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Menzies’ heir

April 3rd, 2011

Most of the press coverage of Julia Gillard’s Whitlam oration has focused on her partisan digs at the Greens, and even then only in an “inside football” way, that is, on the likely short-term political implications rather than the validity or otherwise of her criticism.

The only responses I’ve seen pay any serious attention to what is (or at least is presented as) a major restatement of Labor’s vision have come from bloggers, such as Trevor Cook, Kim at LP and Jonathan Green. It’s also worth rereading this piece by Mark Bahnisch responding to an earlier speech. I broadly agree with much of this commentary, but I thought it would be worth offering a response of my own.

Both implicitly, by omission, and explicitly, in rhetoric and substance, Gillard’s speech represents a repudiation of the Labor tradition exemplified by Gough Whitlam, and even, in many respects, of the market liberal reworking of that tradition under the Hawke-Keating government.

It is a speech that could have been given, with absolute sincerity, by John Howard on behalf of the Liberal party, and marks, in both large and small ways, Gillard’s acceptance and celebration of the values and beliefs of the Liberal party as espoused by its leaders from Menzies onwards. Indeed, with more historically apposite examples (Reid, Deakin and Lyons for example, instead of Barcaldine, Curtin and Chifley) this would have made quite a good Menzies oration.

Let’s start with the omissions. Gillard’s speech contains no reference (either in words or substance) to poverty, unemployment, justice and injustice, equality, rights or freedom, let alone to such political ideas as capitalism, socialism or social democracy.

It contains only a single reference to unions, as “ensuring working people succeed together and that their work is recognised, rewarded and appreciated.” No suggestion, then, that workers might sometimes be in conflict with employers and that unions might represent and protect workers in that conflict.

The only reference to the global financial crisis is as a justification for running a Budget surplus so as to be prepared for emergencies. (I should make clear that I agree with Gillard on this point. But the GFC had a lot more lessons, which she has apparently forgotten or never learned, about the instability and inequity of global capitalism.)

Next, there’s the explicit repudiation of Labor traditions and adoption of Liberal rhetoric and policy viewpoints.

* Gillard asserts “We have moved beyond the days of big government and big welfare”

* In her attack on the Greens, Gillard appropriates the rhetoric of John Howard about “sharing the values of every day Australians, in our cities, suburbs, towns and bush, who day after day do the right thing, leading purposeful and dignified lives, driven by love of family and nation.”

* Gillard claims that Labor is ” a party of government with all the attachment to the political centre and to pragmatic decision making that comes with being a party of government.” This is historically the position claimed by the Liberals, as against Labor’s view that the purpose of achieving government is to change society for the better

* Gillard correctly enough accuses Abbott of “abandoned a 25 year consensus for reform in Australian politics and embraced a populist substance and style quite alien to our political traditions” and says that “the growing extremism of the Abbott Liberals is such, the party of Howard is disappearing from view.?” Implicitly, Gillard presents her own government as the legitimate heir of the consensus embodied by Howard’s.

* Gillard embraces a crowding out theory in which “the private sector will employ more people, spend more money, and build more projects – and that means unless the government pulls back on spending, we will be chasing the same scarce resources.”

Finally, there’s Gillard’s own statement of “what Labor stands for, what we aspire to achieve, what our culture is and our role as a party of government.” According to Gillard

The historic mission of our political party is to ensure the fair distribution of opportunity. From the moment of our inception our mission has been to enable the son of the labourer, the daughter of the cleaner, to have access to same the opportunities in life as the son of the millionaire, the daughter of the lawyer.

Note that, even here, Gillard cannot bring herself to use the word “equality”.

The Liberal Party of Australia, in its Federal Platform, is not so squeamish, asserting that it believes

In equality of opportunity, with all Australians having the opportunity to reach their full potential in a tolerant national community.

The Liberals then go well beyond Gillard, asserting their belief

In a just and humane society, where those who cannot provide for themselves can live in dignity.

Nothing in Gillard’s speech suggests any awareness that there are Australians who cannot provide for themselves, or any desire to do anything for them. Quite the contrary. The theme of “those who do not work, neither shall they eat” is stated repeatedly, for example with reference to being the “party of work not welfare”.

It might be argued in Gillard’s defence that, while the Liberals espouse the rhetoric of equality of opportunity, a Gillard-led Labor party will actually deliver it. On this score, Gillard’s record speaks for itself. As Minister for Education, and as Prime Minister, she has maintained the SES-based system of funding private schools, introduced under the Howard government, which delivers huge sums to the richest schools. This is an explicit repudiation of Whitlam, who resolved the bitter and sectarian State Aid dispute with a needs-based funding system. If Gillard is delivering equality of opportunity, she is doing so with the policies of John Howard. Despite announcing a review of the system as minister, PM Gillard has promised no change as a result.

Finally, of course, it might be argued that Gillard is right to adopt the views of the Liberal Party. On economic policy, such a claim seemed plausible during the years of the Great Moderation, when market liberalism seemed to have resolved the chronic problems of capitalism. To maintain it in the light of the GFC puts Gillard in the absurd company of Alan Greenspan, who recently observed

Today’s competitive markets, whether we seek to recognise it or not, are driven by an international version of Adam Smith’s “invisible hand” that is unredeemably opaque. With notably rare exceptions (2008, for example), the global “invisible hand” has created relatively stable exchange rates, interest rates, prices, and wage rates.

As regards equality of opportunity, it’s been pointed out many times (including here and in more detail here) that equality of opportunity can’t be sustained if its combined with gross inequality of outcomes. The conversion of the United States from one of the most socially mobile countries in the developed world to the most sclerotically immobile illustrates this fact.

Gillard’s speech, coming from someone who is still nominally a member of Labor’s “Socialist Left” faction, is a clear and well-argued exposition of the position of today’s ALP. It seemed, briefly, that Kevin Rudd might promote a rethinking of that position but the moment passed and is unlikely to be recaptured. Any positive thinking about Australia’s future will have to come from outside the Labor party.

UpdateMore from Bernard Keane

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  1. Ikonclast
    April 3rd, 2011 at 19:42 | #1

    I would amend that to “Any positive thinking about Australia’s future will have to come from outside the Labor and Liberal parties.”

    Julia Gillard stands for nothing and believes in nothing. This is clear if you have seen the ABC docmenutaries of her career. She says whatever she thinks will wash at the time and has no compunction about completely reversing her position in the most opportunist manner. Howard actually had a core set of beliefs (all wrong in my opinion). Gillard has no core beliefs or motivations other than the desire to win at all costs.

    We must vote Green. They have actually been right about climate change, resource depletion and renewables all along (for 30 years plus). They have been voices crying truths in the wilderness and they deserve a long chance in government. Labor and Liberal must be voted out of existence before their policies destroy our existence.

