Northern lights

What Australia can learn from the Nordics
Tristan Ewins

Andrew Scott’s Northern Lights is a welcome commentary on areas of policy in the Nordic nations: Sweden, Denmark, Norway and Finland. The focus on policy, and the relevance of the policies for Australia, marks this contribution out from more general commentaries. In the 1980s, Australian trade unions sought to emulate the Swedish experience. While arguably that did not end well, Scott thinks the time has come again to seek inspiration from the Nordics.  

Northern Lights is written with an eye to what Australian policy-makers can learn. Scott questions the prevailing narrow focus on the Anglosphere, and suggests Australia needs to look beyond. He argues that neo-liberal Ideologues use the narrative of globalisation to confirm their own prejudices, while the Nordics show us there are more choices. Against claims of 'historic [particularity]' and 'path dependency', Scott emphasises the importance and the reality of choice. After all, the Nordic social democracies arose from particular political strategies during the 20th century, and didn't just develop without the willing interventions of political actors such as social democratic parties, trade unions and so on (pp. 2,14).

This means more than a robust welfare state. Scott explains how the Nordics’ ‘Co-ordinated Market Economies' (CMEs) deliver lower unemployment and high wage, high skill jobs when compared with ‘Liberal Market Economies’ such as in Australia. CMEs involve ‘work/life balance’, with less casualization and much less in the way of unpaid labour time (less ‘work intensity’). Scott notes how 'Sweden, Finland and Denmark [especially] all have strengths in supporting export-oriented, high value-added manufacturing, including by investing very heavily in research and development, information and communications technology, and design, compared to other countries.' This also helped them recover from the Global Financial Crisis (pp. 6-7). We will consider Scott’s research arguments on a chapter by chapter basis.

In Chapter One, Scott begins by refuting common claims that the Swedish model has ‘collapsed’. While Swedish social democracy had been forced into a slow and organised retreat, much of the policy discourse still takes place on social democracy’s terms. Nordic social democracy has done better in containing the damage to labour rights and welfare than anywhere else in the advanced economies since the 1970s. In Sweden and the other Nordics, welfare states remain the most impressive in the world.  

Chapter Two considers Sweden’s success in reducing child poverty and generally improving children’s’ well-being. Paid parental leave has existed there since the 1970s, and today amounts to 80 per cent of salary up to when the child reaches 18 months. It is extended to the primary carer, be they the mother or the father. Scott speaks in favour of Tony Abbott’s (now abandoned) paid parental leave scheme. For Scott, it is crucial to defend the principle of universalism as part of an agenda to construct broad Nordic-style welfare states with popular support. He is adamant that Australia’s narrow, tightly targeted welfare state is both vulnerable and limited in what it can achieve in terms of progressive redistribution. It is ‘vulnerable’ because the narrow base can lead (as in the United States) to resentment from the rest of the population toward provision (via tax) of welfare and services that they don't benefit from, leading to 'spiralling hostility towards some categories of welfare recipients' (p. 183).

Further in the same vein, Scott observes how Sweden provides free early childhood education and care for 15 hours per week, with a child care sector that is overwhelmingly public and of high quality. Early childhood educators are well-paid professionals. High levels of labour market participation by women, with subsidised, affordable childcare, helps eliminate intergenerational poverty, and there is nothing of the punitive approach taken in Australia, for instance, by the former Labor government against sole parents. Scott notes that 'More than 80 per cent of sole parents in Sweden are also in paid employment, whereas less than 60 per cent of sole parents in Australia are' (pp. 85-89). This is achieved without the intensification of work, as occurs in Australia with rampant unpaid overtime. The Swedes value work, but believe it should be enjoyable and organised in the context of work/life balance. Drawing on the work of former Labor Deputy Prime Minister, Brian Howe, Scott emphasises the importance of assisting workers and families manage 'major transitions in life', such as beginning paid work, retraining after retrenchment, retirement, etc.

In Chapter Three, Scott considers Finland’s education system. The teaching profession is highly valued and respected in Finland. A five-year Masters research degree is necessary to qualify. The lack of respect shown to Australian teachers is a stark contrast, and arguably a consequent hit to morale. Finnish schools are 'well-designed and resourced'. While not necessarily resourced to the degree of Australia’s 'most wealthy' private schools, Finland spreads its resources more equitably. This has the consequence of ‘lifting up’ a broader base and spreading educational opportunity. In Australia, public expenditure in schools is 75 per cent compared with 'more than 98 per cent' in Finland. The private education sector in Finland is virtually non-existent. Scott provides figures to support his case that this strategy spreads achievement more evenly, providing intensive assistance where needed and spreading opportunity. Some 7 per cent of Finland’s education budget is dedicated to ‘special needs’, as opposed to 1 per cent of our education budget. The more widespread special needs assistance also probably de-stigmatises it (pp. 123-24).

