Counting beans

Richard Denniss says you don’t need a pointy head to work out national priorities …. Eva Cox thinks we’re not just greedy little cash-grabbers …. John Quiggin pokes at the underbelly of economic reform … and Tony Smith revisits the pulling power of Pauline Hanson.
For more commentary on the election, hip pockets and the values we hold dearest, see these articles published in NewMatilda.com:
Rod Cameron says Latham’s whacking Howard on fiscal discipline …
Anne Coombs says stand up to be counted for what you believe in …
Rebecca Huntley asks what’s best for our kids …
Trevor Cook warns Labor against defeat without honour …

Mike Hanley and Adrian Monck say clean your own toilet bowl…
… and you want more discussion of better health policy …

Voters from across the political spectrum have stated loudly and clearly that government service provision is the most important thing for them. Yet politicians from across the political spectrum continue to drone on and on about their economic credentials.

Of course managing the economy is important. What neither major party wants to admit, however, is that they have been so successful in deregulating the labour market, the finance markets, and the utilities sector that there is really not that much left to manage.

The most amusing spectacle of the election so far must surely be the sight of John Howard and Mark Latham talking about interest rates – without either of them admitting that it is the Reserve Bank, not the government, that sets interest rates. Both aspirants to the top job can’t really admit to the public that, if given the job, there wouldn’t be much that either of them could do about rising or falling interest rates.

So why is the ‘economic debate’ such a phoney one? One major factor is that a small pool of ‘expert commentators’ and corporate/government consultancies have a disproportionate influence on assessing the desirability of proposed policy.

Once upon a time agencies such as Moodys and Standard and Poors attracted front page attention when they handed out their AAA ratings. Now that role has been passed to the former treasury officials at Access Economics and similar organisations.

The problem with this is the analysis conducted by such organisations can be narrow at best, self serving at worst. Ideological preference for small government is concealed behind impenetrable layers of econometrics and macroeconomic theory. Plans to invest billions in public health or public education are typically met with concerns about the ‘fiscal responsibility’ of such a course of action. Yet handing out billions of dollars in election time tax cuts is either encouraged – on the grounds that it will increase ‘incentive’ – or politely ignored.

Australia is a rich country, at a rich point in our history. If the public ever discovered this, and the fact that we can actually afford to spend a lot more money on delivering public services, the boffins at Treasury – and the former Treasury officials who’ve become influential adviser and commentators – would be beside themselves. Worshipping the budget surplus and scaring people about foreign debt and budget black holes has served them well for the last decade or so. But the cracks in those arguments are starting to show.

Australians can’t have everything we want, but we can have anything we want. The big issues facing Australia are all about choice between competing priorities. The problem for the ideologues is that – unlike ‘regression results’ and incomprehensible economic jargon and theory – talking openly about these choices and priorities can be incredibly democratic.

The bottom line is you don’t need to join Access Economics, or have a degree in econometrics, to make a meaningful contribution to a debate on priorities.

Let’s look at those choices and priorities. Should we spend more public money on education, or focus on fuelling the fetish for fancy flat-screened televisions? Should we improve care for the sick and the elderly, or should we hasten the uptake of mobile phones that take photographs among 15-24 year olds?

For decades we’ve been told we must make sacrifices in order to grow rich so that we can afford the things we need. Well, we’ve arrived. As the current election campaign has shown, there is plenty of money sloshing around. The Australian economy grew by around $30 billion last year. That means we have an extra thirty billion to spend on our priorities of choice.

It is time for more Australians to speak up about what they want. We do need to talk to experts about how to get the things we opt for, but we should never let the experts tell us what they are.

Richard Denniss is deputy director of the Australia Institute, a public interest think tank based in Canberra.

The televised election debate defined buying votes as the major policy initiative in this election. Security has become the emotional anchor, interest rates the financial undertone.

Journalists and politicians compete to prove how much, or little, cash we are offered for our votes. The media reporting focuses on this because both political parties, and most journalists, are still stuck in the mindset of the ‘greed is good’ 1980’s.

Assuming that our votes are for sale prioritises taxation/payment policies and ignores the people’s concern for the social fabric and capacity for collective concerns. They dismiss concerns about truth, equity, ethics and fairness as the province of elites, not the swinging voters they need to attract.

Their target groups, the Howard battlers and the Latham aspirationals, they claim, are more interested in their finances than anything else. Most in the senior ranks in both parties share the belief that most voters are basically grubby little beings that they can buy with tax cuts and similar measures.