  2. hc
    April 3rd, 2011 at 20:01 | #2

    An advantage in voting Liberal at present is that there is no hypocrisy in advancing these same values. There is less disappointment.

    Gillard got rid of her political best friend using the carbon tax issue and now endorses that man’s arguments. I still disbelieve Labor will act decisively on climate. We all know about Martin Ferduson but what about the new NSW leader?

    http://www.theaustralian.com.au/national-affairs/climate/nsw-labor-leader-john-robertson-cautious-on-carbon-tax/story-e6frg6xf-1226032760055

    I think we need new political parties in Australia. I am unconvinced the Greens have their feet on the ground.

  3. Freelander
    April 3rd, 2011 at 20:23 | #3

    With notably rare exceptions (1945, for example), uncontrolled nuclear fission has never been shown to have hurt anybody.

    You have got to love Greenspan. To have bounced back, as a true believer, after 2008 when, particularly in his appearance before Congress, he seemed to have a permanent look of as though someone had just punched him in the face!

  4. April 3rd, 2011 at 20:58 | #4

    hc as things stand at the moment I believe the Greens are about the only game in town. Hoping for even one new party to come out of nowhere is a stretch; wishing for two or more is fantasy.

    Nevertheless I don’t discount the possibility that both major parties could fracture and result in a re-alignment of more-or-less competent politicians with actual political agendas around a broadly progressive and a broadly conservative pole respectively, with Abbott’s lunatics and the Labor careerists consigned to the fringes. There is no natural law that says we have to retain a two party system forever. But the sooner voters force the useless parasites who constitute the contemporary Labor Party to go and get proper jobs, the better.

    Gillard’s speech would be embarrassing from any public figure. To read it from an Australian prime minister is humiliating.

  5. Alan
    April 3rd, 2011 at 21:27 | #5

    The problem with calling Julia Gillard Menzies’ heir is that, despite his conservatism, Menzies had a brain. This is not the only Gillard speech that is cringingly embarrassing. The speech to the US congress is painful to read, a cut-and-paste job devoid of a single new idea. After almost a year we really have no idea why Julia Gillard even wants to be prime minister, let alone where she wants to take the country.

  6. Alice
    April 3rd, 2011 at 21:53 | #6

    I couldnt agree more with Profs comments in this post right down to the rhetoric and selection of words by Gillard. Her comment ““We have moved beyond the days of big government and big welfare.”

    Well Ms Gillard may think we have moved beyond the days of big government but we sure have not moved beyond the days of big welfare and nor have we moved beyond the days of big private sector debt and nor have we moved beyond the days of a grossly insufficient supply of full time work.

    This is a circular sequence. Can anyone convince me that moving beyond the days of big government has generated the jobs that a bigger government in our history managed to provide?

    Can anyone convince me that moving beyond “big government” has generated the infrastructure so desperately needed?

    Can anyone convince me that “moving beyond big government” is delivering the forward planning needed for transport and energy in many of our larger cities and in our regional towns?

    I dont think anyone can and part of the reason traditional and not so traditional labor voters turned on State Labor and savaged them a few weeks ago is precisely for this reason.

    Small committees of small minded short term focused politicians and bureacrats in a small government is precisely that.

    Lean and mean.

  7. Alice
    April 3rd, 2011 at 21:56 | #7

    Actuall Prof I think its an insult to Menzies to name Gillard as his heir.

    At least he got to work and constructed infrastructure and knew how to do it without using tenders forms and pens.

  8. Freelander
    April 3rd, 2011 at 22:06 | #8

    I imagine Julia Gillard wants to be Prime Minister for exactly the same reason John Howard and Tony Abbott did and do, to be Prime Minister. Ambitions beyond that prize are completely secondary if they exist at all in most of today’s fully modern professional politician, here and overseas. Obama seems the latest manufactured in this mold. He won’t do anything he fears will reduce his chance of a second term.

    Labor must be losing their base nationally as they did in NSW. I cannot believe that the average former Labor voter is going to be taken in by what has become just spin, froth and bubble with no substance, all produced to cover their leaders naked self interest and disdain for those who voted for them.

    Abbott could easily be in in a landslide, not that I think most of the public don’t see through him, but simply for the reason Oh’-whats-his-name won NSW – to punish the incumbents.

    The Gillard speech was again froth and bubble, with poorly disguised dog-whistles, of the most repugnant kind, against the Greens.

    The Labor spinmeisters must have decided that their best move, to hold on to the prize, is to join Abbott in the gutter. Even for a politician without a moral compass and willing to do whatever it takes to win, I think that joining Abbott in the gutter will prove to be a mistake.

  9. Alan
    April 3rd, 2011 at 23:17 | #9

    Howard was not my favourite prime minister, but I think it is easy enough to discern a reason for chasing the office beyond mere ambition. That is untrue of Gillard and Abbot.

  10. April 4th, 2011 at 00:53 | #10

    Menzies’ heir is wrong in that at least Menzies built universities and hard infrastructure.

    Although… it’s hard to figure out which is/was the most willing lickspittle to a world power past its zenith.

    Is Turnbull as Liberal Leader the only possible saviour of the soul of the ALP, showing exactly how right wing, how regressive, the ALP has become, by having a Liberal leader more socially progressive and environmentally responsible than the ALP.

    However, Gillard as Menzies’ heir? With her whiny voice and flat phrases, a voice more like Pauline Hanson? (in more ways than mere intonation).

  11. ken n
    April 4th, 2011 at 05:46 | #11

    Just two comments
    Can you imagine the contempt with which Whitlam would have dismissed the Greens? Gillard’s observations about them are, I believe, totally consistent with what he would say. He would, in private, use more four letter words.
    I agree that Gillard has no deep values, other than to get re-elected. Ironically, that will quite possibly lead to the defeat of the ALP government at the next election. I think that would be a pity, as the country needs a period of alternative government and the Libs need the chance to rebuild.

  12. Alice
    April 4th, 2011 at 05:52 | #12

    @ken n
    says “Can you imagine the contempt with which Whitlam would have dismissed the Greens?”

    No I cant actually imagine that Ken n. The Greens today have more in common with labor voters than the labor party itself.

    (Ill omit the use of the words “traditional” labor voters because its the less the voters who have changed than the party – the labor party has and is walking away from its voters).

  13. Alice
    April 4th, 2011 at 05:58 | #13

    @Freelander
    Freelander – Gillard demonstrated her committment to gutter poll trolling before the election by playing the boat people card and being seen with the NSW disease wearing hardhats and yellow jackets (Brand new clean ones without a speck of dust on them!!!) .

    Dont you remember the disdain everyone had for that mindless campaign by Gillard and Abbott? Plus she had to beg people to form a government. People like the independents and Greens. People she now thinks she can ignore and deride.

    Good luck with that is all I can say.