Importantly, Scott notes the results for under-resourcing of public schools in Australia, with a consequent ‘demographic shift’ that threatens to leave behind a ‘residual’ public schooling sector which many Australian families no longer see an interest in supporting. This means inequality could worsen; and echoes the debates surrounding the principle of universality in welfare (pp. 98-102).

Finland also provides first-rate vocational education, and over 40 per cent of Finns in upper secondary are enrolled thus. The Finnish policy-makers don't allow for a stark division between general and vocational education. There is recognition of the value of education for education’s sake; for the sake of personal and social growth. Hence, vocational students who specialise in plumbing, electrical, carpentry and engineering also commonly take part in music, language, sport, and maths, physics, chemistry, health education, art and culture. The first rate resourcing of these schools is a major attraction. Scott notes how a secondary college in Sunshine, Victoria has emulated the Finnish example 'with good results' (pp. 107-109). He provides sobering statistics illustrating 'the [secondary] dropout rate is about 30 per cent' in Australia, compared with '[only] 10 per cent in Finland.' Scott concludes that 'Putting a lot of pressure on young people  to perform in narrowly confined tests is a very different thing from encouraging them to learn in a way which will prepare them well for life’s challenges' (p. 113). Finnish schooling encourages 'curiosity' and 'questioning', and aims 'to strengthen learners’ self-confidence and learning motivation' and ‘give constructive and honest feedback’ and ‘never humiliate or put-down a learner”. 

Finally, Scott deplores the wasted opportunity of the Gonski recommendations to revivify state school education in Australia, with 'a 14.5 billion dollar increase in spending on schools to occur over the six years from 2014.' The Abbott government has effectively signalled its intention to gut these reforms by failing to commit to the final (and the largest and most important) instalments of funds (pp. 119-120).

In Chapter Four, Scott’s emphasis is on 'Skilling Up Securely: Denmark’s Investment in Training and Provision of Security, As Well as Flexibility in Peoples’ Employment Lives'. Here Scott begins by observing the difficulty in helping skilled manufacturing workers adapt after becoming redundant, with the loss of industries and sectors, perhaps including manufacturing and shipping. Scott observes the ultimate loss of perhaps 200,000 jobs due to the loss of the auto manufacturing industry by 2017 (p. 130).

Scott observes: 'One of the lessons [here has been that] you cannot just take middle-aged workers out of factory environments, put them into classrooms and then expect them to immediately learn new skills for new jobs in that unfamiliar setting' (p. 131). Citing research by Andrew Beers on the close of Mitsubishi car manufacturing in South Australia: 'A third of the workers moved into full time employment, a third of workers moved into what we think of as casual or contract employment, and a third of workers left the workforce entirely' (p. 131).

The Danish alternative has been ‘Flexicurity’. Rather than focusing narrowly on 'flexibility for employers to dismiss workers', the Danes also emphasised 'the provision of generous unemployment benefits for those who lose their jobs' and 'the provision of substantial and effective Active Labour Market Programmes (ALMPs), [with] quality training to help unemployed people gain new skills for new jobs …'  (p. 135). This includes 'an intensive adult apprenticeship program; about 8000 a year' and ‘job rotation’ programmes that provide the unemployed with vital work experience (pp. 152, 154-55).

By contrast with Denmark, with the OECD’s most generous unemployment insurance regimes, Australia suffers 'the lowest level of unemployment benefits  in the OECD for a single person recently unemployed.'  Furthermore, ‘Work for the Dole’ programmes are punitive and provide little in the way of relevant skills for job placement. Australia tends to reward employers placing the 'most easily placed' of unemployed. Australian case managers operate according to the 'punitive policy context that they work within', whereas Denmark provides disadvantaged jobseekers with 'the intensive, individually tailored services and help which they need' (pp. 136-38).

Importantly, the meaning of ‘flexicurity’ is highly contested in an ideological tug of war between left and right. Specifically, Scott observes how Grant Belchamber, formerly an economist for the ACTU, has emphasised 'a social insurance model' and “flexibility FOR workers, not of workers', whereas in Denmark 'flexibility does not mean wage concessions' but rather 'managing work-life balance' and 'life-cycle considerations and transitions' (p. 143). Denmark’s active labour market programmes are expensive says Scott, but are worth the investment in radically higher workforce participation.

