The Current Economic Position in Australia
The following article is an edited version of the report given to the SPA Central Committee on April 2, 1995, by CC Secretariat member Anna Pha. A statement, There is Another Way: An Economy Serving the People, was adopted by the CC and published in The Guardian, No. 761, 12/4/95.
Although my topic is Australia, I want to start with some international developments which directly impact on us here in Australia. We might be an island geographically but economically the fortress walls are down and we are part of what is known as the “global economy”.
Let’s start with Mexico, the showcase for the International Monetary Fund and the World Bank. The Mexican Government faithfully handed its economy over to these market gods.
It de-regulated its financial sector, allowed foreign currency to flow in freely, not worrying about how much came in, how much went out or how it was used. Trade was liberalised, tariffs reduced, Mexico entered NAFTA with the US and Canada. Interest rates were de-regulated, and the budget deficit was cut back savagely as requested by the international financial institutions. Inflation was brought under control and privatisation was well under way – a set of policies all too familiar to us here.
What happened to this “miracle”? Unemployment rose, there was a massive redistribution of wealth and a strata of society, around 20 per cent, became very wealthy and bought up big on imported luxury goods.
The current account deficit rose along with imports. Interest rates went up and they became higher than in the US so more capital flowed into Mexico. The capital didn’t go into productive investment or jobs, it fed the habits of the new rich strata of society. Under the new de-regulated system, the government was left with few mechanisms or controls to prevent a crisis or to deal with a burgeoning foreign debt and balance of payments crisis.
The consequences included a 40 per cent devaluation of the peso in December 1994 as capital began to flee, fearing the government could not meet repayments on bonds that had been issued. What followed caused reverberations around the world on stock exchanges and financial markets.
The US hit the panic button and Clinton forked out $20 billion of special reserves. The IMF and the European Bank of International Settlements between them paid out another $30 billion, all to save the investments, mainly of US investors, that were at stake. In fact the devaluation of the peso cost US investors about $25 billion and they fear more losses.
Clinton’s rescue package can only stave off further crisis; it cannot prevent another one or solve the problem. The same policies are being implemented even harder and faster and Mexico is putting its oil up as a guarantee which it will have to surrender in the next big crisis.
The largest investor in the US was Japan but Japan has slashed its foreign investment per annum from $48 to $17 billion in a two year period to 1992 when it was in a deep recession and had its own problems. It also disinvested, pulling out capital that had already been invested, and it shut 460 operations in the US.
Fluctuations in investment and trade are not unusual. They are part of the cyclical pattern of capitalism and in recessions capital is pulled out, it’s not invested. But this case appears to be much more than a cycle. There are fundamental structural changes taking place with international capital.
At the same time as pulling back from the US and not restoring to former levels its investments there, Japan has increased its investment in the Asian region, particularly in China and other Third World or developing countries – a select handful of ten to 15 developing countries in Asia and Latin America that are now getting a large amount of the foreign capital invested by transnationals.
The US has a massive foreign debt and a massive budget deficit. It needs foreign capital to fund these and the only way I believe it can do this now is by pushing up interest rates and devaluing the dollar. This is what’s been happening and we can expect further devaluations and further rises in interest rates.
Of course, this has consequences for Australia with our dollar closely following the US dollar’s ups and downs and interest rate changes affecting us, like other countries around the globe, as capital chases the highest interest rates.
The demise of the Soviet Union and socialist countries in eastern Europe unleashed and intensified the inter-imperialist rivalries that had been suppressed in the interests of capitalism and imperialism. With socialism seriously weakened, these rivalries have come to the fore and the dominance of the US is seriously challenged by Japan and by Europe. Of course, that was already happening regardless of the position in socialist countries.
The US was the world’s largest recipient of foreign capital. In the 1986-88 period, it received 40 per cent of foreign investments from other countries. This was down to two per cent in 1992, primarily because of Japan’s problems with recession. It rose again to six per cent in 1993. I think it is unlikely that it will be restored to the position it was in before.