  14. jquiggin
    April 4th, 2011 at 07:11 | #14

    Ken N, you’ve lived down to my expectations, starting with your bizarre use of the past conditional. Whitlam is perfectly capable of dismissing the Greens right now if he chooses to, but as the first PM to create a separate ministry of the environment, I doubt that he will.

    Alice, thanks for that, but don’t flood the thread.

  15. jquiggin
    April 4th, 2011 at 07:19 | #15

    I’m reposting this from Alan, which went to the wrong thread

    “Perhaps McMahon’s heir would be more accurate. Same inability to speak in anything but clichés, same inability to set out any large goals, same inability to address any new ideas, even a similar vocal quirk.”

  16. ken n
    April 4th, 2011 at 07:25 | #16

    JQ I don’t think Whitlam pays much attention to politics these days.
    He would, I believe, have some sympathy with Brown but would have great disdain for the other wing of the Greens. Rhiannon and the rest are not far away from the people Whitlam had to fight to make the ALP an electable party all those years ago.

  17. Jo C
    April 4th, 2011 at 07:29 | #17

    It’s heartening to read so many thinking people – and I suspect some of you are young. It makes me despair when I see the greedy influence of multinational interests using the major parties as puppets for their own objectives. I think capitalism is comfortable with either of the major parties these days, orchestrating a swap-over every now and then through media and monetary control. The Greens (and any other minor party which appears to be gaining some element of influence) must be silenced because they are the ones that represent divergent thinking – and this is dangerous!

  18. Donald Oats
    April 4th, 2011 at 08:15 | #18

    Just caught the headlines: foreign aide is quarantined, thus protecting Kevin Rudd’s stomping ground – lucky him. On the other hand, around $11B of natural disaster impacts, both direct and indirect, are identified. Instead of defraying this across several budgets, the Gillard version of Labor is effectively going to recover all $11 billion in one annual budget, by her insistence on this budget being in the black. Something large has to give, if this is to occur. All the news identified was (naturally enough, on Sky News) $600M of rorting of public money (in 2008-2009 year); such items as inappropriate spending on public servant credit cards, passing on of confidential information, and pilfering of equipment. Yeah, right. 600M vs 11,000M. Aside from the fact that Sky just wanted to beat up on the public service (again/still), if you put those two figures as respective weights on a scale balance, it would make a very effective catapult weapon with $600M of payload!

    More to the point, how does this Labor budget, announced today, fit in with the analysis Pr Q has provided above, of the Gillard view of Labor?

  19. April 4th, 2011 at 09:02 | #19

    Alan @9 I believe that’s a dangerous misreading of Abbott. To my mind he has a more deeply ideological agenda than any recent PM, Howard included. People don’t toy with the idea of going into the priesthood out of personal ambition, and the continuing relationship with Pell suggests Abbott would be on a mission to save Australia’s soul.

  20. Alan
    April 4th, 2011 at 09:14 | #20

    And yet Abbot supported the ETS until (as with Gillard) abandoning it was a convenient way to knock off his leader. Abbot supported no new taxes until he needed to fund his maternity scheme. And even while supporting the ETS he claimed to believe that climate change is absolute crap. And then he engaged in that extraordinary debate with Kerry O’Brien where he asserted his right to believe several contradictory things before breakfast.

  21. Ikonoclast
    April 4th, 2011 at 09:25 | #21

    Gillard’s digs at the Greens are fatuous, patronising, snide and a downright knife in the back considering the Greens supported her forming a minority government.

    What Gillard said is followed by my comments.

    “The Greens wrongly reject the moral imperative to a strong economy.”

    This is absolute rubbish. The Greens recognise that if you destroy the environment and the climate and if you exhaust non-renweables without building a transition path into renewables THEN you will have no economy at all.

    “The Greens have some worthy ideas and many of their supporters sincerely want a better politics in our country. They have good intentions but fail to understand the centrepiece of our big picture – the people Labor strives to represent need work.”

    More of the same disingenuous, patronising garbage from Gillard. Gillard is essentially pushing the notion that caring for the environment, including the climate, will destroy jobs. She talks about the great state projects of the past and then fails to see that great state projects to save the environment and transition to renewables are exactly what we need now. She has no vision whatsoever is a slave to right-wing neocon economic rationalism at its worst.

    “And the Greens will never embrace Labor’s delight at sharing the values of every day Australians, in our cities, suburbs, towns and bush, who day after day do the right thing, leading purposeful and dignified lives, driven by love of family and nation.”

    What the hell does this disgusting dog-whistle mean? The Greens don’t care about people? The Greens don’t care about family, community and society at large? This is a claim that the Greens, as people, are “Other”, are “Them” not “Us”. This ranks with Howard’s dog-whistle of “for all of us”, which Noel Pearson recognised correctly meant “for us (whites) not them (blacks).”

    This is an implicit claim that the Greens are queer in some sense or rather queer in all senses. Greens according to Gillard do not do the right thing, do not lead purposeful and dignified lives and do not love family and nation. Greens according to Gillard’s implication are sociopaths. There is also a repudiation of all the politics of inclusion in Gillard’s statement. If you do not hold mainstream views, feelings and orientations right across the board then you are other, you are abnormal in the perjorative sense.

    SARCASM ALERT ON. So beware, if you are not homophobic, if you do not love drinking and gambling to excess, if you do not love wrecking the environment with 4 wheel drives, if you do like planting trees more than cutting them down then this makes you a family-hating, nation-hating, job-hating queer! SARCASM ALERT OFF.

    Gillard is dangerous and destructive to Australia’s real chances of dealing with the already current problems of resource depletion, environmental destruction and climate change. She is the last hurrah of corporate capitalism. She and Labor (and the Liberals) must be voted into irrelevance.

  22. Paul Norton
    April 4th, 2011 at 09:35 | #22

    In the spirit of the Prime Minister’s recent reminder of the centrality of scripture to our literary and linguistic life, I hereby declare that Julia Gillard and the ALP are bowing down in the House of Rimmon.

  23. Ikonoclast
    April 4th, 2011 at 09:55 | #23

    @Paul Norton

    No, they are bowing down in the house of Mammon.

  24. TerjeP
    April 4th, 2011 at 11:52 | #24

    I think we need new political parties in Australia.

    Harry – no argument from me. However I think you will find that in places like NSW the law is very hostile towards the registration of new political parties. The membership threshold is much higher than in other parts of the country and even if membership isn’t a problem the process is still extremely draconian. I wish you all the luck in the world but the barriers to entry are formidable.

  25. Fred Argy
    April 4th, 2011 at 11:54 | #25

    John, one always has to think of the Coalition alternative and that is a worry.

    Leaving that aside, you are right to be concerned about the absence of equal opportunity in the USA (other than the formal or classical view of it). But do you believe Scandavians are close enough to equality of opportunity?

