Crimes of the past …

Yesterday, the Opposition leader published his reply to the Prime Minister’s grand attack on neo-liberalism. He claims that the apart from hypocrisy, the PM’s other failing is that he is mimicking a “corrupt police officer” because his essay attempted to blame the former Federal regime “for crimes it did not commit”. It is time that we understood just how bad the previous Federal government was.

To remind readers – this is what I said about the Rudd’s essay. Turnbull’s attack yesterday has started a debate about how wide criticism of a politician can go. One strand of the attack centred on the fact that under the previous Federal regime the public employment service was privatised (into the disastrous Job Network) and several people and groups made lots of money under the new arrangements. It is well known that the PM’s wife owned a string of Job Network agencies and reportedly made millions. So the criticism of the PM by Turnbull is one of hypocrisy – the Rudd family is wealthy, in part, because it exploited the very neo-liberal policies that the PM is now horrified about. Should the PMs wife be subject to criticism? Well this blog is not about any of those issues. The PM’s own essay was still very neo-liberal in flavour. That was my criticism of it. It clearly expressed populist views but didn’t realise that the underlying fiscal position being expressed (the need to get back into surplus) and subsequent Federal policies towards the unemployed (completely supply-side oriented) which boost the flawed Job Network were totally neo-liberal.

Anyway, I want to focus here on the “crimes it did not commit” aspect. The media hasn’t focused very much on what we might call the “legacies” of the Howard years (and I implicate the Keating years as well in the same malaise). There is, in fact, the view that the previous regime managed us well and were able to sustain the growth period that saw us all become wealthier. Words like resilience are used regularly to describe the Australian economy and the associations with microeconomic reform including Work Choices and this so-called resilience are often made.

I see that era as a period of lost opportunity; as a period of deliberate and cruel waste of our most precious assets – our people; and a period where the pre-conditions for this economic disaster that is befalling us were laid. The previous regime were criminal in their neglect of their legitimate responsibilities. I also am not discussing the disastrous foreign policy – that is beyond my remit but it clearly hasn’t helped us. There was an article in the Sydney Morning Herald reminding us that the AWB cowboys remain unpunished despite the violations that seemingly were committed. But I concentrate here on socio-economic matters only.

First, I have spoken often about the failure to generate true full employment. I won’t labour (excuse the pun) that here. Suffice to repeat … and it should be repeated often … at the height of the boom, there were still around 9 or 10 per cent of Australians whose labour was being wasted by the economic system. This group comprised those who were not working at all plus those who were working significantly less hours than they desired. The official data tells the story – 1.1 million working age Australians (at least) were not being used to their potential.

Years of pumping billions of dollars of public money into the Job Network, which had the charter to train and get people back into work – and there were still 1.1 million unable to find enought work.

Given the government could have solved this easily – by direct job creation … that is, the Federal government basically chooses the unemployment rate … I call this a criminal neglect of their responsibilities. The Federal government extolled the virtues of their budget surpluses but ignored the lost opportunities that these surpluses created.

Second, to cover up their trail they then began a campaign of vilification and harsh case management of the victims of their policy failures. They divided the population into those who were robustly indepedent and contributing the wealth creation process and those who were “cruisers”, “dole bludgers”, “welfare cheats” despite the fact that of all the millions they spent prosecuting so-called welfare cheats only the minutest number of succesful frauds were detected. Millions of our citizens were made to feel wretched and held up for contempt.

Third, I have written at length about the stupidity of the budget surpluses the previous Federal government ran. In summary, they destroyed private purchasing power; forced the private sector to liquidate wealth (sell bonds back); forced the private sector to increasingly go into debt to maintain consumption spending growth. The debt was always going to come back to haunt us. At the time the mantra was that we should not worry about the debt because it was building wealth. Well now we know that significant portions of the “paper” wealth is gone – cleaned out by the crisis yet the debt obligations remain.

Fourth, the rising burden of debt also has to be seen in the context of the legislative support for redistribution policies that saw real wages grow very slowly compared to productivity. You can review my previous blog on this. The previous government made many working class Australian’s worse off because their consumption was increasingly driven by debt not wage income. Now the devil is biting back and many people are significantly worse off than they were 20 years ago – in absolute terms!

Finally, something I haven’t written much about is the demise of infrastructure spending during the last regime’s period of tenure. A good example, of many is the road infrastructure situation in Australia. The Federal Bureau of Infrastructure, Transport and Regional Economics (BITRE) has just released its latest research which suggests that the years of under-investment in Australia’s road network is coming back to haunt us.

The inadequate infrastructure is measured against a growing population which combined with the failure to invest in related infrastructure – public transport; jobs in regional areas, etc has left us wth a road crisis which will not only cripple business but make our lives much more problematic.

There are two strands to this crisis – both of which reflect failed public policy (some of it at the State government level). The common link though is that both state and federal levels of government have failed us over the last 30 years because they increasingly embraced neo-liberal free market approaches to resource allocation. The first strand is the lack of investment in roads while the second is the lack of policy development in the area of public transport and alternative transit modes (such as railways).

The BITRE report suggest by 2030 we will be driving 50 per cent more on the non-urban part of the road network. This huge increase in traffic load will be disproportionately borne by the Pacific Highway between Sydney and Brisbane. The route from Brisbane to Tweed Heads will become the busiest part of the road network.

The traffic in Sydney is predicted to become grid-locked in the not too distant future … increasing transport costs and reducing leisure times.

The privatisations of the national railways system was also meant according to the rhetoric at the time to dynamise rail transport in Australia. It has failed badly in that regard. Significant investment is needed and it is unlikely that the private sector will come to the party.

One of the easiest decisions the federal and state governments took when they targetted budget surpluses was to reduce capital spending. It is easy to do because the consequences are not immediate … the deterioration in the existing stock takes some time to manifest. There is a problem that these types of investments deliver benefits well beyond what is called the “political cycle” so if a government is looking for savings that will have as little political damage as possible then public infrastructure is a good target.

But this neglect is criminal because they sell their political message along the lines that they are looking after the good of all Australians. If the consequences of their neglect is that the next generation of Australians have more difficult lives than the current generation because of explicit choices taken by our governments then our political representatives are vicariously liable.

So while I am not defending the current Prime Minister, there is a strong case to be made that the previous Federal government has left a legacy which will cost the country much more than we ever imagined.

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