This assumption does all voters a disservice, because they have no option to consider other policy approaches or voice other concerns. Voters feel bored and devalued if they are not offered a political choice between different values and standpoints but are treated like customers in a price war for similar products.

Despite claiming to be informed by research, both major parties are very good at ignoring results that don’t support their beliefs. So when the polls indicate, and researchers advise, that people are concerned about other issues “ for example, that voters prefer better services to lower taxes, they are ignored.

A Herald-ACNielsen poll after this year’s May budget showed 77% wanted spending on services not tax cuts; a Parliamentary Library Research Note in May 2003 showed diminishing support in ANU election surveys for tax cuts at the expense of increased social service spending.

Earlier this year, the SBS Insight programme held a debate on taxation. It was crammed with commentators, former public servants and politicians. They all claimed money was the election issue. They pooh poohed the ACNielsen and ANU election survey results mentioned above, convinced that they knew the electorate better than survey analysts or, presumably, the voters themselves.

Is there evidence that respecting voters’ intelligence can work? The case of Peter Andren, independent member for Calare, a country seat in NSW suggests it can. He took a principled stand on asylum seekers in 2001 and increased his majority because people wanted to vote for someone with principles, even if they disagreed with his stance. It may have been ‘courageous’ in Sir Humphrey’s terms, but it worked.

My students think this election is boring. Empirical evidence confirms they are not alone. The ANU election studies from 1987 onwards show falling interest in elections. The primary votes of both major parties are dropping as they fail to satisfy the voters needs. Hugh Mackay’s focus groups show general disengagement with politics. Maybe people switch off if defined as customers, not citizens.

In marketing terms, the product being sold – economics as vote catcher – has passed its use by date. Labor constantly complains that the Coalition steals its policies, but that might be because there is so little difference between the policy agendas of the major parties.

Voters put up with what’s on offer because there is little else to consider, but many still raise the question: ‘Is that all there is?’

Eva Cox is a Senior Lecturer in Social Inquiry at University of Technology Sydney, and has an interest in creating more civil societies.

The Howard government’s claims to re-election rest largely on its economic management, and many assessments have been positively glowing. However, a closer examination reveals a rather less impressive record.

As a starting point, it’s useful to look at the numbers most commonly cited in assessments of the government’s record. Over eight and a half years of the Howard government, the official rate of unemployment has fallen from 8.6 per cent to 5.7 per cent. Total employment has risen from 8.3 million to 9.6 million an increase of more than a million jobs.

What can we say about this? First, we’ve had an exceptionally long period without a recession, and there’s no reason to expect one soon. This can be attributed in part to luck and in part to good judgement by the Reserve Bank. Still, the Howard government must get some credit, if only for leaving the Bank to do its job without the kind of ad hoc interference practised by Paul Keating as Treasurer.

On the other hand, given the length of the expansion, the performance of the labour market has been poor. The increase in employment during the first six years of the Hawke government, from 1983 to 1989 was much greater, and the reduction in unemployment much steeper. The unemployment rate fell from 10 per cent to a low of 5.2 per cent in a little over six years, before rising rapidly in the ‘recession we had to have’.

Even a modest recession any time in the next couple of years would wipe out all the gains realised under the current government.

Looking at the labour market figures in more detail, they are generally less impressive than at first glance. The reduction in measured unemployment is, at least in part, the result of continuous pressure to push people off unemployment benefits (although the unemployment statistics are based on surveys rather than claimant counts, people who go off unemployment benefits frequently leave the workforce altogether).

To see the effect of this, it’s useful to look at employment-population ratios. The employment-population ratio has risen slightly under the current government, from 58.3 per cent to 60 per cent, but all of this increase has been in part-time jobs. The proportion of the population engaged in full-time employment has actually declined. And for males, the decline is substantial, from 59.6 per cent to 57.8 per cent. By contrast, during the expansion of the Hawke-Keating period, full-time employment increased fairly strongly.

Some of the decline in full-time employment is due to benign developments, including increased participation in education and voluntary early retirement. But more of it is due to adverse developments in the nature of employment which began in the aftermath of the 1989-92 recession and have been exacerbated.

Traditional full-time jobs, with a work week of 35 to 40 hours per week, and standard leave conditions have virtually disappeared. Instead the workforce has been polarised into a core permanent workforce, whose members are expected to work long hours routinely, and a peripheral workforce of part-time casual and contract employees.