    I tried to grapple with this subject in my discussion paper for the Australian Institute (Equality of Opportunity in Australia No. 85, 2006) but in the end I avoided it by simply pointing to things the Scandinavians do that we do not. Otherwise I just assumed that in Australia we should not be trying to reduce equality of outcome per se but hope that progressive improvements in substantive equality of opportunity will contribute to lower inequality.

    What do you think, John?

  26. TerjeP
    April 4th, 2011 at 11:55 | #26

    In my book the ALP is suffering the fate of the soviet union. Too much centralisation of power, too disconnected from the members.

  27. Ikonoclast
    April 4th, 2011 at 13:10 | #27

    @TerjeP

    Correct TerjeP, but it is not communist centralisation, it is corporate capitalist centralisation. We now live in a corporate command economy.

  28. TerjeP
    April 4th, 2011 at 13:35 | #28

    Whatever you call it, and I’m sure we can debate that for hours, it isn’t a good thing. People who advocate the centralisation of power generally have a vested interest or else think way too optimistically about how that power will be exercised.

  29. may
    April 4th, 2011 at 13:36 | #29

    @TerjeP

    smells like false equivalence to me.

  30. ajwak1
    April 4th, 2011 at 17:01 | #30

    I find the link to the Mark Bahnisch piece points to the Jonathan Green article at the drum.

  31. Alice
    April 4th, 2011 at 19:04 | #31

    @TerjeP
    Terje – comparing the ALP to the soviet union when what everyone else (all those labor voters out there who are getting so pissed off) are complaining about is that the Labor party have shifted too far to the right and use the services of people like Arbib abd Bitar to shove a 2nd rate liberal agenda down peoples throats. No one needs a me too party.

    Its simply stretching it Terje. The Soviet union is dead and buried. The idea of the State owning alll the means of production is dead and buried. That is not in question but people want to see welfare safety nets, they are not subdued and made happy by the notion of small government.

    They clearly want medium sized government Terje and that has nothing to do with the Soviet union.

    Anyhow – the soviet union simply handed its power to an elite of Russian plutocrats as the US has. Same mistake in different power blocs. Isnt that big concentrated government by any other name?

    Keep moving back to the middle terje and you might make sense. Join Barry O and try to get the transport fixed or you are not much use to the left or the right and furthermore neither side really cares about ideological arguments.

    Its the job that needs doing in case you hadnt noticed.

  32. boconnor
    April 4th, 2011 at 19:19 | #32

    Surprising that it has come to this – the party that gave us intelligent, evidence based and logical solutions to market failure (eg Medicare) and supremacy of consumer rights over producer interests (eg TPA, ACCC) can now can see no worthwhile social injustices or problems worth fighting for, or economic inequalities worth addressing.

  33. Alice
    April 4th, 2011 at 19:36 | #33

    @Ikonoclast
    My point too Ikono.

  34. iain
    April 4th, 2011 at 19:40 | #34

    “Any positive thinking about Australia’s future will have to come from outside the Labor party.”

    This has been true for quite a while now.

    A Rudd/Turnbull split taking with it the few remaining worthwhile MPs (possibly Brandt, Windsor, Wilkie, etc less possibly Combet, Broadbent, Hunt etc) and then broadening with better people, is possibly a way forward.

    The more power the Greens get the the more obvious it is they are not really equipped for government, and are better used as a voice of far left “moderation”.

    After Brown goes, it will be like Chipp leaving the Dems.

  35. Alice
    April 4th, 2011 at 19:41 | #35

    @boconnor
    I hate them too (Labor – for selling out working families and battlers) and Arbib and Bitar still have a job on NSW right (scum still there) and the only man left standing in NSW is a shonky real estate dealer on the side with his mates like Costa / come pretend union man.

    Notice only one person was in the news in the NSW Labor campaign? KK. Notice only one man is left standing in the news now? Robbo.

    Says it all. Where is the rest of the party? They dont have one.

  36. TerjeP (say tay-a)
    April 4th, 2011 at 19:49 | #36

    After Brown goes, it will be like Chipp leaving the Dems.

    Iain – Much worse I suspect.

    They clearly want medium sized government Terje and that has nothing to do with the Soviet union.

    Alice – You misunderstood my point.

  37. Alice
    April 4th, 2011 at 19:51 | #37

    We need the Greens to get the other parties to listen. Not until more of us vote green will the conventional parties get off this small government train to nowhere… that voters are not happy with.
    I didnt realise how much smarter the electorate is than they are..youth is doing it. We all need to vote green.

  38. Alice
    April 4th, 2011 at 19:54 | #38

    @TerjeP (say tay-a)
    Terje – raising the soviet union as a scare tactic in this days and age is so passe…

  39. TerjeP (say tay-a)
    April 4th, 2011 at 20:02 | #39

    Alice – if it appeases you let me state categorically that I do not think the ALP are communists. The best PM in Australias history was from the ALP.

  40. Alice
    April 4th, 2011 at 20:07 | #40

    @TerjeP (say tay-a)
    Who was that Terje?

  41. Alan
    April 4th, 2011 at 20:09 | #41

    What the ALP does have in common with the old CPSU, not the Soviet Union itself, is a two-tier system of decisions where everything is first decided by a small nomenklatura and then translated into policy by theoretically representative bodies that actually act only on instructions from above.

  42. Justin Kerr
    April 4th, 2011 at 20:11 | #42

    Going by the raw number of years in government over the past few decades, the ALP has come to seem more and more the natural party of government, as it has taken on more and more Liberal policies and classical liberal beliefs (eg the Burkean concept of civil society is now much more at home in the traditionally left of centre parties than the right of centre ones). This speech is perhaps the apotheosis of that process.

  43. Freelander
    April 4th, 2011 at 20:13 | #43

    Something I dislike is the self reference to the current Labor government as the Gillard government. Talk about Cult of Personality. However, in this case, without a personality. What about the Labor government? Maybe ignoring the brand name is because they don’t want to be associated with what the brand used to stand for, many years ago.

  44. Alice
    April 4th, 2011 at 20:40 | #44

    @Freelander
    Freelander – The labor party is in the process of committing political suicide. Lets just let them get on with it? It happens.

    Doesnt mean the recent backlash wants to vote for liberal policies, but if liberals moderate themselves they are in with a chance otherwise now that the step has been made across the great divide the next step to the greens isnt such a big one.

    Neither party should ignore the backlash aspect in the recent NSW election (a backlash swings) but it seems to me that the party still in denial is labor itself and Ill also place a $20 bet here and now that TA wont be leading the opposition to the next federal election.

    If Im wrong then liberal isnt making the most of its electoral windfalls.

  45. TerjeP (say tay-a)
    April 4th, 2011 at 20:50 | #45

    I don’t think Labor is in denial. I just think they are snookered and they don’t know what to do about it.

  46. Alice
    April 4th, 2011 at 20:58 | #46

    @TerjeP (say tay-a)
    You didnt answere my question Terje – so who was the greatest prime minister (labor) in your opinion? (as at post 38).

