Propaganda, performance & privatisation

President's Perspective

My New Year's resolution is to try to make sure that Bush, Blair and Howard face judgement for misleading their people. President Bush and Prime Minister Howard will face the court of public opinion in elections this year; Prime Minister Blair faces the Hutton Inquiry. It was almost a year ago that Phillip Knightly and Chris Masters participated in an Evatt Foundation seminar on the "The death of investigative journalism and who killed it?" (Philip Knightly's classic book The first casualty remains the essential guide to the study of war lies, lying and liars is available from the Foundation.) The use of the media as a war weapon in Iraq will be judged by history as a new level of manipulation of democracy. The Evatt Foundation's web site has played a small but important part in bringing respected authors who questioned the legitimacy of the war to our membership. As the new report from the Carnegie Endowment for International Peace, a summary of which we publish in this issue of the Evatt Journal, has shown, the Bush Administration and its cronies were wrong and are still wrong. The fallout from the neo-con Iraq war and economic program of the Bush regime will dominate political and policy debate this year.

A blind man in a room of deaf people

The exciting and encouraging thing about the United States is that there is an impressive, longstanding activist and intellectual tradition of challenging the establishment. Now the critics have been joined by a representative of the elite itself, as Ron Suskind's book, The price of loyalty, takes us into the Bush Cabinet through the experience of former treasury secretary, Paul O'Neill. O'Neill was a budget whiz kid in the Nixon and Ford Administrations who went on to be CEO of Alcoa. This is the equivalent of Peter Costello telling us all about John Howard.

First, O'Neill confirms that President Bush junior had been "dead set on going to war alone since almost the day they took office and deliberately lied to the American people, congress and the world." At the very first meeting of the National Security Council held by Bush on 30 January 2001, Iraq was the focus. Iraq was the primary topic at the second meeting two days later. Secondly, Bush is described as not reading his economic briefing notes and policy was made like "kids rolling in the grass." So we have a diagnosis of the president having attention deficit disorder, to be added to America's twin budget and current account deficits.

Former Liberal leader, John Hewson, writing in the Australian Financial Review has highlighted the serious state we are in when he says:

I looked back at data over the last century in relation to the US current account deficit and budget deficit relevant to gross domestic product. There are only nine years in which the budget deficit exceeded 5 per cent of GDP, and these were all crisis years related to war and recession. The current account deficit has never exceeded 5 per cent of GDP in the past 100 years, except recently.

 

But, more importantly, there has never been a year in which the current account deficit and the budget deficit concurrently both exceeded 5 per cent of GDP - indeed, on a number of key occasions when the budget deficit rose dramatically relative to GDP, as after both the world wars and during the Great Depression, the current account was actually in surplus.

 

John Hewson's concerns are well based. American investors have lived dangerously during the past year, denying concerns over the Iraq war and the serious, serial disclosure of scandals corrupting the heart of the market place, from the New York Stock Exchange to the mutual fund industry. The US Congressional budget office recently issued a warning that "the US Federal Budget is drifting into a future of unprecedented tax increases, huge deficits or both", as 77 million baby boomers face retirement. The International Monetary Fund has long been accused of failing to sound the alarm bells before countries with reckless fiscal policies implode. The IMF has now come out in a report forcefully arguing that the US profligacy and voracious appetite for credit will drive up interest rates around the world. An economic slowdown, President Bush's huge tax cuts and increased military expenditure conspired to swing the US Federal Budget from a surplus of 2.5 per cent of gross domestic product in 2000 to a deficit of about 4 per cent in 2003. Add the states' budget shortfalls and the country's trade deficit and, the IMF report notes, the United States faces an "unprecedented level of external debt for a large industrial country". Already there are signs that the world's private sector is voting with its feet, showing less willingness to lend to the US to cover the rising deficits. In May last year the foreign capital inflow into the US was $110.4 billion, but it was down to only US$4.1 billion in September.

So where is President Bush? He is looking to heaven, Star Wars, Mars, anywhere up there, except at the problem. For the answer to this madness we can go to his former treasury secretary O'Neill, who was appalled at his ignorance and his blind acceptance of vice president Cheney's views. When the treasury secretary argued against massive tax cuts, tax cuts that favoured the wealthy, Cheney told O'Neill that "Reagan proved deficits don't matter". This is the Cheney who was the CEO of Halliburton until 2000, the US company that did the most deals with the dreaded Saddam Hussein. This is the Cheney who organised the famous energy task force and the related events that led to the Enron collapse. O'Neill's most revealing disclosure is that, when he made a post-Enron effort to make executives more accountable for their company's misbehaviors, he was thwarted by White House concerns about 'the base'.

