A Thrival Budget

To reach a state in which our survival as a society is plausible, and to go beyond that to ensure a thriving society, we need some fundamental changes in how we manage our affairs. We can take large steps towards a better society, rather than continuing to regress, though more slowly.

Modern budget announcements are as much about theatre as substance, and as much about broad directions as detailed money allocations. The conceptual framework needs to be clear before spending priorities can be sensibly decided. The following outlines a new framework, with some indications of shifts in expenditure.

Australia faces many challenges, but five crises stand out for their immediacy and the severity of their potential consequences: global warming, international conflict, domestic inequality, corruption and media veracity. We see from the example of the United States that prolonged and ever-increasing inequality can destabilise a society and promote open violent conflict and potential civil war. Australia has, for now, stepped off that path, but our society is more divided than is healthy, and than it used to be. Corruption has become normalised and our media have been seriously misleading us about all of these crises.

People need to feel that changes will be good for them, and the precarious poor need a fair deal. The minimum wage will be progressively raised by fifty percent over the coming year. Unemployment benefits will be doubled, as they were during the pandemic, and punitive conditions removed in the belief that most people want to be productively occupied. Savings of enforcement costs are expected to cover the cost of the minority that may choose to remain unemployed. Such people are not necessarily unproductive or without benefit to society. Many would be artists of various kinds.

Increased wages and benefits will stimulate the economy, because poor people immediately spend their income on essentials, as was shown by the 2021 Nobel Prize winners. The money circulates, as it must to do its job. Subsidies to the rich, on the other hand, mainly result in inflating prices of property and shares, as the recent disastrous housing bubble demonstrates.

Immigration will be held to 70,000 per year, as it was in the 1990s. Our unemployment rate is currently relatively low because immigration ceased during the pandemic. This cause is rarely noted, because the political mainstream wants to resume a high immigration rate. On the other hand unemployment is still high compared with the 1-2% levels of the booming postwar decades. Each new person requires about $500,000-worth of facilities, public and private, so this would release $50 billion or more per year for other uses. However spending on the extra facilities is woefully insufficient and people’s lifestyles are being degraded.

With a lower immigration rate employment demand may then begin to yield the wage increases the corporate sector can well afford, given very high current profits. Claims of skills shortages will not be automatically believed; those that can be explicitly documented, and where no short-term alternative is available, may be relieved by limited and short-term immigration. In the medium and longer terms our apprenticeship and TAFE systems will be revived and revitalised so we properly train our own young people for productive trades, thus avoiding high immigration costs and improving productivity, employment and equality. Reduced unemployment will release billions of support money for other uses.

The housing bubble has deflated a little, and may continue to do so, after a decade or more of rapid and disastrous inflation. To prevent a renewed speculative boom private bank lending will be monitored and, if necessary, restricted, as it was during the ‘credit squeezes’ of the postwar decades. This is much more direct, effective and targeted than interest rate changes. Housing deflation always risks becoming a collapse. If a collapse threatens, emergency bond issues will be offered to households to replace equity losses, so as to avoid destitute households and a major recession.

Australia’s necessary transition to clean, zero greenhouse emission energy is woefully retarded. The electricity system will be modernised, and moved towards a more decentralised system, appropriate for decentralised wind and solar sources, featuring regional generation and pumped-hydro storage systems that together can easily provide for our needs. The very costly, polluting and ill-considered Snowy-Hydro 2.0 will be terminated, diverting around $10 billion to regional facilities.

Electric vehicles will be promoted by subsidies, and battery exchange systems will be encouraged. For the medium term, new liquid fuels like hydrogen and ammonia will be aggressively researched, and promoted as appropriate. Industries will be incentivised to adopt clean energy by a revived and strengthened carbon pricing scheme that was proven to work. Household and general energy efficiency will be incentivised, with help for low-income families. Efficiency may be the most cost-effective investment of all.

All subsidies of fossil fuels, direct and indirect, will be phased out over the next two years, saving over $10 billion per year. No new fossil fuel projects will be permitted, as prescribed by the International Energy Agency. States will be strongly discouraged from violating this policy. Exisiting fossil fuel extraction, including that for export, will be aggressively phased out over the coming decade: continuing exports only feed the addiction. Employees will be compensated with support and retraining. The expanding clean energy industry will offer more employment than is lost in fossil fuels, and Australian ownership and employment will be strongly incentivised.

Such fossil fuel exports as continue will be aggressively taxed, to capture some of the extreme profits of international mining companies availing themselves of our resources. This will help to pay for the transition away from fossil fuels.

The government will create and spend as much money as is prudently required to support these initiatives. Inflation will be managed and limited by adjusting taxes, which withdraw money from the economy. Inflation is unlikely to be a serious threat until unemployment drops below about 2%.

The current episode of so-called inflation is not a monetary phenomenon, it is a real rise in the cost of goods, due to disrupted supplies. The appropriate response is to offer additional support to low-income families, which will not be inflationary in the current slack economy. Raising interest rates is counter-productive because it punishes the poor and slows the economy, further penalising the poor and everyone else. The conventional practice of raising interest rates is only about maintaining the value of financial sector ‘assets’ at the expense of the productive economy and the poor. The wilder excesses of the financial sector will be restrained by the introduction of small transaction taxes to reduce the level of speculation, which destabilises the markets and is parasitic on the productive economy.

The so-called government deficit need not involve a burden of debt. The government, through the Reserve Bank, creates the money that underpins the whole economy, and it can spend that money with no burden of interest. The practice of converting new money into interest-bearing bonds, which do impose a burden of debt, dates from a past era of a fixed gold standard, and is merely a subsidy to the financial sector in the present regime. That practice will be phased out over five years. So-called interest charges on so-called loans by private banks will be directly regulated to avoid profiteering.