    Labor has been snookered but not by conventional methods but rather from within by the rise of the power of the right faction (I mean seriously some pretty good liberals are working for labor right faction …I shouldnt say it but by her rhetoric Gillard is one of them).

    So what is wrong with the liberal party that these odious types calling themselves labor politicians didnt sign up to the party that matches their ideologies in the first place.?

    Preselection too hard? Too much competition?

  47. TerjeP (say tay-a)
    April 4th, 2011 at 21:26 | #47

    Alice – Bob Hawke was Australias best every PM. Also I believe he was the only economist ever to occupy the job. Obviously others will judge differently but the point is I don’t reflexively dislike the ALP.

    Labor has been snookered but not by conventional methods but rather from within by the rise of the power of the right faction

    I don’t think that is it at all. I think the ALP have figured out that the Greens will eat them alive some time soon if they merely paint themselves as a lighter shade of green. And not just because ALP voters will likely shift to the Greens but because some ALP voters hate what the Greens represent and will move to the Liberals. I think the ALP are right in this assessment but wrong to presume that what the electorate wants is for the ALP to dress up as conservatives. On their current trajectory they are committing suicide. The ALP has been most successful in the past when they have unified, through good leadership, the socially progressive ideals of their party and the economically liberal ideals.

    The ALP should be offering tax cuts and spending constraint along with popular socially progressive reforms like same sex marriage. However they are trying almost the exact opposite which is a new tax and no socially progressive reforms. That means there is currently no good reason to vote for them over the Liberals. They offer nothing to economic liberals and nothing to social progressives. Those that rank social issues higher will go to the Greens. Those that rank economic issues higher will go for the Liberals, even if merely because Abbott will oppose the “great big new tax”. A few of us that care about both will vote LDP.

  48. Paul Norton
    April 5th, 2011 at 08:26 | #48

    “After Brown goes, it will be like Chipp leaving the Dems.”

    Considering that the Dems experienced their peaks of electoral support and parliamentary representation in the decade after Chipp retired from the Senate, I don’t think the Greens will be too alarmed by this prospect.

  49. Doug
    April 5th, 2011 at 08:39 | #49

    WA and Tasmanian Greens started independently and took quite a while to negotiate a merger.

    ACT Greens started as a group by local initiative. I think the dependence of the Greens on Brown’s profile is much overstated. the other significant difference between Greens and Democrats is that Greens have managed to achieve some representation at the local government level which the Democrats never did.

  50. Alice
    April 5th, 2011 at 10:23 | #50

    @TerjeP (say tay-a)
    If only it was as simple as a tax cut Terje although you do certainly push the almighty tax cut. Sorry I cant agree with you. The entire tax system needs to be more progressive, not l flatter. What we are paying in user costs because governments are failing to provide essential infrastructure in any cost effective manner is having a more negative impact on costs across the board, than any gains made (or you think you will make) from tax cuts Terje. Id like to see middle income earners and low income earners pay less tax. Id like to see high wealth individuals and businesses pay more tax, not less tax.
    Its about the degree of progressiveness not less tax. Its inequality and inadequate budgets for insfrastructure construction that is a key growing problem here.

    Its also a problem in other so called advanced nations, some more than others like the US with its top 1% in possession of more than the wealth of the bottom 45% and still rising.

    The US is one sick puppy Terje.

    So you tell me why anyone is still pushing the US advice of lower taxes here?

  51. April 5th, 2011 at 12:29 | #51

    Paul and Doug rather made my points for me, but the Democrats proved they could do very well without Chipp. Moreover, the Democrats never achieved much success outside the federal arena and South Australian parliament (brief representation in WA and Tas, longer term in NSW but for most of the time only 1 MP). The Greens now have 19 state/territory MPs, and will get to 20 if Jeremy Buckingham beats Pauline Hanson. In addition the Democrats probably never had more than 10 local councillors at a time, whereas the Greens now have more than 100.

    That’s not to deny that Bob retiring will present significant challenges for the party, particularly if Adam Bandt can’t hold his seat, but the implication of collapse is unlikely to be fulfilled.

  52. johncanberra
    April 5th, 2011 at 19:41 | #52

    Very good piece John.
    I am puzzled as to why Julia has moved so far to the right. She did indeed start on the left. She was never Marxist left, but she used to be concerned about equity.

  53. Alice
    April 5th, 2011 at 20:11 | #53

    @johncanberra
    Ill just bet its because the boys club on the right on NSW Labor have got hold of her and anyone else who ends up as a likely power candidate.

    Same as NSW – “you from the left can be our puppet leader as long as you do what we say.” What that means is she is from the left but only with the support and patronising patrongae of the Labor right. The right is the dominant faction. It is more socially conservative (about as conservative as liberals – no difference which is why they are a) in the wrong party and b) are badly stuffing up angry labor voters.

    per Wikipaedia “The Right is most famous for its support of Third Way policies over Labor’s traditional social democratic/democratic socialist policies, such as the economic rationalist policies of the Hawke and Keating governments, such as floating the Australian Dollar in 1983, reductions in trade tariffs, taxation reforms, changing from centralised wage-fixing to enterprise bargaining, the privatisation of Qantas and Commonwealth Bank, and deregulating the banking system. These reforms foreshadowed the high growth economy of the 80′s, 90′s and into the new millennium.”

    As the Prof might say it was a whole lot of zombie economics, practised by the living dead, that damn well didnt work, has created a huge impost and cost on many of us that has nearly killed us and the labor right swallowed zombie economics hook, line and sinker, and they are still in there pushing their idiot ideas in federal treasury and now labor voters have woken up dont like the main meal and are sending it back.

    Serves them right.

  54. Jill Rush
    April 6th, 2011 at 00:45 | #54

    I too was most disappointed with the speech from Gillard – and with her lack of capacity to deliver decent policy. She talks about things she has no idea about because she is frightened that not having a family of her own means that people will have no faith in her. It would be better for her to stop trying to dog whistle as it has not worked in the polls for her. My family rises early and works hard blah blah but I really dislike being patronised by someone who can never understand my situation even if she had empathy. She evokes the Howard white picket fence as if she can be the only one who is different. Personally I was pleased to have a woman as a PM but the comparison to McMahon rings all too true – even to the ears. And Abbott has those too – is there no way out of the land of Big Ears and Noddy?

  55. April 6th, 2011 at 09:17 | #55

    Unfortunately an excellent critique of Gillard’s speech. Unfortunate because of the worrying implications for Australia’s future. As you say, in this speech Gillard lays claim to the heritage of Howard. She plainly rejects the aspirations of those within the party who thought the time right to reclaim the Party’s position as the source of progressive policy and protectors of social justice in the Australian political spectrum. Whatever might emerge from the upcoming National Conference there will be no move to reclaim the social democratic mantle. They left that behind a couple of decades ago. I will never forget then leader Simon Crean’s contemptuous public dismissal of the idea that the ALP was a social democratic party. This position has only strengthened since.