We should be concerned in Australia about that base of powerful companies that finance and effectively run the Bush Administration. The proposed US-Australia trade agreement now being negotiated by the Howard government is likely to see those same US corporate interests dominating the outcome.

The program for this year

In planning for this year, we have to take into consideration the commentators who argue that in the second half of the year or in 2005 there will be a crunch time. The layer of economic instability has to be laid on the top of the uncertainty created by President Bush's unilateralist foreign policy. This will make the elections in the US and Australia most interesting. This month's Australian Labor Party Conference has the challenge of forging an independent Australian position for the future.

The Evatt Foundation is convening a sunset seminar in Sydney tomorrow, 29th January, on the topic of Australia's foreign policy. The speakers will be Kevin Rudd, the Shadow Minister for Foreign Affairs; Kate Longhurst, the National President of the United Nations Youth Association; and Andrew Hewett, the Executive Director OXFAM, Community Aid Abroad. This is part of the ALP's Fringe Conference program. Foreign policy is clearly a key issue for the year, and the seminar isa not to be missed. Note also that Kevin Rudd contributed a chapter titled "Inserting a new dialectic: governance" to the Evatt Foundation's book Globalisation: Australian impacts, copies of which are still available.

The Evatt Foundation will also be considering a seminar on United Nations issues in the next few months. Any suggestions by our members or readers will be welcomed by the Executive Committee.

The states and the public sector

When I was a Senator in a Labor government, the worst experience I had was the failure to have due process at Caucus when the national competition policy was introduced. The prime minister set up a committee system of federal and state bureaucrats that bypassed the federal parliamentary caucus system, although the Business Council of Australia seemed to have strong input to the negotiations. The result was that in April 1995 the Council of Australian Governments (COAG) approved a package of agreements that were implemented through legislation and associated codes of practice. The federal and state parliamentarians were presented with a fait accompli. This was an attack on the public sector without precedent and public debate.

A similar situation occurs today with public private partnerships (PPPs), as pressure is being placed on state governments to sacrifice public infrastructure projects to the private sector. This month we publish papers drawn from the Evatt Foundation's November breakfast seminar, where a new report entitled Paying for private profit was launched. As ACTU Secretary Greg Combet says in his foreword, the report "raises important questions about the roles and responsibilities that governments and the private sector have in protecting and advancing Australia's community and national interests."

Following the PPP seminar, the Foundation released the annual assessment of Australia's state governments, The state of the states. Note that this special 10th anniversary issue, comprising 100 pages and available from the Foundation, contains substantial additional reports on:

  • The state of privatisation
  • Privatisation around the states
  • The state of child protection
  • The state of corrective sewrvices

Dovetailing with these directions, this month we also publish an address on child protection to the Foundation by Carmel Tebbutt, who is the NSW Minister for Community Services, Minister for Ageing, Minister for Disability Services, and Minister for Youth. Finally, drawing on her new book, distinguished feminist scholar Anne Summers sets out the grim facts about the reversals that have beset the cause of equality for women in Australia. The clock, Anne says, "is ticking backwards ... We cannot ignore the facts of our regression."

Organisation change

The Evatt Foundation is undergoing another period of change, affecting both our location and staffing. We are presently in discussions about moving to a new location within the University of New South Wales as a result of the closure of the Public Sector Research Centre. And Fay Gervasoni, the Evatt Foundation's longest and most devoted member of staff, has retired. Fay joined the Foundation as Deputy Director ten years ago and has been the face of the Foundation for our members and supporters ever since. Taking on the day-to-day running of Evatt has been a giant responsibility, while her greatest skill (and delight) has been organising our many events, such as the breakfast seminars, and most memorably the magnificent manifesto dinner and anniversary dinner. Fay is now enjoying her retirement, with her new granddaughter, in Tasmania, but she has promised to remain in close contact; and in this isssue of the Evatt Journal she reports on the history fellowship that has been granted to Dr Melissa Boyde to enable her to research the life and work of Mary Alice Evatt. Fay has gone with our warm thanks and very best wishes. All in all, this Newsletter provides much material for ongoing thought and action at the beginning of what promises to be one of the most important years for the future of our country and the world at large.

Bruce Childs
President
Evatt Foundation
28 January 2004