This is the fifth part of a series examining the Liberal Party of Australia. Part 1, Part 2, and Part 3 examine the party’s climate policies. Part 4 debunks their allegations that the incumbent government is illegitimate. This part argues they are hiding a radical agenda of deregulation and austerity.
The countdown has begun: 226 days until an Australian federal election in which the Liberals look likely to sweep into office. Yet we still have very little idea what the Liberals would do in government. Leader Tony Abbott contradicts himself from day to day, apparently depending on who he’s speaking to, and even his party’s official policies are not very clearly explained. At this stage, a vote for the Liberals is a blank cheque. In this vacuum of confirmed information, I am forced to resort to informed speculation. You’ll know whether I’m right when the Liberals finally announce their fully detailed policies (which looks like it will be about 5pm on 14 September).
The deregulation agenda
I fear an Abbott government would be a wrecker government. We already know the Liberals would repeal the carbon and mining taxes, axe most other climate change policies, and delegate environmental approval powers to the states. These policies should be disturbing enough for anybody, but increasingly appear to be only part of a broader agenda of deregulation and austerity which should trouble even those unconcerned about climate change. It would follow the precedent set by the Newman government in Queensland, which blindsided the state last year by sneaking into power under cover of opposing a long-lived incumbent then proceeding to implement massive cuts.
Liberal finance spokesperson Andrew Robb told Business Spectator in August: “Now on my desk, as the coordinator of policy, I’ve got 49 policy documents with covers, narrative, a list of policies, what Labor has done wrong, and the costings, across all areas.” But his party won’t tell us about all that detail until close to the election, and Robb openly admitted the reason is that when they did so in the 1993 election they lost. (There is something ironic about a pro-deregulation party drafting such a large volume of secret policy documents.) The fact that the Liberals are deliberately hiding their policies from voters suggests they have something to hide – that they realize Australians will not support them.
What might the Liberals’ hidden agenda look like? A possible glimpse is provided by the Institute of Public Affairs (IPA), an ultra-right-wing think tank allied with the Liberal Party. The IPA refuses to reveal where its funding comes from, but advocates policies that would benefit the fossil fuel industry, the mining industry (particularly Gina Rinehart), the energy industry, the tobacco industry, the alcohol industry, the junk food industry, the commercial media industry, big business generally, employers, high income earners, political party donors, and right-wing politics generally. The IPA has called for an Abbott government to implement in a single electoral term a selection of 75 radical libertarian policies including:
- axing not only the carbon tax but all climate change and renewable energy policies including the Renewable Energy Target and the Liberals’ own Direct Action Plan
- withdrawing from the Kyoto Protocol
- repealing the mining tax
- introducing a mining-friendly “special economic zone” in northern Australia
- delegating environmental approval powers to the states
- repealing plain packaging
- removing all barriers to international trade
- ending public funding for political parties
- ending mandatory disclosures for political donations
- privatizing public broadcasters (why does the ABC give so much airtime to an organization that wants to destroy them?)
- privatizing CSIRO
- privatizing Medibank
- delegating income taxing powers to the states
- setting a single income tax rate
- cutting company tax to 25%
- abolishing several family welfare payments
- repealing the Fair Work Act
- sacking 50,000 public servants
- legislating caps on tax-to-GDP and spending-to-GDP ratios
- ceasing construction of the National Broadband Network
- abolishing the Department of Industry, Innovation, Science, Research and Tertiary Education
- abolishing the Australian Competition and Consumer Commission
- abolishing the Foreign Investment Review Board
- abolishing media regulations
- introducing a “one-in, one-out” policy on regulations
The IPA is unlikely to get everything it wants (in particular, the Liberals are likely to steer clear of restrictions on workers’ rights since the unpopular WorkChoices legislation contributed to the downfall of the previous Liberal government). But the IPA wishlist gives an indication of the likely direction of an Abbott government: increasing the power of money in politics, reducing the power of the federal government, lowering taxes for the rich and big business, withdrawing welfare from the poor, slashing government jobs, and cutting green policies.
Robb told an audience of businesspeople the Liberals’ policies include promoting growth in mining (among other industries they consider to be Australia’s “strengths”), reducing mining industry regulation and paperwork, reducing the time required for pharmaceutical testing, reducing small business regulations, delegating many of the federal government’s responsibilities to the states, and cutting spending to get the budget into surplus and reduce national debt (though the numbers may need to be updated after the next budget).