    You conclude with the comment that: ‘Any positive thinking about Australia’s future will have to come from outside the Labor party.’ I worry that this possibility is somewhat constrained by the features of our electoral system. The ALP, having displaced the Coalition from the political middle ground with their push to the right during the Hawke-Keating years, believes it can continue to ignore the progressive vote because in Lower House contests it will come back via preferences in any election. Gillard’s speech plainly reflects this view. They may unfortunately be right. The source of progressive policy in Australia is, and I think will remain, The Greens.

    Unless the Greens fragment during the post Bob Brown era which surely can’t be more than another term away, the Greens’ vote will continue to grow. Residual progressive Labor voters will give up in despair and new progressive voters without historic allegiance to the ALP join the electorate. Even so I can’t see the Greens achieving in the next couple of election cycles a primary vote much more than 15%. Although the Greens’ presence in Upper Houses may continue to strengthen the increasingly popular strategy in the major parties of swapping preferences will continue to severely restrict the Greens ability to win Lower House State and Federal seats. Thus the possible influence of progressive policy thought influencing the shape of Australia’s future is severely restricted.

    In respect of the future challenges confronting this country my knowledge is restricted to the environmental crisis we are already confronting and the oil crisis that will soon be on us. Much better heads than mine have argued that if we don’t act very soon on the huge task of restructuring demanded by the crisis of climate change the stress placed on all parts of our economy by the oil price rises generated out of peak oil will severely constrain our ability to take action on climate change.

    The climate scientists under the umbrella of the IPCC say that to have a 50/50 chance of avoiding runaway climate change global emissions including ours must peak by 2015 and thereafter fall to something like 80% below the 2000 levels by 2050. Given the current state of Australian politics and the attitudes of our major political parties to this crisis (just one among many) does anyone see much possibility of achieving what is required? Gillard’s speech bodes very ill for our collective future.

  56. Alice
    April 6th, 2011 at 09:36 | #56

    Even now we have Albanese deciding whats best for NSW (and Macquarie Bank no doubt) and thats a second airport. So here it is back doing the rounds AGAIN…AGAIN and AGAIN. Thats the trouble with Labor. Nothing much happens. The second airport should have been built absolutely years ago but now we need rail so citizens can actually get to work. Swam talks about lost economic opportunities from no second airport. What about all the lost economic opportunities from people sitting in miles of unproductive traffice everyday?

    Federal Labor should just give the money to OFarrell, stay out of it or go back to fighting amongst themselves and designing the next piece of completely imaiginary infrastructure.

  57. Alan
    April 6th, 2011 at 10:21 | #57

    The Greens do not need to be passive victims of a preference lock-out. There is no reason for the Greens to ever preference rightwing ALP members. Over a few elections that will have a significant impact.

  58. April 6th, 2011 at 14:20 | #58

    @Alan
    Do you mean that they should preference against right wing Labor candidates or simply abstain from directing preferences? If the former, whoever the Greens preference the votes would in most cases eventually leak back to the ALP ahead of the Coalition. The only exception I can see might be when there is an effective and well supported independent candidate to preference.
    Given the left orientation of nearly all Greens voters wouldn’t they, of their own accord preference Labor ahead of the Coalition? So if the Greens did not direct preferences they would leak back to Labor anyhow. Maybe there’s something I’m overlooking, but at the moment I can’t see what preference strategy the Greens can use to ‘fight back’ effectively at an election.

  59. Monkey’s Uncle
    April 6th, 2011 at 14:34 | #59

    As much as I am not the biggest fan of the Greens leftist economics, environmental alarmism and so on, the Greens are still somewhat preferable to the other parties on issues like civil liberties and adopting a sensible approach to the failed war on drugs.

    The Greens are really the only significant political party in Australia that stands for anything real at all. The problem with the ALP, the Coalition, Family First, Xenophon et.al is that they really stand for nothing except a similar brand of lowest-common-denominator, small-target, populist, spin-oriented politics. A bit like competing brands of breakfast cereal that are all really just similar combinations of refined carbohydrates.

    I can respect a party that stands for something real, however much it may not be everyone’s cup of tea, over a party or parties that stand for nothing.

  60. Monkey’s Uncle
    April 6th, 2011 at 14:46 | #60

    Doug Evans :

    Unless the Greens fragment during the post Bob Brown era which surely can’t be more than another term away, the Greens’ vote will continue to grow. Residual progressive Labor voters will give up in despair and new progressive voters without historic allegiance to the ALP join the electorate. Even so I can’t see the Greens achieving in the next couple of election cycles a primary vote much more than 15%.

    I have to disagree. Most of the evidence suggests that the Greens will struggle to gain support beyond the level they are now receiving. In the NSW election the Greens only slightly increased their vote, despite the fact that the collapse in Labor’s support and the coinciding of Earth Hour on election day presented a rare opportunity to make much more substantial gains.

    The main reason the Greens struggle to gain support beyond a certain level is that they tend to poll better in more affluent areas, particularly among higher-income professionals, and yet most of their economic policies are not really that beneficial to higher-income earners (with the possible exception of some of those who work in the public sector). The Greens contradict the general trend that voters usually vote primarily according to their economic interest, and secondarily according to their social values. Greens voters generally vote their social values over their economic interest. But that puts a strict ceiling on how much their support can grow. The Greens are something of a niche market in politics.

    Indeed, it is just as likely that the Greens support may decline once the stereotypical ‘doctors’ wives’ constituency starts to realise that a lot of Greens policies, such as bringing back inheritance taxes, are not particularly to their interests.

  61. April 6th, 2011 at 16:55 | #61

    @Monkey’s Uncle
    Hmmm! You may be right; but as I understand it The Greens’ vote in both State and Federal arenas has increased steadily (if not as fast as they might hope) for several elections now. This also includes the NSW State election where their vote was up by 1.5% Statewide (?) despite their foolish handling of the Israel boycott issue. Without the sort of in your face crisis that I described originally, and which the major parties are patently failing to figure into their thinking, I think there almost certainly is an upper limit to their vote in a comfortable and fundamentally conservative electorate but I reckon there is some leakage yet to come from the ALP. This especially if Gillard et al make as big a mess of this term as they did the last. But this is no more than speculation on my part.

  62. Alice
    April 6th, 2011 at 19:20 | #62

    @Alan
    I quite agree. The Greens lost my vote in the recent state election because i coudlnt get a clear picture of where their preferences were going (and mine were not going to labor) and no the Greens should not preference a party dominated by a right wing faction.
    Unless labor and liberal pull their right wing horns in and get more moderate like the rest of the electorate, the Greens will do well by telling them both to get lost.