In the short run, the pressure created by this process has increased productivity. However, the long-run effect is to drive people out of the workforce either through burnout or through the scarring effects of job loss.

Another important influence has been the abolition of the Commonwealth Employment Service and its replacement with the privatised Job Network. The government has produced a regular series of reports claiming the Job Network as a great success, and an equally regular string of announcements that the Network is being reorganised to cope with unforeseen difficulties.

The real test is in the aggregate performance of the labour market. Not only has a fairly strong economy failed to produce much employment growth, but there is an increasing mismatch between growing job vacancies and a large pool of unemployed and underemployed workers.

Assessment of the Howard government’s record will in the end depend on macroeconomic outcomes. If a recession can be avoided for another few years, we will in effect have enjoyed a complete cycle with no downturn, and the benefits will be substantial.

On the other hand, even a modest recession would wipe out all the gains that have been achieved in one of the longest expansions on record.

Professor John Quiggin is a Federation Fellow in the School of Economics, Faculty of Business, Commerce and Law, University of Queensland. See his website and weblog.

When Pauline Hanson announced she was running as an ‘independent’ Senate candidate for Queensland, the reactions of the major parties showed much about the nature of the 2004 election campaign.

Although Hanson has little chance of election, the major parties seized an opportunity to make statements that they could claim were grounded in ethical considerations, by taking a principled stand against someone regarded as an extremist during her previous parliamentary career (1996-98). Candidates wanting to position themselves as ‘moderates’ could not have contrived a more convenient distraction than the emergence of the Hanson bogey.

The major parties leaping onto their moral soapboxes showed just how marginalised questions of ‘values’ have become from public debate in Australia “ generally, and from this election campaign.

The majors fail to offer strongly principled policy alternatives, due in part to the professionalisation of politics through the use of opinion polls and aggressive media campaigning. The resultant cynicism in the electorate feeds back to the alternative governments, who eliminate all risk from their approaches.

Consider what happened last week when a Labor backbencher honestly conceded on talkback radio that her party’s tax policy could disadvantage some people, to some degree. Journalists jumped on the story almost as enthusiastically as Labor’s opponents.

This campaign has been dominated by ‘hip pocket nerve’ considerations, with each leader claiming he will deliver a few dollars more in disposable income. Gone are the ideological differences between the Liberals, who once advocated strong individualism and competition to maximise opportunity; and Labor, which emphasised just policy outcomes and provision of a social wage.

In 1996, Mr Howard campaigned successfully on the ‘politics of envy’, arguing that Labor was creating privileged minorities and neglecting economic growth. Hansonism was one product of that campaign against a perceived ‘political correctness’. Between 1996 and 2004, Howard’s drive to transform Australia into a ‘share holding democracy’ has contributed to the preoccupation with selfish ends.

So the pitch to voters about education, for example, has no language about creation of a fairer society. Instead, it assumes that people will grab the best deal available. It relies on targeting swinging voters in marginal seats and party strategists care only about tallying the balance sheet, and that more voters are attracted than are alienated.

Hanson’s announcement provided relief from this rigid financial focus. Hanson has expressed views readily described as economically naïve, socially simplistic and occasionally racist. This has made her an easy and tempting target for those who want to appear moderate, educated and articulate. As she has noted however, the Howard government has adopted some of her policy suggestions, such as providing refugees with temporary protection visas.

This shows how influential minor parties can be in our rigid two-party system. By advancing alternative policies, they force the major parties to adjust their own in order to reabsorb the minor parties’ followers.

Each of the major parties deals differently with Hanson. Labor preferences One Nation or Hanson last and challenges the Coalition to do likewise. The government employs brinkmanship, refusing to be pushed into categorical disendorsement.

But Hanson is interesting for reasons beyond basic numbers. Hanson, Mark II, is still a ‘values’ politician, and so challenges other candidates to make a response based on their own values.

In this sense she is a useful addition to the campaign. Her arrival demonstrates how discussion of values has been lacking in this barren campaign.

Dr Tony Smith is a writer living in country New South Wales. His opinion pieces and reviews have appeared in the Australian Financial Review, Australian Quarterly, Australian Book Review, Online Opinion, Online Catholics, the Journal of Australian Studies and Drawing Board: Australian Review of Public Affairs.