and Industry (ACCI) and the Minerals Council of Australia. Far less successful was the Australian Industry Group (AIG), which was the only major lobby to call for education and training, R & D and support for renewable energy and cuts to carbon emissions. Pursuing the World Economic Forum’s ‘neoliberalism with a human face’, the AIG’s base is the manufacturing sector, which is distinctly neglected by Abbott. Conversely, the ACCI, representing small and medium businesses in the service sector, pursues a hard right-wing agenda like the Institute for Public Affairs. It opposes a range of social-welfare policies and, for purely ideological reasons, other small businesses operating in the renewable-energy sector.

Overall, business lobbies were able to secure protection of fossil-fuel subsidies and tax policies especially favouring the finance sector. This was done by leaving superannuation benefits for high-income people secure for at least another five years, guaranteeing the continuation of negative gearing (95 per cent of credit growth since the decline in mining investment has now gone to the property sector). On the Australian Stock Exchange, financials now make up a massive 38.7 per cent of the top 200 stocks, a far higher proportion than financial stocks in the United States. Any future government that threatens this dominance could suffer electorally, as bank stocks play a prominent role in super-fund and personal-investor holdings.

‘Enemies’

As for Abbott’s ‘enemies’, they still adhere to obsolete organisational practices and policy agendas that are ‘one society or historical stage behind our current lived experiences’. For too long the peak environment, social-welfare, labour-movement, development-aid and human-rights bodies have got used to politely courting Labor governments and sympathetic Coalition politicians. Apart from the occasional street march, many conduct their political lobbying as if they were in a university seminar. Dozens of detailed reports are regularly prepared by NGOs on endless topics, from social-welfare needs to climate science and the benefits of foreign aid and the arts. Government ministers consign most to these reports to the rubbish bin. Crucially, Abbott’s ‘enemies’ have failed to come to terms with the following characteristics of the new global phase of capitalism:

1. Capitalism and democracy are becoming increasingly incompatible and business wants to completely free itself from democratic regulation;

2. International investors in bonds and currencies, or those industries primarily geared to exports rather than domestic consumption (e.g. the resources sector), have little vested interest in maintaining decent social welfare, health and public services;

3. In those domestic sectors of the market where competitive pressures are greatest, an increasing percentage of profits and market viability depends on favourable government policies such as reduced taxation, reduced regulation over labour costs, minimal consumer protection and fewer restrictions over services and the marketing of new financial products;

4. In contrast to weak resistance in Anglo-American countries, European and Latin American countries have witnessed an escalation of desperate forms of public resistance to austerity measures (riots, occupations, torching of luxury cars and homes of the rich, smashing expensive shops and hijacking food trucks), thus placing governments on notice that there is a limit to their toleration of austerity (is this the future that awaits Australia?);

5. The rise of the anti–big business populist Right parties also simultaneously weakens both the mainstream Left and the corporate sector’s ability to shape policies.

Despite knowing from 2010–11 that Abbott was going to win, social movements succumbed to the same old ineffective politics. The Abbott government now privately derides and disparages them, thus leaving them with no plan B, not just to fight back against the Coalition but also to prepare strategic policies regardless of an Abbott or future alternative government. Abbott’s contempt for climate science particularly renders existing practices of the ACF and other peak environment groups irrelevant. They are now belatedly turning to grassroots community activism but still have a long way to go. The same is even truer of the Australian Council of Social Services (ACOSS). How they can maintain their alliance with the BCA—formed in 2012 by Cassandra Goldie (ACOSS CEO) and Tony Shepherd, yes, Tony Shepherd of the recent infamous National Audit—is beyond belief after ACOSS’s welfare constituents were savaged by Hockey and Shepherd. How also to understand well-intentioned people like Tim Costello, Paris Aristotle or Robert Manne, who undermine their long moral commitment to the poor or asylum seekers by now advocating naive and immoral policies? Does Costello think a broadened GST will restore foreign-aid cuts and that a regressive tax is OK because, as he stated, poor people do not eat much fresh food? Or what of Paris Aristotle and Robert Manne, who legitimised the offshore hellholes on Manus Island and Nauru, even though they oppose Scott Morrison’s harsh methods?

Certainly the labour movement has belatedly organised protests to combat Abbott. However, the real danger for the ACTU and ALP is that they will do a Beazley and think that they will be re-elected on Abbott’s unpopularity. A timid opposition front bench will have to be dragged screaming before it proposes increased tax revenue and abandons its conservative-climate change and social-integrationist welfare policies. Similarly, the Greens will have to devote much more energy to extra-parliamentary campaigns, especially outside their inner-city strongholds. Abbott’s ‘enemies’ will have to formulate clear alternative revenue-raising measures, not just by closing privileged entitlements but, by using a creative set of massive capital raisings (a minimum of $50 billion per annum or less than 3 per cent from the $1.7 trillion superannuation system) in the form of compulsory levies, social-infrastructure bonds and so forth, in return for continued favourable tax treatment. There are numerous imaginative ideas for how to simultaneously fund and organise urban and regional community housing, social services and environmentally sustainable infrastructure without falling back on the old bureaucratic state and federal department processes. Building community alliances through the promise to deliver community-designed social agendas is potentially the basis for a successful political strategy as well as a political necessity to combat climate change and dilapidated public services.

Abbott’s fair-weather allies put in their ambit claims precisely because there was little opposition from labour and social movements over the past six years. A new message of consistent public opposition and campaigning in strategic marginal parliamentary seats as well as outside prominent corporate and industry-lobby headquarters is required. New disruptive campaigns must be organised, such as ending the dominance of the IPA and right-wing commentators on the ABC and combatting their commercial-media outlets. Regular protests could occur whenever Abbott and his ministers attend public functions. Finally, Abbott has taught his opposition a powerful lesson: quiescent, nice people come last. However, strong opposition is only half an answer unless popular resistance has a set of socio-economic and environmental goals. This will require a major rethink of strategies and policies. The age of comfortableness is over.