Despite changes in structure and patterns of power and the weakening of the US, the US is still a major force. It is still the largest economy and is still a force to be reckoned with. It certainly hasn’t been superseded by Japanese or European capital yet but there will be some big trade wars, and possibly other wars, before that happens.
Changing capital flows
At a recent Australia-Japan Business Outlook Conference an economist from one of the leading multinational accounting corporations indicated that the flows of capital from Japan and Germany into the US have stopped and that this is not likely to change in 1995.
She spoke of the withdrawal of capital from “trade deficit countries”. Capital has been flowing out of countries with large trade deficits, like the US, and is being redirected to countries with a trade surplus. Australia is a debtor country and this could have ramifications for us if we’re looking at attracting foreign investment.
She also said that traditional capital flows between OECD countries are coming to an end.
Many people have a picture that a lot of capital is invested in Third World countries which are exploited. We call this neo-colonialism. In fact the majority of capital flow is between the major industrialised countries, they invest in each other more than they have invested in the Third World countries.
That is changing, she said. In addition, apart from the withdrawal of capital and the lack of capital flows into countries like the US, the United States will no longer be able to provide stimulus for recoveries. Its role as an economic leader will decline. I would add that the dollar as the reserve currency is nearing an end. In this respect it is being joined by the deutschmark and the yen.
The Japanese economy
When we turn to the Japanese economy, we see a process which the Japanese call “hollowing out”. With the yen going up in value, Japanese exports become much more expensive on foreign markets and less and less competitive. There have been several rounds of appreciation of the Japanese yen since the mid-1970s.
Japan’s infrastructure, according to the economist, has been ignored and not developed or renewed over the last ten years. According to a survey carried out by the Export-Import Bank of Japan, Japanese corporations are now looking to increase investments offshore, to make car parts, electrical components and so on offshore and import them into Japan.
It’s no longer profitable to make them in Japan so there’s going to be a de-industrialisation or hollowing out of a lot of Japan’s productive capacity. The same process has occurred in parts of the Australian economy, it’s occurred in Britain, in France and in the US.
The hollowing out is to be accompanied by de-regulation of the Japanese economy. Japan was one of the last, if not the last major industrialised countries to adopt trade liberalisation and de-regulation of the financial sector. It has not been de-regulated yet. Japan has now put forward a five year plan which Australia’s Senator McMullan thinks isn’t going fast enough, and he’s told the Japanese so.
This is going to hit the working class of Japan, it’s going to create unemployment in larger numbers than they’ve experienced before. It means there will be pressure on the labour force in Japan to compete with workers in South Korea, the Philippines, Taiwan, Hong Kong.
What happens in Japan is important for Australia because of connections in investment and trade. Australia was the third largest recipient in the world of Japanese foreign investment (following the US and Britain). The total amount of accumulated direct Japanese investments (where Japan entirely owns or owns a controlling proportion of an enterprise or company) in Australia is US$236.6 billion.
The hollowing out or de-industrialisation in Japan, Europe and the US as well as Australia involves abandoning domestic economies as a priority in economic planning and policy. There is an obsession with exports as against local development. This has serious consequences for countries like Australia and its workforce because it affects jobs.
Australia, which is heading in the same direction as Mexico and is a bit more advanced than Japan in this direction, shares many of the problems facing Mexico.
Japanese capital is now increasingly invested in third world countries, particularly China where in 1993 it invested US$26 billion. This is a new phenomena occurring over the last three to four years. Much of the investment by Japanese corporations in these countries is to produce export goods – the cheaper labour and government incentives make such exports far more competitive than similar goods produced in Japan.
In 1993, 25 per cent of exports from China came from the subsidiaries – or, as they now call them, affiliates – of foreign transnationals. They were worth US$92 billion. So these processes are also affecting China, as large as it is, in the export area and hard currencies.
Southeast Asia has the fastest growing economies in the world and capital is being attracted to these growing economies, moving from industrialised countries where it used to be invested.
