There are economic battles you think you’ve won, only to discover you need to fight them all over again. Look around and you can see them everywhere: from taxes and spending to industrial relations and productivity enhancing reform. The federal election campaign is a classic case in point. Labor wants to increase taxes on property investors, self-funded retirees and higher-income earning wealth creators. At the same time, it plans to re-empower unions to pursue pattern bargaining — even though they account for about 10 per cent of the private workforce.
The Coalition fails to prosecute any counter-narrative on how pro-market reforms would deliver rising wages. It surrenders to the Opposition’s health and education narrative that it is inputs, not outcomes, that matter for patients and students. As they’ve become cosy with power, fewer Liberals share Peter Costello’s passion for a tax-cutting, economic-growth agenda.
Meanwhile, those on the Green left think living within one’s means is a moral outrage, and those on the Hansonite wing of the conservative movement block budget repair.
It’s been 30 years since the “end of history” posited by Francis Fukuyama, yet polls show socialism is resurgent here and across the Anglosphere. So much so, that capitalism is regularly blamed for so much alleged doom and gloom: the supposed rampant inequality, economic insecurity, inter-generational debt, housing crisis … and so on.
And yet our country is a clear example of the success of market economics: from the mid-1980s until the mid-2000s, reforms designed to greatly expand incentives to work and save led to sustainable economic growth and higher living standards for ordinary Australians.
We will soon enter our 28th uninterrupted year of economic growth — an OECD record. ‘Rampant inquality’ is a myth, as the Productivity Commission pointed out last year. Indeed, sustained growth has delivered higher living standards across all income groups.
Casualisation in the workplace, despite union scaremongering, is around the same level since the mid-1990s. And involuntary job loss as a proxy for job insecurity — as CIS, the BCA and other groups have pointed out — has dropped 22 per cent in the past two decades.
Memo to the Cassandras: Australia is not America, where economic inequality has increased. Nor are we Europe, where growth has stagnated and prosperity has stalled for decades.
None of this is to deny the genuine sense of public angst about the pace of socio-economic change. As Trump, Brexit, Hanson and the wave of European populist insurgencies show, there are losers in technological change and globalisation.
However, the forces that breed this creative destruction can’t be stopped. As Costello and Paul Keating often warned, a nation that shies away from structural reform and fiscal discipline won’t enjoy opportunity and prosperity for all. The lesson: good policy really does matter.
Reform is a tough sell. But just think how the old Australia — the overregulated, highly unionised and inflation-prone country of the 1970s — would have coped a decade ago if the previous leaders had not paid off our debt and implemented sound market policies to enable Australia to weather external shocks.
The media consensus is that the Coalition has done little to deserve re-election, and so perhaps voters will ignore Labor’s more interventionist economic priorities. But one of the ironies of current politics is that a swing in only a few House seats could result in a huge ideological shift in Australia.
Business (both big and small) widely believes that Bill Shorten indulges in populist anti-business rhetoric. And there is concern that his policies — from extending bigger childcare subsidies to scrapping negative gearing tax concessions and cash refunds on dividends — will increase the size and scope of government.
Labor’s high-taxing, high-spending agenda isn’t socialism, but it is not the system Australia has had since the mid-1980s when Hawke and Keating deregulated the economy to help Australia compete in the world.
Why would Labor take this political risk? Maybe because they don’t think it is a risk. Parts of the media cheer them on. Howard and Costello are long gone. Abbott and Turnbull have been vanquished. The Coalition faithful are in a despondent mood. And prosperity has made the public detached — even complacent — about government.
At the same time, America’s Democrats and Britain’s Labor party are unashamedly embracing socialism. From health care to education to taxes to nationalisation, the Bernie Sanders and Jeremy Corbyns want to party like it’s 1969.
No wonder many of the socialist-leaning left yearn to dream again. Whether most Australians want to pay for those dreams is another question.
Tom Switzer is executive director of the Centre for Independent Studies in Sydney and a presenter at the ABC’s Radio National.
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