The Sun Is Setting On Three Decades Of Free Market Economics

The Sun Is Setting On Three Decades Of Free Market Economics

How much Australia has changed over the past decade can be seen from the difference between what Kevin Rudd as Labor opposition leader said to get elected in 2007 and what Bill Shorten is saying today in 2019.

You can also notice the change by comparing Labor’s and the Coalition’s election policies from this campaign. In 2019 while there’s certainly differences between the two, most notably on tax, the difference between the parties policies is nowhere near as big as it should be.

In essence, Labor and the Coalition accept an ever-increasing role for the government in the economy and in people’s lives. While Labor is proposing the part-nationalisation of the salaries of childcare workers, the Coalition wants to part-nationalise lending for residential property.

Significantly, at this election neither Labor or the Coalition are suggesting there’s any area of public or private activity in which there should be less government intervention. Similarly, the idea the role and responsibililities of federal, state and local government should be clearly delineated has gone out the window. All politics might be local, but when federal politicians start promising the replacement of cricket pitches on local council sports grounds its time to ask whether the concept of federalism needs to be reconceived.

As has been proved since 2013, the Coalition is not against raising taxes, after all it’s increased lots of taxes of its own.

The zeitgeist of 2019 is in sharp contrast to that of 2007.

To get elected politicians say what they think people want to hear. In 2007 Rudd believed he should present himself as a fiscal conservative. Talking about the Coalition he famously said, “this sort of reckless spending must stop”. In Rudd’s first cabinet Lindsay Tanner’s official ministerial title was even “minister for finance and deregulation”. Today “deregulation” is a word no politician would dare utter.

Of course as things out turned Rudd was more Whitlam than Howard. Whether Rudd actually believed anything he said is debatable given that at the first opportunity he used the excuse of the global financial crisis to massively increase the size of government and the level of government debt. But the fact remains that in 2007, Rudd, at least initially, obviously thought that presenting himself as an economic liberal was politically advantageous.

Today, Labor’s campaign rhetoric couldn’t be more different. Bill Shorten is unapologetic about its plans for higher taxes, more government spending and the re-regulation of the labour market. Labor has also enthusiastically stoked the theme that the economic interests of the younger generation are fundamentally in conflict with those of their parents.

It could be argued the genesis of this language came from the Coalition when it increased taxes on superannuation.

The increase to the top marginal rate of personal income tax that Labor want to make permanent was introduced as a temporary measure by the Coalition.

Just like Tony Abbott and Malcolm Turnbull before him, Scott Morrison hasn’t challenged the size and scope of the big-spending social welfare programs established by Labor. Morrison has framed the debate about economic management as a choice between which side of politics can best pay for these programs – not whether they should exist in the first place.

Across a range of policy areas the differences between the parties are more apparent than real. For example, on climate change the Coalition is already committed under the Paris accord to cutting Australia’s per capita emissions by more than any other developed country. And when it comes to the regulations imposed on business more broadly, while the Coalition has argued against things like a federal Environment Protection Agency, in office the Coalition has made little effort to cut red tape.

In years to come historians might classify the 2007 federal election as the last of that golden era of economic reform in Australia.

The 2019 federal election, on the other hand, might end up categorised as the election that signalled the end of Australia’s three-decades-long experiment with free market economics and the beginning of the acceptance by both major political parties that Australia’s economic and policy path was to be less like the that of United States and more like Europe.

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