Australia’s economic position
As I said, Australia is a major recipient of Japanese investment but this has declined quite significantly over the last four years. In contrast to the US and some other countries, Australia is more likely to retain Japanese investment because our resources and various other features are attractive to Japanese capital.
Australia is heavily reliant on Japan for a number of major commodity exports. For example, in 1993, 97.9 per cent of our woodchip exports (a controversial area) went to Japan; 94.4 per cent of liquid natural gas; 61.7 per cent of copper ore; 42.7 per cent of coal exports. However, we have diversified in recent years and the reliance is not as heavy as it used to be.
The other side of the picture is that Japan is reliant on Australia for the import of particular commodities. For example, Japan gets 63.7 per cent of its wool from Australia.
In tourism, Australia made a surplus of $3.5 billion last year and this is still a growing area with Japan.
Australia has a trade surplus with Japan although it’s been declining in recent years. In calendar year 1994, we exported $15.980 billion worth of goods to Japan and imported $12.1 billion worth.
As well as cutting direct investment, Japan has also been taking capital out of Australia from securities investments, bonds, shares, loans and so on.
Companies wanting to invest in Australia in certain industries or with amounts over a certain figure have to get approval from the Foreign Investment Review Board (FIRB). Its acting head is Ken Stone, a former secretary of the Victorian Trades Hall Council.
The Board makes a recommendation to the government which usually just rubber stamps it. The FIRB had a rejection rate of 1.7 per cent last year. So it’s pretty much open slather with token monitoring.
There are areas where there are still some controls on foreign investment. They are in shipping, civil aviation, real estate, the media (and newspapers has been a fairly controversial one), telecommunications and uranium.
The applications made to the FIRB indicate the trends in investment in Australia.
In the mineral sector, 23 per cent of the applications to invest in Australia were for new projects with some job creation potential. However, 77 per cent were to invest in pre-existing enterprises, mines, operations, and so on where the capital was not going into developing Australia, but into buying up and taking over.
In the financial sector, 42 of the 47 applications were takeovers and acquisitions of existing businesses. Only five were to set up new businesses.
In manufacturing, 97 per cent were acquisitions. They included some big ones like Gladstone Power Station which was a privatisation exercise and Lion Nathan which includes 105 hotels as well as a brewery.
In the coal industry, 58 were for acquisitions as against four new businesses. In this area the US, Britain and Japan are buying up in Australia.
In the services sector – transportation, education, business and personal services (legal, accounting, auditing, funerals, etc.) – 114 were takeovers of existing businesses and did not contribute to developing Australia while 17 were associated with new development.
The picture is that the overwhelming majority of foreign investment coming into Australia is not developing the country, and not creating jobs. It is taking over and buying up the farm. It is also increasing our liabilities because the produce profits or dividends which go out of the country, adding to our balance of payments problems.
The level of stock – accumulated foreign investment – in Australia, according to the Bureau of Statistics, is $359 billion compared to Australian investments overseas of $126 billion. The interest payable on foreign investments, securities, bonds, dividends and so forth is $18 billion. Not all of this leaves the country, some of it is reinvested here. Australian profits abroad, from overseas investments, are $4.8 billion.
Balance of payments
Last financial year Australia had a balance of payments deficit of $23 billion. By the end of December, this year’s figure was running at $23.8 billion. The government now estimates a deficit of $26 billion.
The breakdown of this figure is interesting. The deficit in the area of products – manufactured commodities and primary products such as coal, wheat, wool, minerals and so on – is very small. Last year it was only $504 million.
So trade is not the cause of our problems yet workers are being told they must spend less and consume less. You couldn’t even buy a decent bomber from the US for that amount of money. So if the defence budget was cut back a little bit, that would solve that problem much more easily.
The balance of payments includes the services sector – items like shipping freight and insurance payments. We run at a deficit there because the money for our cargo and freight is paid to foreign shipping and insurance companies. That’s why Australia needs its own shipping line.
Services also includes things like tourism, education, accounting, legal fees and so on. These industries are all run now by big transnationals. Last year there was a deficit of $1.4 billion. However, one cannot say that $1.4 billion caused the $23 billion deficit.