The Liberals have broadly confirmed these priorities elsewhere. In a booklet released on the weekend they promise to “establish a new Prime Minister’s Business Advisory Council” chaired by climate change denier Maurice Newman, “cut government red and green tape costs on businesses and community groups by $1 billion per year”, “require Parliament to spend two days a year removing legislation and regulations”, “replace burdensome regulatory reporting requirements with independent audits”, “reduce union militancy”, transfer responsibility for schools and hospitals to local community boards, and strengthen Australia’s trade relationship with Asia through free trade agreements and exporting uranium to India. Details remain thin.
What’s wrong with deregulation?
You might be thinking this doesn’t sound too bad – surely the more government keeps out of our lives the better? I agree with that belief to an extent on many issues. But in economic policy, reducing the power of government does not significantly empower individuals in practice. What it does do is transfer power from government to big business. That is what the Liberals are really about: reducing the power of government in order to increase the power of corporations. It’s no accident they have been most candid about their policies to businesses and business journalists.
Less regulation of corporations means less democracy, less stability, less equality, less accountability, and more environmental destruction. Australians are already experiencing these effects following three decades of neoliberal economic policy (the US has gone much further but we are heading in the same direction). Labor has been complicit: for example, despite the Liberals’ rhetoric about “great big new taxes”, the tax-to-GDP ratio is now lower than it was when the Liberals were in government. However, the business lobby is agitating for more such “reform” and electing a Liberal government would accelerate the process.
Corporate executives and lobbyists, in particular the fossil fuel lobby, already have privileged access to the political system, and are using it to persuade governments to implement their anti-regulation agenda, which includes opposing effective climate action. They manipulate both major parties to some extent, but the Liberal Party more so, as evidenced by the recent dramatic growth in mining industry donations to the Liberals (see graph below). Similarly, 97% of British American Tobacco’s political donations go to the Liberals. Unlike the Greens who supposedly control the current government, faceless corporate lobbyists are unelected and unaccountable. A new bout of deregulation would entrench and increase this undemocratic imbalance of power, dragging the political centre further to the right and making it even more difficult to sell climate change policies.
Disclosed mining industry donations to Australian major political parties from FY2004-05 to FY2010-11 (source). As it happens, donations for FY2011-12 will be disclosed tomorrow.
Unlike the Greens, who openly present themselves as standing for environmental protection, and unlike Labor, who openly present themselves as representing unions (to the extent they still do), the Liberals present themselves not as a party of corporate power but as a party of individual liberty. They constantly misrepresent regulations that apply to businesses by giving a misleading impression they apply to individuals. For example, they emphasize the impact of a carbon price on consumers rather than polluting companies by calling it an “electricity tax”, and describe a carbon price regulator as a “carbon cop” who looks over your shoulder “every time you turn on the TV” and “could hit you with 10 years in jail [and] million dollar plus fines”.
The Liberals want us to think they offer a restoration of stability, but they are a radical neoliberal party itching to transform Australia in line with free-market ideology. Not only are they attempting to destabilize the Parliament in their mission to get elected, but if elected their policies will help to destabilize the economy, and decrease the ability of governments to control the uncertainties in life. Deregulation makes it easier for financial bubbles to form; one of the reasons Australia has largely avoided the global financial crisis is that our banks are relatively regulated. Most importantly, the lack of ambition of both major parties on climate action will help to accelerate climate change, and we can’t maintain a stable society without a stable climate.
Deregulation would further increase already-rising economic inequality. The Liberals accuse Labor of fighting a “class war” (because they didn’t give big business a tax cut!), and Abbott says: “Government should be at least as interested in the creation of wealth as in its redistribution.” But an unrestrained market has the effect of redistributing wealth upwards – just look at the US where the 1% has accumulated massive profits while the 99% has suffered from recession. Some level of government intervention is necessary to protect the poorest and most vulnerable people.
Neoliberal politicians talk about “red tape”, “green tape”, and other such terms, as if the policies they want to cut exist for no good reason. In reality, regulations are needed to hold businesses accountable in the interests of the voting public, in all sorts of ways. “Green tape” exists to protect the environment and desperately needs to be strengthened, not removed as we speed toward planetary tipping points.
