The discussion on the Greens’ economic policy has been really great, and very helpful to me. Its helped me in working the short extract I posted into an opinion piece for the Fin, which came out today (posted below the fold). I’d like to thank everyone who took part in the discussion – in more or less subtle ways, they’ve helped to improve the final article.
As we approach an election, it’s natural to focus attention on the major parties competing for government. But in a bicameral system, minor parties play an important role, and should not be ignored. With Brian Harradine having announced his retirement, and One Nation set to disappear from the scene, it is safe to confine attention to the Democrats and the Greens.
The Democrats’ electoral support has fallen to the point where it is unlikely that they will elect any Senators this time round. Nevertheless, they have four long-term Senators, and will probably hold the balance of power in the Senate. Fortunately, they are, as far as economic policy is concerned, a known quantity.
Over the time that they have held or shared the balance of power in the Senate, the Democrats have made a substantial, and generally positive, contribution to economic policy. They have avoided ideological extremes, while generally providing a left-of-centre alternative to Labor.
Either at this election or, more probably, in 2008, the balance of power in the Senate will pass to the Greens. There is also a possibility, admittedly remote, that the Greens might hold the balance of power in the Lower House.
It is therefore, important to subject the Greens economic policy to the same scrutiny as those of the major parties. I approached this with a mixture of hope and trepidation; hope because the Greens have generally been willing to take a principled stand on the issues and trepidation because the economic policy platforms of minor parties frequently contain large elements of wishful thinking, small-group hobby horses and plain irrationality
It turns out that trepidation is unnecessary. The Greens economic policy is one of the most coherent and intellectually-defensible documents of its kind ever put forward by an Australian political party (at the opposite end of the political spectrum, the 1992 Fightback! program was similarly coherent and substantially more detailed). At the level of broad principles, it begins with the recognition that economic policy must be financially, as well as environmentally and socially, sustainable.
Far from seeking cheap popularity by arguing for both tax cuts and increased public expenditure, the Greens have insisted that new public expenditure must be financed by higher taxes. In addition, they observe that public sector debt should be matched by adequate capacity to service debt, and that dubious financial expedients like the use of privatisation to reduce measured debt should be avoided. There is even a commitment to a consistent application of accrual accounting, something that the major parties have promised, but not delivered.
As the example of Fightback!shows, the fact that a policy is coherent and well-argued does not mean that it will commend itself to everyone. In fact, precisely because the Greens have ducked the usual soft options and evasive formulas, it is easier to find points on which to disagree.
Supporters of market-oriented policies and unfettered competition will reject the policy outright. It is a traditional social-democratic policy, based on values of equality and community, of the kind that Labor might have put forward before it became more concerned about aspirational swinging voters than about its core supporters.
On the other hand, radical Green supporters will be disappointed to find that there’s no hint the view that growth in the production and consumption of goods and services is undesirable in itself, a view put forward most recently by Clive Hamilton in Growth Fetish. The stated objective of the Greens policy is ‘to maintain and enhance the collective net wealth of the nation, including non-monetary economic and social assets’, which implies support for economic growth, correctly measured to take account of environmental and social assets.
My own main point of criticism relates to the policy on foreign investment, which is couched largely in terms of old-fashioned economic nationalism. What is needed here is a more sophisticated analysis of the strengths and weaknesses of global capital markets, to back up the case for policies such as a Tobin tax.
In most electorates, a vote for the Greens will have purely symbolic significance, and it will be the allocation of second preferences between Liberal and Labor candidates that really counts. Moreover, it is doubtful that many Green voters will be motivated primarily by concerns about economic policy. Nevertheless, anyone who decides to vote for the Greens on the strength of their support for the environment and opposition to war should be encouraged to know that they are also choosing a party with a policy that is economically as well as socially responsible. If only the major parties could claim as much.