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What price economic growth?

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Not all Australians have benefited from 25 years of economic growth and free market policy, says Leon Moulden.

AUSTRALIA'S June Quarter National Accounts figures show that Australians have enjoyed 25 years of uninterrupted economic growth.

There have been 25 years of prosperity without a recession — even during the global financial crisis.

But not everyone has benefited. Not everyone is celebrating.

Instead, Australians are becoming increasingly concerned about job security. A recent Essential Poll asked Australians to compare today’s Australia with the Australia of 50 years ago and then state whether they thought today was better or worse. In most cases Australians said better. But with regards to job security, a substantial 55% of Australians said that job security is worse today than it was 50 years ago.

These sentiments are supported by other recent reports. The Australian Council of Trade Unions (ACTUThe Future of Work in Australia report also suggests that Australians are concerned about job and income security. The report states:

A defining feature - as well as a driver - of this growing economic insecurity is the rising number of poor quality, insecure jobs. Increasing numbers of workers are engaged in work that is unpredictable, uncertain and that undermines what ordinary Australians need to feel secure in their lives and communities.

Moreover, recent Australian Bureau of Statistics (ABSCharacteristics of Employment data highlights that over 2.3 million Australians are employed on a casual basis, with no leave entitlements or set hours. This is nearly a quarter of Australia’s 9.5 million employees who do not have permanent hours of work.

Yet our Federal Coalition Government seems paralysed and unable to respond to this growing sense of unease and uncertainty in our society. The best they can do is talk about "jobs and growth". But they seem unable to act on providing jobs and economic growth. It appears as if their almost religious belief in the free market won’t allow them to consider taking an active role in the economy and therefore provide it with a much needed boost. Instead, they are stuck in the neo-liberal paradigm of the past three or four decades and, as a consequence, they seem to have forgotten about the future.

And like all proponents of the free market, this Government still believes that they can grow a nation and its economy by simply removing troublesome regulations, cutting taxes and reducing welfare payments.

But what about the future needs of our nation and its people? What about the provision of public services such as education, health care, public infrastructure, public transport and the conservation of our natural environment? The market won’t plan for these crucial elements of national prosperity. Only a government can lead on these issues.

It is becoming obvious that a government who places its full faith in the powers of the free market — is a government that can only fail at the task of nation building. And more and more people are realising this.

So now, after nearly 40 years of free market economic policy pursued in the name of national prosperity by both Liberal and Labor governments – and by centre-left and centre-right governments around the world – it is obvious to many that neo-liberal free market economics is more accurately described as an ideology, than as a proven economic method. Many policy experts now argue that the evidence of neo-liberal economic success is limited.

Academic and author Martin Jacques has argued:

It should be noted that, by historical standards, the neoliberal era has not had a particularly good track record. The most dynamic period of postwar western growth was that between the end of the war and the early 70s, the era of welfare capitalism and Keynesianism, when the growth rate was double that of the neoliberal period from 1980 to the present.

Jacques also argues that the main impact of neo-liberal economic policy 'has been the huge growth in inequality'. This is because income and wealth have not trickled down to all levels of society as according to neo-liberal economic theory. Instead, the gap between the “haves” and “have-nots” has widened throughout the western world, including Australia.

Indeed, evidence of this failed ideology is not hard to find in Australia. It is not only job insecurity and the increased casualisation of the workforce that has impacted average Australians but also cuts to government services. As successive governments have lowered taxation due to the belief that a low tax regime is beneficial, they have also left Australia spending only 5.2% of GDP on education while the average for OECD countries is 5.9% of GDP.

And as efficiency and global competition have taken precedence over local jobs, our once thriving manufacturing sector has contracted. Now this will be further reduced when the remaining car manufacturers – Ford, Holden, and Toyota – all cease production by the end of 2017, leaving thousands of skilled workers unemployed.

But perhaps the best example of the disconnection between the official economic story and the one lived by average Australians is that of home ownership. The latest Household, Income and Labour Dynamics in Australia Survey shows that home ownership – once the Australian dream – has decreased to a rate of only 51.7% of adult Australians, down from 57% in 2002. At this rate, less than half of Australian adults will live in their own home in less than a decade.

Yet Prime Minister Turnbull says: “there has never been a more exciting time to be Australian”. Obviously, the Prime Minister is only referring to those Australians who own the nation’s wealth — not those who are worried about job security and owning their own home.

But people all around the developed world, including Australia, are questioning high levels of job insecurity, falling wages and growing levels of inequality. From the rise of extreme political representatives such as Bernie Sanders and Donald Trump in the U.S., to the UK "Brexit" and independents such as Nick Xenophon, Pauline Hanson and others in Australia, people are saying “No” to more of the same old economic policies.

It is this extreme response to free market policies that will truly test our society because, while responding to the inequalities and insecurities of the current economic paradigm is completely understandable, not all responses to date have been constructive. Some responses have unleashed the dark-side of Australian culture.

Xenophobia, racism, bigotry and ultra-nationalism have all shown their faces in reaction to today’s discontent. But these types of reactions will not fix the inequalities of Australian society. They will not make our jobs more secure or make housing more affordable. They will only make the situation worse.

Only clear-minded public policy that places the economic, social, environmental and cultural wellbeing of all Australians before the economic benefit of a few will provide an answer to today’s concerns. But this will require the assertion of an inclusive democracy over free market capitalism. It will also require our governments to play an active role in the economy — as governments once did.

Will this Federal Government go back to our Keynesian past to build the economic prosperity of our future? Currently, this appears to be very unlikely.

Leon Moulden is a freelance social researcher.

 

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