The obsession with deregulation is at best a distraction from the incredibly urgent issue of climate change and other global environmental problems facing humanity in the 21st century. More often, it directly undermines our ability to solve those problems.
Am I in touch with my fellow voters on the role of government? Polling shows, as summarized by one blogger:
[Australians] support the idea of small government, but only as a broad motherhood statement since we can’t find any area we would actually like government to become smaller in. We believe that government isn’t doing enough on public services like health, education and public transport infrastructure. We support industry assistance, we support government owning things and oppose privatisation. We believe that the economic reform program didn’t benefit ordinary Australians and that most of the benefits went to corporations. We don’t appear to have much trust in those corporations and are more than willing to regulate their activities at a higher level than we currently do, including increasing their tax burden. We also believe that labour market flexibility has mostly benefited employers and that those employers should be required to provide more permanent jobs.
The austerity agenda
It is worth examining in more detail the Liberals’ intentions on a subject on which they have been particularly coy: fiscal policy. Simple arithmetic proves the Liberals would need to make massive spending cuts. To show you what I mean, let’s go through what the Liberals have told us about their fiscal intentions.
As I’ve already mentioned, the Liberals promise to return the budget to surplus and reduce national debt. Liberal treasury spokesperson Joe Hockey recently said “we will deliver a surplus in our first year and every year after that.” While the Liberals spin this focus as “living within our means”, they disregard the more important issues of climate change, pollution, and resource scarcity, which will have far more impact on the wellbeing of young people than any government debt or deficit. Their crusade against debt and deficit looks more like an excuse to reduce the size of government. (Also, their criticism of Labor’s budget deficits ignores the global financial crisis.)
The Liberals have promised to abolish the carbon and mining taxes (not that the mining tax is raising any revenue anyway) and most of the things they fund, though they have been vague on what they will do about the household carbon tax compensation, which is mostly in the form of tax cuts. They promise “personal income tax cuts for individuals and families – without the carbon tax”. (I notice that in contrast to the carbon tax compensation, which overcompensates the poorest households and does not compensate those who can afford to pay, the Liberals don’t specify whether their tax cuts will benefit high-income or low-income individuals and families. People struggling with the cost of living should not jump to the conclusion that Liberal policies would make them better off. A bait-and-switch would mirror Robb’s misleading description of the carbon tax as “a real stab in the heart to many families who are trying to make ends meet; many households won’t receive any compensation” – falsely implying both statements applied to the same people.) Although the Liberals’ paid parental leave policy will be funded through company tax, they say there will be “no overall increase in the tax burden on business” as they will be “cutting company tax – without the mining tax”. The combined effect of all these promises will be to reduce revenue.
The Liberals “pledge to the families of Australia that we will never make your lives harder by imposing needless new taxes”. Despite the weasel word “needless”, it is probably safe to assume the Liberals would introduce no new taxes. Hockey says: “I can give you this absolute guarantee: we will collect less revenue than the Labor Party in government and we’ll have smaller government”. This is the opposite of what the government should be doing: Australia needs higher taxes to pay for all the things that warrant funding (this need not hurt the poor – for example, the Greens recently proposed a millionaires’ tax).
The Liberals also promise new spending. Abbott promises “lower taxes, better services, stronger borders, and modern infrastructure”. Services, border security, and infrastructure all cost money (except “better services” appears to be code for cutting the costs of services). More specifically, the Liberals support various new infrastructure projects including roads.
After the 2010 election, Treasury found an $11 billion “black hole” in the Liberal Party’s costings, reducing their promised surplus to wafer thickness. Since then, the goal of delivering a surplus has become harder as government revenue has continued to fall short of expectations, and the Liberals have proposed new tax cuts and spending.
So to summarize the Liberals’ fiscal position: surplus within 12 months + debt reduction + tax cuts + no new taxes + new spending + black hole at 2010 election = massive spending cuts required. (Conversely, if they don’t cut spending it means they are lying about their budget surplus, which would be blatantly hypocritical given their criticism of Labor for failing to deliver its own surplus.) It’s a strategy right out of the Republican playbook: starve the government of revenue so it is “forced to make hard decisions” to cut spending to balance the budget. We’re talking tens of billion dollars per year. In August 2011, leaked documents showed the Liberals were looking for spending cuts worth up to $70 billion over four years. By March 2012, according to Crikey, that number had grown to $150 billion. It is difficult to confirm the exact number, because it will need to be updated after the next budget and whenever the Liberals are asked about it they evade the question. Nevertheless, Robb says: “We will make the cuts that are necessary to keep us in surplus and go better.”