  63. Alice
    April 6th, 2011 at 19:34 | #63

    The latest new is Obeid could somehow manage to buy an 11 million dollar house in Hunters Hill in Sydney on his politicians wages of 130,000K a year….

    Yeah sure he could which is why he and his ilk are gone.

  64. Alice
    April 6th, 2011 at 19:39 | #64

    @Monkey’s Uncle
    MU – its the oppressed indebted youth excluded from the housing market, indebted due to their education costs, suffering high unemployment if they dont get a higher education, caught between a rock and a hard place, who are giving their votes to the Greens.

    Let me know I told you first. Its no more than what my students are telling me. They can listen or they can keep screwing the youth of this country – but youth become adults and adults carry grudges and old folk die. Both major parties have the choice to listen or they can ignore.

  65. Christopher Dobbie
    April 7th, 2011 at 09:07 | #65

    @Alice

    Interesting quantification of this done recently by Steve Keen:

    “…since 1985, has doubled the relative cost of buying a house. Since the early 1960s, when the oldest Baby Boomers were buying their first properties, it has tripled the cost.”

    @Monkey’s Uncle

    The Greens will do well when the present flush of fossil fuels rushing through the economy starts to decline. Until then they’ll still increase incrementally but won’t take large swaths of support while the economy relies on exponential growth.

    By the way, how many ‘doctor’s wives’ are there? Surely we wouldn’t have a doctor shortage if at 1 in 10.

  66. Hopeful
    April 7th, 2011 at 09:43 | #66

    I agree that Julia Gillard, like all Labor leaders since Whitlam, appears to be moving to the Right and the movement seems to have been accelerating with each leader. However the Greens look like they just might fill the void and we still have the unions. So, what I see emerging is, hopefully, not so much the decline of the Left as a reshuffling where three of possibly four strong parties might emerge. This just might be better than the virtually two party system we have now.

    I would also like to ask just what do you think is wrong with being realistic? Aiming for the children of the poor having the same access to opportunities as the children of the rich is, I believe, as close to equality as it possible to argue until the infrastructure problems have been addressed and I agree that equality of opportunity for adults is important as well but this, I believe, also depends on addressing the infrastructure.

    Do you really think it would be possible for Gillard, Rudd, or anyone else, to tear down overnight all the inequalities the the Howard government put in place, such as financial government support for all private schools and the destruction of the very good government run employment offices we had under the Hawk, Keating governments.

  67. Ernestine Gross
    April 7th, 2011 at 10:00 | #67

    Christopher Dobbie ,

    Yes, it is widely known that the cost of buying a house (relative to wages) in Sydney, and Melbourne, particularly close to the CBD, has increased steadily. However, not uniformly across the metropolitan areas and not across the whole country to the extent you portray. Moreover, the housing stock has changed in quality (also not uniformly) and the income tax rates have declined (but GST has been introduced). Banks lend on after tax income and expenditure (which is a manipulable number).

    The first baby boomers would have been at most 20 years old in the early 1960s. What about the first baby boomers who, in the late 1960s and early 1970s bought old and dilapidated houses and spent their evenings and weekends ‘doing them up’ – in Balmain, in Glebe, in …..? Not to the standard of airconditioning, internet access, expensive kitchens, …etc.

    So I don’t buy the baby boomer argument. The details of ‘the economy’, including the regulatory framework, have changed and it is in these changes where we can look for reasons why young people in big cities have great difficulties buying houses when they are in their 20s.

  68. jakerman
    April 7th, 2011 at 12:02 | #68

    @Christopher Dobbie

    Most of that doubling occured between 1999 and 2005, the period where the mean housing priced jumped from 4 times average anual income to nearly 8 times. The change that coincided with this jump was innovative bank lending. I.e the rise in housing price relative to wages coincided with a change in bank lending practices. It was a Ponzi scheme that to conitnue required ever increasing amounts of debt.

    The Greens will do well when the present flush of fossil fuels rushing through the economy starts to decline. Until then they’ll still increase incrementally but won’t take large swaths of support while the economy relies on exponential growth.

    In a three way fight it might be difficult for the Greens to make incremental gains from 12% overall without ousting labor in more an more seats. I wonder if they might either break through or plateu/receed until they can breakthrough.

  69. Christopher Dobbie
    April 7th, 2011 at 18:42 | #69

    @Ernestine Gross

    I’ll defer to the expert; http://www.debtdeflation.com/blogs/

    @jakerman

    Well they certainly have a beachhead now. I still hold with my prognosis that all gains from here on will be incremental until the economy is forced to change with the coming energy crisis. Far too many incomes depend on things staying the way they are for broad voting intentions making a different political reality (Though will a caveat that I’d love to be proved wrong.).

    In the mean time I’d hope that the Greens seriously take to learning how the economy works.

  70. Monkey’s Uncle
    April 8th, 2011 at 11:42 | #70

    Ernestine Gross :
    Christopher Dobbie ,
    Yes, it is widely known that the cost of buying a house (relative to wages) in Sydney, and Melbourne, particularly close to the CBD, has increased steadily. However, not uniformly across the metropolitan areas and not across the whole country to the extent you portray. Moreover, the housing stock has changed in quality (also not uniformly) and the income tax rates have declined (but GST has been introduced). Banks lend on after tax income and expenditure (which is a manipulable number).

    To suggest that a slight shift in the tax mix from income tax to consumption taxes, and a flow-on effect to bank lending practices, is responsible for a vast increase in house prices seems a bit far-fetched. In any case, the shift in the tax mix has been relatively small compared to the changes in house prices. And any increase in consumption taxes would increase the cost of living and thus the real (perceived) value of wages anyway.

    Ernestine Gross :
    ,
    The first baby boomers would have been at most 20 years old in the early 1960s. What about the first baby boomers who, in the late 1960s and early 1970s bought old and dilapidated houses and spent their evenings and weekends ‘doing them up’ – in Balmain, in Glebe, in …..? Not to the standard of airconditioning, internet access, expensive kitchens, …etc.

    I agree that some of the vast increase in housing costs can be attributed to an increase in the size and quality of housing. But even adjusting for this, it is still substantially less affordable to buy even a modest house in a major capital city today than it was in the past.

    :
    ,
    So I don’t buy the baby boomer argument. The details of ‘the economy’, including the regulatory framework, have changed and it is in these changes where we can look for reasons why young people in big cities have great difficulties buying houses when they are in their 20s.

    This is a somewhat vague, nebulous statement. You seem to be implying that some sinister market forces are to blame for all these problems, but without much further detail or specifics.

    The main reasons for house prices increasing so much are government policies such as restrictions on new land for development, as well as exempting primary residences from capital gains tax and most means tests (which has the effect of distorting the market by encouraging more investment in increasing the value of homes at the expense of investing elsewhere in the economy). The point is that these are not largely failings of the free market, they are failings of political and regulatory distortions of the market.

