HON. WAYNE SWAN MP
FEDERAL MEMBER FOR LILLEY
ADDRESS TO THE 2017 AWU NATIONAL CONFERENCE
WEDNESDAY 1 MARCH 2017
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It’s great to see so many old friends I’ve worked with over the years here today.
When I last spoke to you two years ago I mentioned being in New York and walking the high line. One morning as I was walking along the abandoned railway tracks of this urban park I looked up and on side of an old brick building was a large advertisement, which read, “the French aristocracy never saw it coming either.”
It was yet another reminder of the groundswell of support sweeping around the world for a more inclusive form of prosperity and it’s been an image seared in my mind ever since.
Little did I realise at the time just how significant a sign this was of things to come.
In the United States in particular the relationship of the very wealthy and the rest has come to resemble Louis the 16th’s relationship with the peasantry of the 18th century.
Inequality in many parts of the world is back to 19th century levels and exhibit A is the United States. When you have you have 19th century inequality, you can’t be surprised when you get 19th century politics too.
If you’re looking for reasons for Trump’s victory look no further than the wealth and income concentration driven by powerful vested interests dictating policy and ineffective political strategies from some progressive elites shoving their orthodoxies down working people’s throats.
That’s the American lesson for us – we must not go down the American Road. We can’t let parts of Australia become the “Down Under” version of their mid-western communities whose skills are no longer in demand and get thrown of the scrap heap.
Until 2013 Labor policies implemented over 30 years in partnership with the trade union movement have restrained growing inequality and warded off populist uprisings.
A strong industrial framework with decent minimum conditions and collective bargaining, universal and affordable health and education, progressive taxation and a targeted transfer payments system and a universal retirement income system have delivered strong economic results for low and middle income working Australians
As you can see the result is the Australian middle class has 40 per cent of national wealth, while the US middle class only has only 19.6 per cent.
That’s not enough in Australia either, if you ask me, and we have struggled like other similar countries with the onslaught of globalisation. But we have proved better than other countries at avoiding scorched earth neoliberalism (and not by accident, as anyone old enough to remember the 1993 election or the 2008 financial crisis can tell you).
But there is a strong and growing risk that Australia will become a place where ordinary people’s views are drowned out and only those with the most expensive megaphones get a say.
Our achievements face a concerted attack from an over-powered and over-paid corporate and financial elite who through every step are trying to destroy our social democratic model.
We must not fail like the Democratic Party and the union movement did in the United States when the conditions for their success in the Presidential election were near perfect in working class communities.
Post mortems of the US election have found evidence that shouldn’t surprise anyone in this room—much of the working class holds relatively moderate economic views. These working-class moderates have no objection to progressive governments intervening in the economy on behalf of working people—in fact, they would welcome it. But in the US, many of these workers voted for Donald Trump: not out of any hard-right ideology or an entrenched racial intolerance, but because they no longer saw the Democrats as the party who spoke or acted for them.
Similarly across Europe, large parts of the traditional left have been swept away by populist right wing movements.
These experiences tell us we must be unrelenting in defending the economic interests of working people.
Consider if you’re a truck driver in Logan or a steel worker in Wollongong you’re constantly told to work harder for less while tax cuts go to the top end – you might suck that up for a while because you have to.
All the while you see progressive social issues dominate the news.
Eventually you reach a breaking point and your job is sent off-shore or made casual.
Suddenly you’re tossed on the economic scrap heap and like a drum of kerosene dumped directly on the smouldering fire your frustration with progressive issues erupts in an inferno of white-hot rage.
And quite a lot of that rage might express itself with immigration, gender equity or other favoured progressive issues, not because rage by definition doesn’t contain itself very well, but very much because the right will always supply scapegoats of various types – anything to ensure the blame isn’t sheeted home where it really belongs: the policies they designed to fleece working people and redistribute the gains to the top.
This is what happened and is still happening in America.
Our party has a proud record of progressive social reform but we must always have at the forefront of the policy battle the economic interests of working people.
