When you change the government you change the country’. Today, it’s the other way round

When you change the government you change the country’. Today, it’s the other way round - SMH - Malcolm Knox - April 15, 2023

When you change the government, you change the country, Paul Keating told us in 1996. It was truer than it is now.

Today, we have a country that is waiting for governments to catch up with change that has already occurred. Australians are well aware of an alarming economic inequality and have elected new governments to reverse it. Coast-to-coast, voters have turned to Labor, the party whose mission (if not always its reality) is the fairer redistribution of wealth. Will the ALP catch up with the national reality?

The widening wealth gap in Australia has been recognised by numerous studies. The Australian Bureau of Statistics’ last major survey reported that the average household wealth of the top 20 per cent had risen from $2.7 million to $3.3 million in the previous decade, whereas that of the bottom 20 per cent had fallen from $38,800 to $35,100.

This week, the Australia Institute published a study titled Inequality on Steroids, a snapshot of a startlingly unequal Australia where the top 10 per cent had cornered 93 per cent of the growth in national wealth in the past decade. Nine in 10 Australians, meanwhile, had seen almost no benefit. This was a “radical reversal” of history and made Australia an outlier against comparable countries.

“It has become increasingly clear that the Australian economy is not working for most people,” said Matt Grudnoff, the study’s co-author. “From the 1950s to the 1980s Australia was considered the land of the fair go and we saw people benefiting more equally from economic growth. Today, that Australian dream has turned into an inequality nightmare with the maldistribution of economic gains fuelling the cost-of-living crisis for low-and middle-income Australians.”

Extreme and growing inequality is something we can ignore for only so long. We might look to the US, the global bellwether in its pursuit of neoliberal economics, to see where it leads. Political chaos is the symptom, inequality the sickness. The most shocking fact emerging from America is not Trumpism but its underlying cause: an inchoate grievance against gross inequality.

Americans’ life expectancy has been falling for half a decade, a staggering thought: in the wealthiest country on earth, life expectancy is heading backwards. The cause is not COVID or poor healthcare for the aged. It’s economic inequality. Life expectancy is falling most sharply among the young and the less-educated. Among those currently in school, one in 25 will not reach the age of 40.

As The New York Times reported last week, “Mortality is increasing more quickly for those without a college degree… Except for a few super rich Americans, individuals at every percentile of income are now dying sooner than their counterparts in Britain, for instance. For the poorer half of the country, simply being an American is equivalent to about four full years of life lost compared with the average Brit.”

The former Treasury secretary Larry Summers called this “the most disturbing set of data on America that I have encountered in a long time” and “especially scary remembering that demographics were the best early warning on the collapse of the USSR”.

Are Australians prepared to wait until our life expectancy falls and our political system self-immolates before we address inequality?

The Australia Institute study focused on a set of federal policy decisions that could redress the inequality gap: the stage three tax cuts that benefit the top 10 per cent of earners; the superannuation tax breaks that disproportionately favour the wealthiest; the tax anomaly of negative gearing on investment property; tax-free franking credits. All of these have delivered the greatest redistribution of wealth in a generation into the hands of the privileged few. Australia’s biggest welfare recipients are, via advantages in the tax system, those who are relatively privileged, who are not just keeping their own from the taxman but actively taking from the neediest.

Federal Labor’s caution in taking on these policies is evident. The lesson they took from their 2019 election defeat was that the product, rather than the head of sales Bill Shorten, cost them victory. Labor remains spooked by this possible misreading of 2019. So far, it has not been ready to pursue wealth redistribution again, stating that it lacks a “mandate”.

But if a coast-to-coast red wave is not a mandate to catch up with what is happening in this country, what is? Labor is ascendant in every mainland state. Its opponents are in complete disarray. Yet the age-old maxim haunts it like something dead rotting under the floorboards. Winning power comes first. You can’t do anything without winning.

But how much winning does it take before you make those wins produce a better country? For all its political capital, by continuing the policies of the neoliberal status quo, the ALP risks remaining a step behind the curve. If it is unable to reverse policies that increase inequality, why is it in power? So-called “radical” policies are only one way of putting hard-won political capital at risk. A surer way, as evinced by the previous government, is inaction. Inertia, the absence of courage, can be a greater waste

Perhaps parliaments are the wrong place to look, and the answers will be found in changing attitudes from that place so mythologised and misunderstood by politicians, “the grassroots”. In his new book Poverty, by America, Pulitzer Prize-winning journalist Matthew Desmond asks, “Are we – we the secure, the insured, the housed, the college educated, the protected, the lucky – connected to all this needless suffering?”

As in Australia, the biggest recipients of welfare in the US are the affluent. They pay less to borrow money, they receive most government aid, they pay a lower percentage of their income on necessities. It is, even more than when James Baldwin wrote it in 1960, “extremely expensive to be poor”. Desmond offers practical steps for the top 10 per cent of individuals and companies to become “poverty abolitionists”. He says it is impossible “to look the poor in the face and say, We’d love to help you, but we just can’t afford to, because that is a lie”.

Responsibility, he argues, lies in the hands of those who used to jealously guard their privileges but are now motivated to change. Here, the wealthiest voters have rejected the party of neoliberal economics and have shown a willingness to help those unable to find somewhere to live, unable to earn minimum wage, unable to get a bus or a hospital bed. The bleeding heart is a mainstream force.

In Australia, the neoliberal revolution was set in train in the 1980s in the sincere belief that a rising tide would lift all boats. We now know that it hasn’t. Even the federal treasurer acknowledges this. In his recent essay in The Monthly, Jim Chalmers wrote of “how unjust it is that people who live on the outskirts of capital cities and in some regional areas experience much more inequality than other citizens”. He outlines a manifesto for “values-based capitalism” and a rejection of the failed neoliberal model. If not him, who? And if not now, when?

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