The real source of the deficit is what’s called “net income” – the money that services foreign debts, loan and interest repayments, profits going offshore and so on. This area was in net deficit of $14 billion in 1993-94 and this is the major source of our problems.
The net foreign debt last year was $162.7 billion. Now that’s quite large. It’s large by Third World standards. It’s large as a percentage of our national income. It’s 38 per cent of GDP. The gross debt is actually $204 billion but because Australian banks and companies have lent and invested money overseas and have some credits due, it comes down to $162.7 billion.
Debt is not intrinsically evil. We don’t frown on people borrowing money to buy a car or a home. The question is what you’re borrowing it for, your ability to pay it back, what’s involved in paying it back, how much the loan costs.
In this case, the debt has been raised for investments that do not serve any useful purpose, not only the foreign investments in Australian real estate, factories or whatever, but also speculative investment in bond markets, currency trading and so on. And that’s just gambling, it’s part of the casino economy.
Because there are no or virtually no controls, we cannot make decisions about what the money is used for or how the debt arose. Apart from its size, this is the big problem.
Australia is a recipient of foreign investment and a place that imperialists plunder. But it is also a middle-sized imperialist power in its own right and we do our share of investing and exploiting overseas workers.
Our favourite spots until recently were Britain, the US and Europe. Now increasingly we’re turning to Asia for investment by Australian-based transnationals. Incidentally, Australia has some quite large TNCs of its own. Two of them make the top 200 in the world.
The latest discovery for investment is India. We’ve already discovered China and Southeast Asia.
The government is promoting Australia in Asia both for exports and foreign investment of our mining and resource exploration and technology skills, our telecommunications, education, infrastructure development, agriculture and horticulture, food processing and financial services.
In other words, as an industrialised developed country, we are able to offer developing countries considerable technological expertise. That’s interesting because in other ways its seems we are becoming a banana republic. These are contradictions in Australia’s position.
The US dollar has been taking quite a pounding recently and the Australian dollar has slid down a certain distance with it. The changes that are taking place with the rise of the deutschmark and the yen and the decline of the US dollar and Australian dollar reflect, I think, changes that are taking place in global power relations, in the dominance of different currencies and capital.
Back in 1973-74, there were 422 yen to an Australian dollar. Yesterday, it was 66. That is a devaluation against the yen of 84 per cent – that is, the dollar is approximately one-sixth of its former value compared with the yen. That’s massive.
To give you an idea of what this means, take the example that a Japanese corporation decides to buy up Pioneer International which has assets worth $1.5 billion – that’s the company which owns AMPOL.
In 1973-74, with the value of the dollar as it was then, it would have cost the Japanese 633 billion yen. Today it would only be 99 billion. So we’re dirt cheap to Japanese capital compared with 20 years ago.
The problem is not just with the yen. With the deutschmark, there’s been a 66 per cent reduction in the Australian dollar since 1973-74 and 48 per cent since de-regulation.
What about the pound sterling? After all, it’s taken quite a hammering. Britain isn’t doing too well, it’s another ailing economy. Well, in the same period, the Australian dollar has gone down 28 per cent against the pound.
The Australian dollar has gone down 56 per cent against the US dollar.
Most of these devaluations have occurred since de-regulation in Australia but the process started before de-regulation in the mid 1980s.
What does this mean for Australia? Well, it certainly helps our exports. The government was keen to devalue the dollar when it de-regulated since it makes our exports cheaper. Conversely, it make imports that much more expensive and has an inflationary effect on the economy – and that means lower living standards.
A motor car bought back in the early 1970s at a cost of about a third of an average teacher’s annual wage would now cost the whole of that annual wage. Even though tariffs have been lifted, the same car is about three times more expensive.
Devaluation makes Australia a very cheap tourist location for the Japanese and the Germans and so on.
Devaluation makes Australia a much more attractive place for foreign capital, because it makes labour cheaper and provides the potential for it to export from here as well.
How does Australia, as the avant garde of de-regulation, with a rip rip mentality, compare with other OECD countries?