We will encourage a less aggressive and more balanced approach to the war in Ukraine, taking account of the long-term manipulation, interference and provocation by the United States as well as the destructive and inexcusable response by Russia. Bombastic rhetoric and provocative actions can only lead to escalation and nuclear catastrophe.

To ensure more balanced information, the ABC will be given more independence, and long-term funding losses will be restored over the next five years. A restructured board will be charged with purging internal management of partisans and with pursuing a broader and more nuanced balance of coverage, as well as the broader social and cultural roles it used more to be involved in. Merely parroting the propaganda of one or more governments will thereby be discouraged.

Many China experts, including former Prime Ministers from both sides, agree that China’s alleged expansionary aims are limited, and mainly aimed at countering foreign intervention in its immediate neighbourhood and to asserting its place in the international economic order. There is no possibility of a military attack by China on Australia unless we attack China first. Australia has long supported the claim that Taiwan is part of China, and we will encourage a peaceful accommodation of the mainland’s and Taiwan’s claims and needs. We will not join any military defence of Taiwan, which would also risk nuclear catastrophe.

Australia’s military posture will be shifted fully to defence. We will focus on whatever equipment we need to defend our maritime approaches, our land, and our communication and other essential systems. We will emphasise our diplomatic efforts to improve understanding and avoid disagreements becoming threatening disputes in the first place. Our long and sad history of fighting other people’s wars is at an end. The move to nuclear-powered submarines will be cancelled. We will withdraw from the so-called AUKUS alliance and note that the ANZUS alliance, so-called, merely provides for consultation in the event that one of the parties is threatened.

Special mention must be made that successive governments have allowed the United States to become deeply involved in our military and general affairs, to the point that our foreign and military policies have been effectively outsourced and our land has become a staging ground for US military activities. We will firmly assert our sovereignty over our own affairs, phase down explicit US military activities in Australia, and expose and discourage the many US ‘soft-power’ activities that recruit US adherents and distort our view of ourselves and the world. Certain intelligence facilities, such as Pine Gap in central Australia, are apparently so sensitive that we may need to be very patient in claiming our sovereign rights. We must bear in mind that the US has hundreds of military bases around the world and has intervened literally hundreds of times in the internal affairs of other countries, including overt invasions and the overthrowing of many elected governments. The claim that there is a ‘rules-based international order’ is mocked by these facts, as is the charge that China has become an aggressively expansionist military power. The protests of the United States are the protests of the bully boy whose long-asserted dominance is now being resisted.

Our parliament is also the focus of a great deal of inappropriate influence, through lobbyists and political donations. It is accurate to say the old parties have been deeply corrupted, even captured, by special interests, notably in the cases of fossil fuels, military hardware, gambling and developers, among others. We will require all members of parliament to post publicly in real time all contacts with interested parties, and all payments or donations in money or kind. Donations will be limited to $1000 per entity per campaign. A new system of public payment of political campaign costs will be instituted, and the powers of the Australian Electoral Commission expanded to aggressively monitor and enforce the requirements. Parties and individual candidates will need to achieve thresholds of demonstrated support to qualify for public campaign funds. It is central to the functioning of democracy that members of parliament must be free to balance the interests of all of their constituents.

It is also central to democracy that citizens are supplied with truthful and broadly balanced information.The powers of the Australian Broadcast Control Board will be expanded to monitor the veracity of political claims made at any time. Clearly false claims, according to clear evidence, will need to be withdrawn or corrected and the perpetrators will be penalised financially and by limiting their public pronouncements. Obvious partisan propaganda will also incur penalties. Persistent and flagrant offenders may be prohibited from continuing. These rules will apply to all media. They will apply to only the most flagrant falsehoods and not to topics of legitimate debate. They will be less onerous than, for example, existing restraints on potentially defamatory claims. It is not acceptable to say that because making these judgements is not always clear that is an excuse to do nothing. Collecting taxes is not simple either, but we don’t give up making the effort. Claims that even minimal restraint will lead to the repression of North Korea are self-interested hysteria.

To summarise, our present efforts to address global warming are still quite inadequate; we approach the precipice a little more slowly, but the end will be the same: an apocalyptic world. There is a serious danger that some components of the climate system have already begun to tip into irreversible runaway. We owe it to our children to make a genuine, urgent and serious effort; doing so will bring many collateral benefits as we reduce our heavy footprint on the planet. The main obstacle has been the reluctance of politicians who have been captured by blindly self-interested parties.

Our deep entanglement with the United States exposes us to serious danger. The US has a long record of clearly counterproductive interventions around the world and it is internally unstable. We should distance ourselves from its blundering and pursue our own path.

We used to claim to be the land of the Fair Go. However imperfectly, we did pursue that goal through most of the twentieth century. But since about 1980 a doctrine of selfish competition has been dominant, and it has done a great deal of damage to our social fabric. There should be no place in a materially rich nation like ours for widespread poverty and increasing homelessness, with their accompanying social and physical ills. We risk the dysfunction taking hold in the United States. There are many places in our economic system that promote inequality: they can and will be reversed. We are rich enough to ensure a dignified life for everyone.

Our governance system and our larger political culture are seriously corrupted by the dominance of selfish special interests. Many people, including independent members of parliament, are unwilling to go along with this any more. We can directly limit corrupt influences in political campaigns through financing rules and by proscribing obviously false claims. We can require immediate and full transparency of contacts between members of parliament and all interested parties. We can set the ABC at arms length from government and provide ample funding to supply us with broad and balanced information. Commercial media all serve special interests, so part of the ABC’s role is to balance their distorted version of our society. All media can be held to a minimal requirement to avoid plainly untruthful and unbalanced presentations.

It is possible to create a much fairer, safer and more durable society than we have at present. It is there for us to do.

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s