EDITORIAL Tony Abbott's last chance
by Peter Westmore
News Weekly, March 28, 2015
The demise of Education Minister Christopher Pyne’s bid to deregulate university fees, now defeated twice in the Senate, gives the Abbott government the opportunity to jettison a number of unpopular policies which have contributed to the drop in support for the government.
In framing the 2014 Budget, the federal government made two disastrous miscalculations. The first was the belief that it would be able to get unpopular policies through a Senate, where the balance of power was held by independents and minor parties. This was never likely to happen.
The other mistake was to give the economic fundamentalists in both the government and the bureaucracy — who believe implicitly in the free market’s “invisible hand” — control of the political agenda with a series of extremely unpopular measures undertaken on the basis that it was necessary get the Budget back into surplus.
Apart from the deregulation of university fees, these included the Medicare co-payment, cuts to pensions, abandoning car manufacturing, cuts to public sector employment and the end of domestic production of Australian warships.
All this is happening as the end of the mining boom was pushing up unemployment. Meanwhile, foreigners are buying up land and businesses at bargain prices, and, in doing so, pushing up house prices for the young, while wealthy multinational corporations like Apple and Google are paying almost no tax.
The government’s public standing was also damaged by a number of broken election promises, helpfully documented by the government-funded Australian Broadcasting Corporation (ABC).
These allowed Labor opposition leader Bill Shorten to claim, repeatedly and effectively, that if the Prime Minister had told the truth, he would never have been elected.
This claim is fatuous but politically astute, and captures the mood of an electorate, which believes that the government is more concerned with the budget bottom-line than protecting vulnerable Australians.
The challenge facing the Prime Minister is to reset the agenda on terms which take into account the difficulties the Coalition government faces in the Senate.
Tony Abbott has started this process by acknowledging the mistakes his government made in its first 18 months in office.
But he needs to go further, in order to put forward a realistic and appealing agenda for the future.
To be credible, this requires a reversal of the economic narrative of the Abbott government, that it will inflict pain on the people of Australia to get the budget back into surplus, while having no credible policy to reduce unemployment
The central component of the alternative agenda is to protect and advance the interests of Australia and Australians. How can this be done?
A good starting point is to look at the recent announcement by the Minister for Indigenous Affairs, Nigel Scullion, that the government would set a target to ensure that indigenous businesses get a set share of government contracts.
This is designed to give indigenous Australians business the opportunities which would not otherwise be available.
The same principle should apply to all government contracts. There should be an absolute preference for Australian employees, Australian-made goods and Australian-owned businesses, so that foreign corporations could win government contracts only if there is no Australian competitor.
No doubt free-market ideologues will throw up their hands, claiming that this conflicts with Australia’s international obligations under the World Trade Organisation.
What they never explain is that our major trading competitors already pursue such policies. For example, the United States has a strong policy of domestic procurement.
Since World War II, under the Berry Amendment, the U.S. Department of Defense must give preference in procurement to domestically-produced, manufactured, or home-grown products, most notably food, clothing, fabrics, and specialty metals.
After the global financial crisis, the Obama administration introduced the American Recovery and Reinvestment Act of 2009, which included specific “buy American” components.
Quite separately, the United States government subsidises its agricultural producers — who compete with Australian farmers in export markets — through its Farm Bill. According to a recent report by the U.S. Department of Agriculture, its expenditure on agriculture in 2015 will be $US146 billion (AUD$190 billion).
Of this, an estimated $US20 billion ($26 billion) is in direct subsidies, called “farm income stabilisation”.
The European Union in 2010 spent €39 billion ($56 billion) in direct subsidies, as part of its agricultural development package. Not surprisingly, European manufactured foods clog the shelves of Australian supermarkets.
No doubt, policies which support Australians to find employment, support Australian manufacturers and farmers would lead to howls of outrage from big businesses which benefit from present policies, and the so-called “free market” economists.
It would, however, have the overwhelming support of the Australian people.
Peter Westmore is national president of the National Civic Council.