Between 1982 and 1992, our energy consumption rose by 25 per cent. The average for the European Community was 14 per cent and for the OECD 16.5 per cent.
Australia offers virtually no subsidies to consumers or to producers of agricultural products. Only New Zealand gives less subsidies. We’ve now entered the World Trade Organisation (WTO) where our competitors will have years to phase out large subsidies but we can’t impose any new ones.
Australia unilaterally threw away protection before anyone else except New Zealand and now our farmers are going to suffer. They will be driven off their farms, the transnational corporations will move in and take over. It’s not just the drought that has devastated Australian farmers.
Australia used to be one of the richest countries per capita and had one of the highest living standards.
Now we are well down the OECD list when it comes to the number of doctors per head of population. We’re above average when it comes to the percentage of GDP spent on health but we have a heavier reliance of private as against public health, according to OECD figures. The number of beds per capita declined between 1981 and 1991 by almost ten per cent.
We’re not spending much money on research, only 1.3 per cent of GDP. More than half of this is financed by the government and the government is pulling out. Yet research is so important for the future. We spend only half the percentage that Germany and France do. Japan spends 3.0 per cent, the US 2.75 per cent.
With defence spending, we’re in the top half of the big spenders with 2.2 per cent of GDP. The Australian Government has considerable blood on its hands with East Timor and Bougainville, as it defends and pursues the economic interests of transnationals like CRA, BHP, Santos and so on.
Between 1983-84 and 1993-94, the number of people in employment has risen by about 1.4 million, which sound impressive until you compare it with the growth in the population of working age. It is in fact 235,000 less than the growth in the labour force. So the government’s job creation – if you can call it that – has not kept up with the growth in the labour force.
More than half of the new jobs have been part-time. Full-time jobs are being destroyed, they’re being turned into part-time and casual work. Contract labour is on the rise.
The hardest hit are youth. The Labour Studies Department at Adelaide University has predicted that by the end of this century, there won’t be any 15 to 19 year olds in full-time work and there won’t be that many 20 to 24 year olds in full-time jobs either.
There are a number of training schemes. Training is important, of course, but, in itself, does not create jobs. It’s being used to create a pool of skilled unemployed to compete with each other, to go in and out of work. It’s not providing them with permanent, secure employment, a career or a life of work and hope.
The workforce is being restructured into two tiers – a core and a peripheral tier. The core will be employed, be better off and belong to the corporate unions. The peripheral will be the people who are in and out of work, some who may never work, some who are hoping to get into the core.
Preparing for the consequences
The Australian Government, the US and other governments too, are preparing for the consequences of these policies.
We are moving towards a Third World structure, towards the Mexican structure, and more and more hearing the “law and order” cry. Governments are giving themselves the power to take people off the street before they’ve committed a crime. Private prisons are being built.
In the US, workers are campaigning for “Jobs, Not Jails” and this slogan is becoming relevant in Australia, particularly in the light of what we heard in the NSW election campaign from Liberal and Labor Parties.
Private policing and security forces are on the rise and already outnumber the public police. Private housing estates are being built with security guards at the gate.
There are attacks on women’s rights, with measures to exclude women from the workforce as permanent, full-time participants. A home makers allowance if offered to encourage women out of the workforce and back into the home. It has little to do with preserving family values, however.
The capitalist system cannot now give jobs for anywhere near the whole working population as it did in the 1950s and 60s. It doesn’t need the whole population except, perhaps, as consumers.
The division into two tiers affects not just the labour force but society as a whole. There’ll be the group or strata – it’s not a class because there will be working class in both strata – who will be well off, who will have enough income to buy better quality services, who will use the private education system, the luxurious private health system, have accelerated entry to universities and pay fees for degrees, and so on.
Then there’ll be the other strata who rely on the safety net, who still use the run down public health system, who use the run-down public education system and so on. That’s the way things are heading if we don’t succeed in halting privatisation and the various other changes that are taking place.
Australian Government revenue as a percentage of GDP is one of the lowest of all OECD countries. Only the US raises a smaller proportion.
