Features Australia

Tin foil hats and the top end of town

14 July 2018

9:00 AM

14 July 2018

9:00 AM

You have to wonder what Paul Keating will be thinking as the invitations to attend Labor fundraisers and campaign events begin piling up as the next election draws nearer. The former PM who lived by the mantra ‘good economics is good politics’ has increasingly little in common with his old party, which is fast becoming the economic equivalent of the 9/11 truth movement.Together with Hawke, Keating implemented the most ambitious market-based reform agenda in Australia’s history. The wall of tariffs which had caused entire industries to grow sclerotic was torn down and the dollar floated, transforming our economy. The straightjacket of centralised wage fixing was lifted, providing decades of rising productivity and wage growth. State-run behemoths were sold off and industry assistance ditched. The outcome: the most prosperous middle class in the world.

The genius of Keating’s vision was his understanding that the old Labor orthodoxy of dividing a static economic pie among the party’s constituents was not actually in the interests of wage-earning Australians. Instead, Keating recognised the only way to advance the interests of the working and middle classes was to grow the pie larger by freeing the economy from byzantine regulation and heavy-handed state controls.

The same thriving middle class Keating helped create will be the biggest losers of today’s retrograde Labor platform if the party succeeds at the next election. Indeed, Shorten’s tenure as Labor leader has been a depressing case of back to the future. The high-taxing, business-bashing, and paternalistic thinking that infected Labor until the 1980s has been revived by supposedly right-faction politicians who fashion themselves as heirs to the Hawke-Keating legacy. The most dangerous feature of this return to old-school Laborism is the Corbyn-esque belief that when people and businesses succeed, it’s because they’ve gypped someone else. Two recent incidents illustrate the point.

Consider Shorten’s response to revelations that an unironically-titled ‘business luncheon’ with him only sold a handful of tickets – ‘If some Liberal businesspeople would rather listen to their Liberal leader than the Labor leader, I don’t take it personally.’ The unmistakeable import of Shorten’s retort was that businesses who didn’t care to pay $30 to be lectured about corporate greed were just Liberal party lapdogs. It’s a subtle way of reinforcing Labor’s pitch that the Libs, big business and well-funded special interests are part of a vast, right-wing conspiracy waging a war on working people.

This Marx-inspired clash is the opposite of the Hawke-Keating approach, which viewed workers, unions and businesses as partners in the pursuit of prosperity, not enemy combatants. Shorten’s hostility towards the private sector doesn’t even find an equal in Whitlam, the most left-wing PM in the last half century. Shorten’s closest equivalent is quite possibly Ben Chifley, who sought to nationalise banking by painting financiers as robber barons swindling the masses.

A second example of Labor’s backslide can be found in Wayne Swan’s elevation to party president. As a self-styled champion for working people, you might have expected Swanny to use his first interview to talk about issues that most closely affect lives of wage-earning Australians. Job security in an age of globalisation and growing pressures on household budgets thanks to more than a decade of botched-energy policy both spring to mind. Instead, Swan’s opening salvo was to condemn the pay rates of top corporate execs – a cohort that amounts to 0.00004 per cent of the population.

According to Swan, the ‘top end of town – and those on the highest incomes – are basically gorging themselves,’ a trend which is ‘ripping society apart’. He went on to claim current pay rates set a ‘shocking’ example for the rest of the workforce, and should be brought under control either by legislating a cap on executive remuneration, or a stiffer corporate tax rate. As a former Treasurer, you’d think it’d be on Swanny’s radar that executive remuneration is almost always tied to company performance, often leading to substantial fluctuations in yearly pay. And knowing this, you’d think it would have occurred to him that his second thought bubble would effectively mean punishing large, and highly profitable companies (who as it happens, are also Australia’s biggest job creators) for being too successful. You only need to look back to Swan’s advocacy for lowering the corporate tax rate as part of the mining tax package in 2011 to see how quickly the former Treasurer has regressed to an Occupy Wall Street fringe dweller.

Of course, a Google search can tell you Swan’s well-worn trope about the growing gap between the top end and the beleaguered everyman is nonsense. The salaries for the CEOs of Australia’s top 100 companies are down on pre-GFC levels, despite market capitalisation rising by nearly 50 per cent. But the more dangerous flaw in his thinking is the assumption that lavish salaries for chief executives are coming at the expense of workers. Every mining executive in Australia could work for $1 a year and it wouldn’t change the price of iron ore or coal, the cost of running a mine, or the supply of qualified engineers and mine operators. What’s been far more consequential for working people than the take-home pay of the nation’s most high-powered business people is the two thirds increase in real per capita income enjoyed by workers over the two decades following the reform efforts of the 1980s and 1990s.

It’s also worth noting that the salaries of Australia’s top CEOs are chump change compared to some of Swanny’s greatest hits as Treasurer. The combined yearly pay for Australia’s top 100 CEOs came in at around $522 million last year – three per cent of the annual interest bill of the Commonwealth’s public debt, less than half the cost blowouts of the Rudd Government’s ill-fated pink batts and school hall spending sprees. As leading figures of Labor’s right faction, Swan and Shorten should be proud ambassadors of a political tradition that once put the interests of working people before progressive fashions. They should be crafting a vision to grow Australia’s wealth, not just carve it up among the Labor Party’s clients of state dependency. But unfortunately, Swan and Shorten have given up on building on the legacy of Labor’s most successful period of post-war Government. For now, the only thing that interests them is donning a tin foil hat and shaking their fists at the top end of town.

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