Scott concludes Chapter Four by observing other manufacturing options for Australia, including  'making machinery for the mining and construction sectors, and transport equipment for the aerospace industry; increased activity in defence supply chains and marine engineering; and the further development of Australia’s urban and region infrastructure.' Here, the 'skills of displaced automotive and other workers should now be linked with these potential growth areas as a matter of urgent priority' (p. 159).

Finally, in Chapter Five, Professor Scott considers Norway’s management of natural resources for the nation’s 'long term benefit'. He considers this compared with the short-term thinking of the Howard government when it came to Australia’s mining boom. Compared with Abbott’s opportunistic capitalisation on a mining industry fear campaign with regard to Rudd Labor’s proposed resource super profits tax, Norway secured a substantial public share in its own oil investments as early as the 1970s and taxed private operations substantially (pp. 163-164). 

Contrary to the Australian mining industry's scare campaign, Scott observes how 'the effective resource charge' in Australia had fallen to 'less than 14 per cent', compared with 'an effective 78 per cent tax rate in Norway'. Despite robust taxation, private investment in Norwegian oil did not ‘collapse’. ‘Super profits’ were enough of a motivation, despite Norway’s steep tax regime (pp. 167-173). The consequence of Australia’s failure to follow the Norwegian example was neglect of services, infrastructure, pensions and other forms of social insurance. Instead of investing for the future Howard and Abbott emphasised short-term thinking; thinking of short-term political capital to be made from tax cuts.

Interestingly, though, Scott also observes the Hawke Labor’s abandonment of Labor’s post-Whitlam commitment to pursue public investment in natural resources. Short-term thinking that catered to neo-liberal ideological misgivings about such direct public sector investments influenced Labor as well as the conservatives. Following the Henry tax review, Rudd Labor’s support for a resource super profits tax was suggestive of ‘Labor coming to its senses’, even though the government later backed down in the face of mining industry resistance. Henry had argued the unsustainability of lower federal taxes, which had fallen from 26 per cent of GDP in 2001 to 'just 23 per cent of GDP in 2013' (pp. 181-182). The opportunity to invest for the future had been blown with short-term thinking, in the course of providing tax cuts for the middle class. The pretty obvious implication is that governments must find progressive ways of raising more tax.

Scott concludes by urging labour movement leaders, activists, thinkers and policy makers to “re-activate” interest in the Nordics with an eye to all that we can learn from them in Australia. He argues that the Nordic example holds the key to reversing “despair and demoralisation” amongst left-of-centre people (p. 189). Scott refers here to not only policy inspiration, but also the Nordic example of far greater labour movement membership and grassroots activism, which has long far surpassed conditions in Australia (p. 190). Whether we look to the Nordics’ robust welfare regime; their progressive taxation arrangements; their first-rate education systems; or their comprehensive active labour market programmes and industry policies; there is so much to learn, as Scott has demonstrated in this important work.

All this said; Sweden, for instance, achieved its comprehensive welfare state over decades: and a similar challenge faces Australia. Scott draws on research suggesting overwhelming public support for higher progressive taxes (including super profits taxes on polluters, miners, banks) and greater public investment in social services. ‘Egalitarian sentiments’ are far from dead in Australia (p. 185). 

This reviewer believes it is crucial for Labor to repudiate ‘small government’ at its coming National Conference, and progress towards a fairer and more robust welfare state. Federal taxes should be increased in the first term of a new Labor government in the vicinity of 2.5 per cent of GDP. Other savings in the area of superannuation concessions for the well-off can be redirected into public goods, infrastructure and services. This could provide the means for Australia not only to find inspiration in the Nordic example, but to meaningfully act upon that example. In my view, over the long term, it would be preferable to raise progressively sourced revenue in the vicinity of 5 per cent of GDP, or approximately $80 billion in today’s terms. Northern Lights is an important offering which will be of great assistance to politicians, policy makers and progressive activists.

Tristan Ewins is a freelance writer, teacher and member of the Australian Fabian Society. Northern lights; the positive policy example of Sweden, Finland, Denmark and Norway by Andrew Scott is published by Monash Univerity Publishing, Melbourne.


Suggested citation
Ewins, Tristan, 'Northern lights', Evatt Journal, Vol. 14, No. 1, December 2015.<>