    Governments have deliberately inflated house values because it is in their interests to do so. Because there are more homeowners and those paying mortgages than there are individuals trying to purchase homes in the short-to-medium-term, there are more votes to be won than lost through high house prices. And with an aging population creating problems for budgets and public policy, artificially inflating the home values of retirees serves as a kind of ‘hidden tax’ on younger workers to prop up the asset base of retirees.

  71. Ernestine Gross
    April 8th, 2011 at 19:13 | #71

    @Christopher Dobbie

    Thank you for the debtdeflator blog site. I am familiar with Steve’s macro-economic models and Minski’s theory.

    My post contained 3 related points. Firstly, the limitations of macro-economic models. Second, macro-economic models invite speculation as to why or what and your reference to baby boomers is an example. My third point contains my suggestion as to where you have to look for the reasons as to why young people in big cities have difficulties buying a house.

  72. Alice
    April 8th, 2011 at 20:34 | #72

    @Ernestine Gross
    I can tell you why Ernestine. I have a 19 year old boy and a 32 year old stepson who is an ambo officer. The former wanted to work full time for a year after leaving school but could only get casual jobs. Sometimes two shifts, sometimes 3, sometimes 5 sometimes none. Unpredictable income. Has now gone to uni and is as poor as a churchmouse and requires heavy subsidisation. The 32 year old saved a deposit – wasnt enough on his salary to get the loan and we kicked in 50K to help. So all this subisidisation is coming from us and we are both working away at the risk if we stop – all subsidies to our children from us (and none from the government) will stop also. My mother stopped working many years before me but she had the good fortune to be married to a long standing public servant (super) who was also a war veteran.

    You do what you have to do.

  73. Ernestine Gross
    April 8th, 2011 at 20:37 | #73

    @Monkey’s Uncle

    1. What conclusion would you reach if you were to read my post in total instead of segmenting it into three paragraphs as if they were totally unrelated?

    2. Do you have evidence to contradict what I have said, namely banks lend on after tax income and expenditure pattern, the latter of which is manipulable (ie understated)?

    3. Nowhere did I suggest what you write I did, namely “To suggest that a slight shift in the tax mix from income tax to consumption taxes, and a flow-on effect to bank lending practices, is responsible for a vast increase in house prices seems a bit far-fetched.”

    As per my last paragraph, details of institutional changes, locally and internationally should be looked at instead of using phrases such as ‘baby boomers’.

    4. “This is a somewhat vague, nebulous statement. You seem to be implying that some sinister market forces are to blame for all these problems, but without much further detail or specifics.” MU, who is writing nebulous statements here? What exactly do you mean by ‘market forces’? More specifically, do you belong to that group who believes, without theoretical or empirical justification, that the ‘market forces’ in the fruit and vegitable markets are the same as in financial markets? If so, I would not agree.

  74. Ernestine Gross
    April 8th, 2011 at 21:09 | #74

    @Monkey’s Uncle
    Part 2

    5. Coming now to what you say: “The main reasons for house prices increasing so much are government policies such as restrictions on new land for development, as well as exempting primary residences from capital gains tax and most means tests (which has the effect of distorting the market by encouraging more investment in increasing the value of homes at the expense of investing elsewhere in the economy). The point is that these are not largely failings of the free market, they are failings of political and regulatory distortions of the market. ”

    I am not convinced.

    a) To the best of my knowledge, there is no restriction on new land for development in the country NSW, the country QL, country Victoria and probably also not in WA and in the NT. Why isn’t the ‘free market’ providing jobs in these country areas?

    b) I do realise some economists try to make an argument against “exempting primary residences from capital gains tax and most means tests (which has the effect of distorting the market by encouraging more investment in increasing the value of homes at the expense of investing elsewhere in the economy).”

    There may be an argument to put a limit on the dollar value of the primary residence which is exempt from capital gains tax for properties that are transacted frequently (but this might also be achievable via increasing the top marginal income tax rate – this is a maybe – and prohibiting corporate loans to corporate managers.)

    I am strongly against removing the exemption for everybody else. Home ownership bestows a degree of personal independence of individuals, independence from being exploited by the wastefulness of corporate ways of doing business (growth strategies, mergers and acquisitions, marble temples, trying to influence governments) and paying their ‘senior’ managers silly (large) amounts of money. Personal independence of individuals is important for both, the working of that part of a market economy that is not merely concerned with shuffling paper and for democracy. A person who has to give all his little spare cash either to banks or to corporate enterprises or to governments has no ‘freedom’ – he or she is a wage-debt-tax slave.

    Finally, and still under the same point, if you wish to reduce the apparent inequity in the capital tax treatment, I suggest you abolish first the tax deductibility of interest for investors in real estate. I have no objection of people buying a second, third, fourth house or unit with their after tax income, including paying of a mortgage with after tax income. It seems to be a much better investment for retirement then putting money with superannuation fund managers and corporate managers. The corporate law is such that shareholders have basically no say in what these managers are doing with their money.

  75. Monkey’s Uncle
    April 9th, 2011 at 00:29 | #75

    Ernestine Gross :
    <a href="#comment-277464" rel="nofollow"
    1. What conclusion would you reach if you were to read my post in total instead of segmenting it into three paragraphs as if they were totally unrelated?

    Much the same conclusion I reached before. Are you suggesting the fallacies I outlined in each individual paragraph are negated or surpassed by some grander narrative that can only be appreciated in the totality of the three paragraphs? If so, I am not really sure that I see it. But you are welcome to that belief if you wish. Or would you have preferred me to have quoted the entire post in one big slab? Do you think that would have assisted in clarifying the issues at stake?

    Ernestine Gross :

    2. Do you have evidence to contradict what I have said, namely banks lend on after tax income and expenditure pattern, the latter of which is manipulable (ie understated)?

    No, because I never disputed this fact. I merely suggested it was a minor point that would have negligible impact on house prices compared to the other factors I mentioned, and as such was not really a fruitful area of inquiry.

    We are only up to point 2, and it is not looking good for a productive discussion.

  76. Ernestine Gross
    April 9th, 2011 at 07:22 | #76

    @Monkey’s Uncle

    I agree it is not looking good for a productive discussion but for different reasons.

    You try to suggest you have outlined falacies in my initial reply to a post that talks about ‘baby boomers’ and home ownership affordability. I agree you tried. But you did not succeed because, as you say in your second last paragraph, you never disputed that which I actually wrote.

    As for the topic of this tread, I understand during Menzies’ time home ownership was a desirable goal of many if not most Australians. Who is the heir of Menzies?

  77. Ernestine Gross
    April 9th, 2011 at 09:56 | #77

    @Alice

    Like your son, James Packer also got a subsidy from his parents (and I got a subsidy from mine but not of the same size!!) These are good examples of the difference between ‘opportunities’ in words and in outcomes.

  78. Ms H
    April 10th, 2011 at 01:47 | #78

    Bring back the democrats…

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