IAN McAULEY. The difference in the economic policies of the major parties.

Jun 16, 2016

In the din of distractions about political trivia, many in the media have lost sight of, or fail to understand, fundamental differences in the economic policies of the two main parties.

That is their approach to distribution, or redistribution.

Although politicians may accuse one another of heartlessness or of ignoring the poor, almost all politicians believe that the benefits of economic activity should be distributed fairly (even though what they see as constituting “fairness” may differ).

But there are fundamental differences in the means they propose.

The Coalition, or more precisely Liberal Treasurer Morrison, seems to endorse the idea that with strong economic growth, some of the benefits of that growth can be directed to distributive welfare in the form of social security transfers.  That’s been fairly standard neoliberal thinking, not just here in Australia, but also in other prosperous countries, at least since the 1980s.  (For a full description see Miriam Lyons’ and my 2015 book Governomics.)

Labor, although it has been less clear, seems to have re-endorsed the traditional Labor policy of achieving distribution in part through what is known as the “social wage” – an economic philosophy that endured from the Curtin to the Hawke Governments, and that was also taken up by some conservative governments, most notably the Playford Government in South Australia. It is about access to education, health care and housing, not only to provide a safety net, but also to support community solidarity, or “social inclusion”.  (Labor, correctly in my view, classifies health care, education and other services as economic benefits, while many on the other side of government tend to use the term “social expenditure”, as if social benefits are not economic benefits.)

This difference between the parties is not picked up in media arguments about who is going to be better off under Labor or Coalition policies – “a single mother in part time employment will be better off/worse off by $3.81 a week under a Coalition/Labor Government”. Quite apart from the false precision of such arguments, they ignore the very fundamental differences in the ways the two main parties see how economic distribution is to be achieved.

As I describe in a recent New Matilda article, that misunderstanding was most clearly displayed last Friday in a regular chat session between Fran Kelly and Michelle Grattan.  (That’s only one example of many.) That same New Matilda article briefly describes the different philosophies between the two approaches, and for a fuller description see Chapters 7 and 12 of Governomics.

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