What would they cut?
So what might these cuts look like? The Liberals won’t tell us. One thing we do know is if elected they would commission a once-in-a-decade audit of government spending. Abbott says this is so “the operations of government can be improved and streamlined while the new government has maximum political capital to make hard decisions”. One possible interpretation of this policy is that some of the cuts required to deliver their promised budget surplus will not be announced until after the election, in which case voters will not be making a fully informed choice. Also, the audit is similar to one which led former Liberal PM John Howard to notoriously break his “non-core promises”. How do we know an Abbott government wouldn’t similarly claim the policies they promised in opposition are too costly?
In April 2012, Hockey gave an uncharacteristically honest speech using the global financial crisis, which in reality was caused by financial deregulation, as an excuse to lambast large welfare systems as undeserved “entitlements”. He argued these “entitlements” can no longer be afforded because revenue has decreased (neglecting to mention one reason is that neoliberals like him have insisted on cutting taxes, especially for the rich). He acknowledged the alternate solution of raising taxes only to dismiss it on the grounds it would “compromise economic growth”, and insisted even a low level of debt is unsustainable. He idolized Asian economies because they have economic growth and Europe doesn’t, but would you prefer to live in Asia than Europe? The objective of economic growth is to raise the standard of living; cutting welfare does the opposite (and would also make it harder for Australians to cope with the rising cost of living which the Liberals like to talk about). Australia’s welfare system is actually small by OECD standards; the Newstart unemployment benefit is unlivable. Emulating Asia would be a terrible mistake.
In an interview with Lateline, Hockey refused to specify which welfare a Liberal government would target. He also gave this revealing answer:
[INTERVIEWER]: There’s the diesel fuel rebate, there’s subsidies on imported four-wheel drives in Australia and so on: are these entitlements, in a sense, that belong to a past era that can no longer be afforded?
JOE HOCKEY: Well they need to be looked at on a case-by-case basis, but the two that I think you’ve identified relate to business and business investment. The great criticism of Spain at the moment is that the fiscal consolidation program in Spain involves reducing any incentive and support for business and not taking a hard look at the welfare entitlements of the people.
That’s right: Hockey thinks subsidies for the rich and powerful are alright, but not subsidies for the poor and vulnerable. Similarly, the Liberals last year supported an increase in MPs’ salaries; as a Shadow Minister, Hockey receives $238,000 per year from taxpayers. Is he entitled?
Despite the Liberals’ claim to be defending Australian jobs from a carbon price, they promise to cut at least 12,000 public sector jobs (including the entire Department of Climate Change), though they claim they can do it through attrition. They don’t actually use the word “jobs”: Abbott calls it a “reduction of 12,000 in the size of the Commonwealth government payroll”. Funny how he doesn’t call lost mining jobs a “reduction in the size of the mining industry payroll”. The number of lost jobs may need to be even greater than the announced 12,000 to deliver the promised spending cuts.
Apparently the Liberals only care about your job if you work for a mining company. Yet less than 2% of Australian jobs are in the mining sector (and even fewer in fossil fuels specifically). The majority of mining industry profits either go overseas or benefit only a small minority of Australians. The mining boom is driving up the Australian dollar and thus destroying other industries. Contrary to popular belief, the mining sector did not prevent a recession, but in fact went into recession itself in 2009. Most importantly, fossil fuel mining is driving global warming. So why do mining jobs get special treatment? It suggests the Liberals do not care about either jobs or the environment, only corporate profits.
My conclusion about the Liberals’ broad policy agenda, provisional on further announcements, is that they are trying to sneak into government by opposing a “great big new tax”, so they can blindside Australians with great big new cuts.
The anti-Liberal arguments I have outlined in this series, combined with my constant criticisms of Labor, are reasons why I intend to vote Greens on 14 September.
This concludes my analysis of the Liberals’ present positions. In Part 6, I will speculate on the direction the Liberals might take under a possible alternate leader, Malcolm Turnbull.