This is a much longer and more complex topic than I have time for here. We must never go back on the important gains we have achieved as a broader progressive movement in combating racial and gender discrimination and building a multicultural society. But we must also admit that we could do a better job of keeping the core economic interests of working people front and centre of our agenda.
If we fail to restore the focus on living standards and economic equality, we will go the way of so many social democratic parties around the world; out the back door and quickly.
But there is also good news amid all the horror of the rightward turn in the US and Europe.
We are watching the collapse of the neoliberal consensus which has dominated economic policy for decades where large slabs of both the left and the right in agreement on the agenda of reducing taxes and regulation. I certainly wasn’t immune from that myself.
But the financial crisis put an end to that. At least for me it did.
Ever since, there are two types of economic policy thinkers and doers.
The first are those who feel that an appalling economic crisis like 2008 changes everything, and that economic policy must change as a result, lest we end up in the same place again
And the second are those who have learnt nothing and forgotten nothing, as it was said of the House of Bourbon after the restoration of the French Monarchy in 1814
It seems bizarre that the second group should still be admitted to polite society nearly ten years on from the crisis, let alone still in positions of power, but I firmly believe this is a temporary thing – even if more durable than we would like.
Because doubling down on those policies is inviting disaster – by handing over economic policy to parts of Wall Street while preaching populism as Donald Trump has done; or by having another Goldman “mini-me” running the government here, with his own scorched-earth neoliberal agenda.
That looming electoral disaster is pretty obvious in the wild unpopularity of Trump in the US – no honeymoon there – and of Turnbull here.
The laws of political gravity have not been repealed, and when the modern-day Bourbons come crashing down to earth, we need to be ready to drive a new, sensible economic framework that creates opportunity and spreads prosperity.
A framework that addresses the growing concentration of wealth and income and the power of vested interests.
The near dead heat of the 2016 Federal election shows that Australians aren’t impressed by the incessant drip of the trickle-down economic experiment of Turnbull and Abbott.
If we are to win the next election we need to sharpen the difference between us and our conservative opponents.
Policy document after policy document doesn’t add up to a compelling message or a believable answer to the critical proposition put by the populace; whose side are you on?
Today I want to talk about two areas of policy which go to the core of presenting a bold agenda for a prosperous, fair and aspirational Australia;
Let’s start with progressive tax.
The surest way to destroy the faith of working people in the whole political system is to make people who pay taxes believe the government is taking them for fools by penalising them and sparing the wealthy.
Recent ATO data release showed that one in three private companies pay no tax and one in four public corporate entities operating in Australia pay no tax.
While 56 millionaires didn’t pay a cent in tax, not even the Medicare levy.
You know the white hot rage a hard working Australia is filled with when they find out some of Australia’s largest companies such as BHP with some of our most respected directors are smuggling profits offshore and simultaneously calling for a corporate tax cut and an increased GST.
In BHP’s case using a Singapore tax shield to avoid paying profits on taxes of $5.7 billion.
BHP when challenged on this outrageous behaviour claimed that because they were paying tax on some of their profits they didn’t have to pay tax on all of their profits.
BHP is like that guest at the hotel. They protest about the price of a standard room, then they sneak into the penthouse and get full room service before running off and leaving a massive damage bill.
This sort of behaviour more than anything is why people have lost trust in business leaders and politicians.
To put a rough figure on tax evasion in Australia if we assume 10 per cent of corporate tax collections is lost through these practices, the cumulative cost to the budget is $26 billion over four years.
It’s amazing how conservative politicians and the business community constantly lecture on the need for budget repair but never forcefully argue the case to smash tax evasion.
In government, Labor acted on rampant tax evasion and minimisation and every step of the way, we were opposed by the Coalition.
Now in government, the Coalition has acted too slowly and too feebly to deal with debt dumping and profit shifting.
Our party has been strong in opposing Turnbull’s $50 billion corporate tax cut which is nothing more than a smash and grab on the Australian Treasury.
Such a policy will only push up debt and hand a massive windfall to already highly profitable multinational companies.
