Don’t expect Nirvana; or, how to avoid being disappointed by a Labor government.
Whenever a Labor government is elected, its supporters expect the world to change. They are always disappointed.
Nirvana, according to Wikipedia, is “a state of perfect quietude, freedom, highest happiness as well as the liberation from attachment and worldly suffering.” The unfortunate truth is that you can’t get there through politics.
Election campaigns deliberately feed unattainable expectations. They encourage potential devotees to imagine what might be, and then vote. We all superimpose our own expectations on parties we support – and small-target campaigns leave more room for us to do that. And more room for disappointment.
What, then, is reasonable to expect a new Labor government to do in its first term?
Most of the specific election promises, such as they are, should at least be on their way to fulfilment within three years.
These include more TAFE and university places, more apprenticeships, starting to reform the industrial relations system and outlawing wage theft.
We can expect the child care subsidy to increase, though Labor has been strangely quiet about where extra staff and facilities will come from.
It will invest some money in the power grid and in moving towards renewables. More homes and businesses should have fibre-to-premises within three years, though how many is uncertain.
Aged care has been a major focus of the campaign. Failing to achieve at least the beginnings of major change in this area would attract immense anger from across the political spectrum and potentially endanger Labor’s hold on office, so this will be a priority.
The other promises – somewhat better funding for the ABC, improving the capability of a seriously debilitated public service, Royal Commissions into robodebt and the pandemic, and so on – are also achievable within the first three years.
There are a couple of points to be made here. One is that in the context of a total government budget of $630 billion, none of these policies are likely to cost a lot. The other is that, while welcome, they do little to address two of the most pressing issues facing the country – a health system in near-collapse and an inadequate, unfair and chaotic welfare structure.
Three years ago, Labor learnt the hard way that oppositions promising to increase taxes tend to remain in opposition. But the structural budget deficit bequeathed by Howard and Costello will have to be addressed before such serious and expensive issues can be addressed. If this is to be a reforming Labor government worthy of the name, more tax dollars will have to be raised somehow.
A TWO-TERM STRATEGY
In an interview with The Sydney Morning Herald and The Age, Anthony Albanese hosed down expectations of a fast-moving reform program.
“What I’m outlining at this election is a strategic framework for the next six years,” he said.
“We can’t repair all of the damage done in the first term; we will inherit a trillion dollars of debt and need to be economically responsible.”
In his defence, it is worth remembering what happened when the Whitlam government tried to do everything in three years. They lasted for three years. Much of the program was overturned by Malcolm Fraser’s Liberals and had to wait for the 13 years of Hawke and Keating to be firmly and permanently implemented.
Health and welfare are the most difficult to reform, and in the most need of reform, for the same reason: they’re expensive. Next financial year, according to the current budget, they’ll cost $327 billion. That’s 52% of everything the government spends.
The dole (current brand-name Jobseeker) will cost $12.5 billion next year. Although it’s indexed to inflation, the base rate of $45.90 a day is widely acknowledged to be inadequate. Labor has all but ruled out an increase.
Raising the rate to the poverty line of $70 a day, as the Australian Council of Social Service recommends, would cost an extra $6.6 billion annually, increasing the total cost to $19.1 billion. Another way of looking at it is that $6.6 billion represents less than 3% of the total welfare budget.
In the meantime, the controversial stage-3 tax cuts for high income earners will go ahead, supported by Labor. The Parliamentary Budget Office calculates the annual cost at an initial $15.7 billion in 2024-25, rising to $30.5 billion by 2031-32. Of this, 75% will go to people earning more than $120,000 a year, and 45% to those above $180,000. The 1% highest-paid do best of all: they’ll get 8.3% of the proceeds.
The windfall going to the nation’s richest 1% will cost the budget $7.1 billion in the first year – half a billion more than the cost of increasing the dole to a liveable amount.
It's a strange priority for a Labor government.
Despite the Labor slogan promising to “strengthen Medicare” there is no concrete evidence of their intention to do anything much at all. A big deal was made during the campaign of a proposal to spend $750 million over three years – just $250 million a year – to deliver the top priorities for reform outlined by a yet-to-be-appointed Strengthening Medicare Task Force.
Just in case you feel impressed, remember this: the Commonwealth spends more than $250 million on health every day. Already.
So they have a plan to formulate a plan. After nine years in opposition, perhaps they could have developed a few ideas before now.
The other elements of health policy are even more trivial – 50 “urgent care clinics” to address the immense problems facing Australia’s 294 public hospital emergency departments and its 31,000 general practitioners. Some grants for new computers in general practices. And so on.
There’s no need for a task force. We already know what needs to happen. But any real reform – not the ersatz variety promised in the Labor campaign – will cost money. It will also save lives, but perhaps that’s not so important right now.
The Medicare rebate urgently needs boosting. When the scheme was introduced in 1985, the rebate adequately covered the cost of providing care – plus a bit more. Inadequate indexation and five years of freezes under the Abbott and Turnbull governments have produced substantial and increasing out-of-pocket costs to patients. In an average year, more than a million people don’t go to a GP because they can’t afford the cost.
The rebates for GP services would need to rise by about 35% to restore their former value and to eliminate most out-of-pocket costs. It would cost $3.2 billion a year.
Public hospitals cannot survive as an effective and comprehensive system without large-scale federal investment. There is now severe overcrowding in almost every major hospital. Seriously ill patients are kept in chaotic emergency departments – sometimes for 24 hours or more – because all beds are full. Per-patient costs are soaring because staff cannot function efficiently under such conditions.
The Commonwealth currently funds hospitals for 45% of the National Efficient Price – that is, what the average price for treating a patient was two or three years ago. That urgently needs to rise to at least 50%. And Malcolm Turnbull imposed a 6.5% cap on annual increases, meaning any price rises above that would have to be covered by the states or not covered at all. That also must go. Costs are now increasing by far more than that.
No state government (except Western Australia, because of their dodgy GST deal) can afford to build and equip new hospitals without borrowing. Only the Commonwealth has the money-raising power to change that.
It would be foolish to assume a new Labor government will do any of these things, at least not within its first three years. If we take Anthony Albanese at his word – that larger-scale reform is a two-term project – then some serious change is at least possible. Something is likely to happen, but we have no idea what.
Under this scenario, the first term would consolidate the new government in office. By then, perhaps, the fiscal situation will have improved and taxation reform put back on the agenda. Perhaps.
It’s possible, of course, that this could be the beginning of a great reforming Labor government in the grand tradition. But we have absolutely no evidence of that. Labor supporters also have to face the possibility that the days of sweeping reform may be over.
If that is the case, supporters will become increasingly disillusioned and the bleeding of votes from the ALP will accelerate. In this election, the Liberals have been the main target for independents and minor parties. If Labor is seen to have traded in its soul in exchange for electoral safety, it will be their turn next.
Both major parties are in trouble and have been for a long time. The Liberals seem to be facing a split and, perhaps, a realignment of the sort they last experienced in the 1940s. That would boost Labor, at least in the medium term. But reform, rather than minding the shop, has always been the ALP’s reason for existence. Timidity is the way to the abyss.