Fred Argy proposes an ambitious social reform agenda

Australia: An unfair country

Equalitarianism is in retreat, explains Fred Argy.

Where to from here?

By Fred Argy

Australia is in the throes of a major re-evaluation of its egalitarian values. We are steadily turning our backs on many old social norms once considered untouchable. As a result, the last decade or two has seen:

1. Large and often growing inequalities in job opportunities;
2. A stark increase in long term unemployed and jobless households,
3. A deterioration in workers' quality of life;
4. An erosion of the long-standing right to needs-based welfare;
5. The emergence of pockets of real poverty, even among some low income working families,
6. A persistent crisis in indigenous health, education and employment,
7. A growing spatial, regional wealth divide,
8. A widening gap between rich and poor in terms of access to education, health and housing; and
9. A marked decline in the industrial bargaining power of unskilled, casual workers.

Today, there is less genuine equality of opportunity than a quarter of a century ago. Yet Australia has never been wealthier.

Why is this happening? Many say it is an unavoidable consequence of economic liberal reform. Others argue that nasty, hard-line economists are feeding biased policy advice to governments. Others again believe that social spending has become ineffective or even counterproductive. And some say governments are simply responding to changing community values and priorities.

I am very sceptical of all these claims. Taken together they cannot explain why Australia is in full retreat from its egalitarian ethos.

One should look elsewhere for explanations. One suspect is globalisation. While it has not reduced the fiscal autonomy of governments, it has spawned a new "invisible" but increasingly dominant power bloc, made up of global financial markets, multinationals and rating agencies - all backed by friendly think tanks. They are ideologically unfriendly to egalitarian policies and instill fear among today's politicians. Globalisation has also diminished the politically acceptable options available to finance redistribution policies, forcing governments to rely increasingly on taxing labour rather than capital. All this applies irrespective of the particular complexion of the Party in Government.

But my second explanation for the retreat from egalitarianism is specific to recent domestic political developments. For nearly seven years we have had a well-entrenched government in Canberra with a strong ideological commitment to individualism and small government and an intense dislike of welfare and unions. No less importantly, it is a government well endowed with political "spin doctors" - people able to manage public opinion effectively and credibly. For example, the electorate is told that most of the long term unemployed are job "snobs" or "cruisers". That it is the social security system, rather than growing market inequality, that is responsible for the increased welfare dependence problem.

That worker protection regulation (even in its present scaled down form) is costing thousands of jobs. That militant trade unionists are all bullies and thugs. That cuts in some existing social programs are necessary to make way for the effects of an ageing population (we must not "steal from our children"). That any net government borrowing, even for long term infrastructure investments in health, education, transport etc, represents a nasty "black hole". And so on.

What I am saying is that the formation of public opinion is to a large degree a product of the political process rather than the other way round.

In short, if we want to understand why Australian egalitarianism is in retreat, we should look mainly at globalisation and domestic political developments for an explanation.

So where we do we go from here?

In the short term, because of increasing demands on government for environmental repair, defense and an ageing population, the fiscal climate will not be ideal for egalitarian policies. Nonetheless governments cannot long delay tackling our serious social problems.

A brave government that faced up to this challenge would need to tap additional resources. It could reorder some social priorities (away from middle-class welfare), make greater use of government borrowing to fund long term infrastructure and draw on social entrepreneurship at the local level. But ultimately it must broaden the revenue base through "efficiency-neutral" tax measures.

Is all this a forlorn vision? In the immediate future, perhaps. But the ultimate Aussie trademark has always been and still is a Fair Go for all. So there is hope.

Also by Fred Argy on the Evatt site:

• Why fiscal surpluses?
• The Budget & Australian egalitarianism

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