Labor’s decision to scale back negative gearing for future investments and tackle capital gains concessions is also a critical part of making our tax system fairer.
This is a good start but we do need a through discussion of a Buffet rule to give people confidence that wealthy individuals are paying their fair share.
Many corporates are not content with tax evasion, they’re also eating away at the foundations of a decent and fair system of industrial relations. Many of the very same companies that are aggressively minimising tax are seeking to destroy our system of collective bargaining and to escape their industrial responsibility through casualization and contracting out.
A tax avoiding company like BHP has relentlessly moved to contract out what were once secure well paid local jobs.
If we are to reverse this trend we need a stronger voice for working people and it’s no coincidence that corporates have joined with conservative interests to eliminate unions within their work forces.
Around the world in developed economies declining union membership has been accompanied by dramatic increases in inequality.
Just as unions are a critical and positive part of wealth creation they’re also one of the most effective checks on inequality.
Strong industrial laws and institutions to protect workers are required if we are to avoid increasing income inequality and to change the dominant conversation of vested interests for a trickle-down society.
Average weekly earnings in the period to last November grew at an annualised rate of just 0.4 per cent; slower than any other point in the history of the data and well behind the rate of inflation.
This reflects both the stagnation of hourly wages and the continuing shift to part time and casual work.
We now have a situation where 40% of the workforce is in non-permanent forms of employment – this means fewer rights, potentially lower pay and less economic security.
This trend towards casualisation is tearing the security blanket provided by a decent minimum wage simultaneously as the government tears away at penalty rates earned by some of Australia’s lowest paid.
This means that unions are going to have to organise like they have never organised before but it also means they shouldn’t be the target of hostile public policy seeking to supress their voice and capacity to participate in a broader debate from a position of strength.
Just like business they ought to be represented on key bodies such as the RBA and other public institutions such as the ABC.
Clearly there needs to be a strengthening of our institutional arrangements to tame the power of vested corporate interests. We need new rules to address unfair market concentration, short term speculative investment horizons and outrageous executive pay.
Delegates, a strong trade union movement and a strong Labor party are the only antidote against the poison of politically inspired trickledown economics which erodes the living standards of ordinary working Australians.
When people hear strong worker voice they think unions and collective bargaining and we certainly have to make those arrangements as strong and as equitable as possible.
But most importantly we need to get to and stay at full employment.
Full employment is a non-negotiable objective for any progressive government.
Pushing the economy back to full employment restores the position of workers at the bargaining table, repairing the broken link between labour productivity and wages.
We must pursue activist fiscal policy by broadening the conception of public investment in particular investment in infrastructure and human capital.
Progressive governments must be willing to contemplate more ambitious programs of public investment and direct employment.
That means we must also have a comprehensive plan for Australian jobs.
We understand that industry in general but in particular the manufacturing sector continues to face seismic technological changes and difficulty attracting long term capital investment.
This means that the government can’t stand idly and watch as the manufacturing industry confronts punishing gas prices.
But most importantly we have to win the battle of ideas.
We will only will the next election if we have a clear and bold message about how we strengthen growth and spread opportunity.
We have to make the economic case that less inequality and good wages and working conditions for low and middle income earners will promote economic growth.
We have to make the case that middle class consumers, not just rich people, are also true job creators; that a broad middle class is a source of prosperity not a consequence of it.
If all the public hears is social justice rhetoric and the only reason to help workers is because we feel sorry for them – a bleeding heart message then we will lose.
The failure in Britain was that swinging voters weren’t convinced that inequality mattered to them.
British Labour didn’t effectively make the case that inequality affects everyone not just the poor.
In Britain the Tories smashed Labour on economic management and in the US voters weren’t convinced that Hillary Clinton was serious about dealing with inequality.
The labour movement needs an economic policy which drives growth and lifts productivity but we need a message that says clearly and unambiguously whose side we’re on.
If we fail in this task we’ll end as a country ruled by a new plutocratic aristocracy where in the word of Bruce Springsteen’s Badlands; Poor man wanna be rich, rich man wanna be king, and a King ain’t satisfied till he rules everything.