The source of government revenue is shifting. Corporate taxes have been lowered*, the tax rate on high incomes has been reduced and sales taxes have been increased. For a large proportion of the workforce real wages have been falling. There’s been a redistribution of wealth and the old saying about the rich getting richer and the poor getting poorer has never been truer.
The destruction of the public sector has brought more unemployment and loss of people’s assets. The state – if this trend is not stopped – will be left with virtually nothing. The loss of government revenue and the democratic consequences are serious. The effect on services, on costs, access to and the quality of services for the people will be disastrous.
These developments raise serious questions about the role of government and the ability of government to carry out functions which it carried out in the past. It will curtail the ability or prevent governments being able to stimulate economies in times of crisis, to provide job creation programs and to maintain welfare.
When we do have a left-progressive government, a people’s government in Australia, what resources will be left for that government to implement its policies? The cupboard is going to be very bare if these developments go on for much longer.
APEC (Asia Pacific Economic Co-operation) is chugging along quietly, although there is some opposition and anxiety in countries like Malaysia.
With the Bogor (Indonesia) Declaration last year and the Osaka summit at the end of this year, we are proceeding towards trade and investment liberalisation in the region. Aspects of the agreement will probably be voluntary but Australia is pushing at the forefront to go further and harder and faster than anyone else.
The ASEAN Regional Forum (ARF) is a relatively new body which has the potential to become as important or more important than APEC.
The Secretary of the Department of Foreign Affairs and Trade, Michael Costello, described it as having a central theme of inclusive security. He said of the ARF that:
"It is now clearly the primary regional security structure. There are excellent prospects for the development of more substantial dialogue between regional Foreign Ministers and Defence establishments."
A ministerial meeting of the ARF is due to be held in July and Australia is looking for “substantial outcomes”. For example, Australia is interested in “region wide adherence to the UN conventional arms register” and “an agreement to enhance military contacts”. Well, we’ve seen some of that enhancement with Indonesia recently.
We need to give attention to the fact that we’re not controlling the development of our own economy. It’s the so-called “market forces”, the financial institutions, the transnationals that are deciding what shuts, what opens up.
We need to take up the issue of trade liberalisation. The removal of tariffs and quotas is destroying industries, destroying jobs. Trade should be on a mutually beneficial basis and no country should give up its sovereign right to control its own economy.
We need to pay attention to the processes of de-regulation and self-regulation which are resulting in environmental destruction, affecting the safety of workplaces, buildings, airlines and food (and the Garibaldi salami case with the death of a child is an example of what can happen).
We should be opposing wage restraint very strongly. We should be fighting for the restoration of living standards, boosting domestic demand and supporting our domestic economy.
Unemployment is a major issue. Keating now believes that full employment for Australia is five per cent unemployment. He said it unashamedly. I think full employment should mean full employment, every person who is capable, able and willing should have a job, a real job.
The question of privatisation is a priority for us. It has meant job losses, loss of sovereignty, loss of control over our economy and de-regulation of the labour market. We are heading towards Third World conditions and further de-unionisation.
We need to take up the question of growth. Capitalism needs growth but the world is finite and resources are finite. I think the answer does not lie in debating the percentages of growth. It lies in looking at the nature of growth and the use and distribution of our resources and wealth. Redistribution will bring about changes in what we produce, in how we treat the environment and resources as well as bringing benefit to people. We can achieve that without the massive growth that capitalism needs.
One of the consequences of the government’s economic fundamentalist policies is the circulation of hundreds of billions of dollars on stockmarkets, financial sector derivatives and so on. The Barings Bank collapse brought home to us what it is all about.
There’s nothing socially useful for people in all this, it’s non-productive, it’s not giving people services. It’s a casino, it’s gambling, it’s fast bucks, big profits and big losses. And when the big losses come, it’s workers who pay with their jobs, with their living standards.
When Barings went, like other big crashes, workers’ savings, their retirement income went. And there are some big bubbles building up. The system is in crisis and that crisis is deepening at the moment. Mexico is a tremor, a warning of bigger earthquakes to come, so is Barings.
Financial capital is becoming more and more divorced from the real world but its escapades, its big bangs and explosions, its earthquakes are going to hurt the working people of the real world.
There are a number of contradictions building up in Australia. One of them is our relations with Japan and with the USA. We are tied to the USA militarily and politically but to a lesser extent economically. Economically, relations with Japan are more important. We are increasingly tied into Asia and the government and Australian capital see our future in Asia.
But as competition between Japan and the US intensifies with vicious trade wars – and it might not stop at just trade wars – Australia is going to be in an interesting position.
Another major contradiction is between the global economy and the domestic economy. The interests of the global economy are supported by the transnational corporations, by exporters, by the financial sector. These are the forces behind the push for economic fundamentalism. They are prepared to override or surrender our sovereignty and the interests of the people in Australia. They do not respect the borders of any country.
Then there’s the domestic economy which is based on the nation state which is, I think, largely supported by the labour movement which backs domestic industries, small farmers and small businesses which require some protection, controls on financial flows and investment.
One of the things we need to promote is the importance of protecting and defending the domestic economy which is, after all, what provides us with jobs. We do need to export and exports will provide some jobs. However, heavy reliance on exports leads to the position, in a free trade, de-regulated situation, of having to push down worker’s conditions and wages to Third World standards. That’s what it means.
These contradictions appear not just in Australia but also manifest themselves in the European Union. We see them with Britain’s position as against the position of Germany and France.
These inter-imperialist contradictions and rivalries are likely to intensify and will be important as the globalisation process intensifies. On the one hand, businesses must try to be part of international trade, but on the other hand, they cannot risk the destruction of the domestic economy.
Internationalisation, de-regulation, liberalisation of trade and investment, and monopolisation of capital are in practice increasing the wealth, power and dominance of the transnationals, particularly finance capital.
Governments are left with few means to control economies and solve crises. All they can do now is tell us to spend less, reduce wages and, perhaps, if they’ve still got some control, tinker at the edges with limited monetary and fiscal policies.
The system is more and more serving the interests of the financial system, the “market forces” and transnationals. Economies are not serving the people.
A people’s agenda
Australia has great potential. We’re an extremely wealthy country, we are rich in resources, we have a highly educated population.
The starting point should be policies which address the needs of people. The economy should serve those interests and needs.
The Liberal and Labor Parties are not going to do this. That raises the question of the left and progressive political alternative which is the only way we can start to address the situation in any meaningful way.
Of course, there are demands and gains which can be won now. The following list is not inclusive but contains a number of programmatic points for struggles by the working class:
- The struggle to halt the corporatisation and privatisation of the public sector and the restoration and expansion of public services. Much in terms of jobs and living standards centres around this.
The maintenance of awards as the basis for determining wages and conditions with enterprise agreements adding to and improving the provisions of awards.
A living wage for workers, students and pensioners to ensure all receive a share of productivity gains. At the moment the productivity rises are enormous but they’re all going into profits, not to the people who created them.
- A 35-hour working week. Why are something like a quarter of full-time males working 49 hours a week? Why is overtime rising? It’s crazy. We shouldn’t even be working 40 hours or 38 hours a week.
Progressive tax reforms with adequate taxation to raise resources to provide public services. Priorities are a universal public health system, education, transport, housing, public infrastructure.
An immediate cut in defence expenditure of ten per cent.
Superannuation funds to be directed into job creating projects.
Government intervention to protect industries and support the domestic economy. That doesn’t mean we don’t export, it’s not one against the other. We should be looking at a balanced development.
Re-regulation of the financial sector. Other policies cannot be put into practice until the government re-establishes priorities and the controls necessary to implement them.
Through such struggles we can win support and lay the basis for a more far-reaching program which rejects economic rationalism and puts people’s needs and environmental sustainability first.
* It was increased slightly in the May 1995 Budget but very few companies pay tax at the full rate. All sorts of favourable allowances and tax deductions are available to companies – Editor