Populism now the case for progressive populism

The politics of populismPART ONE: LOOKING BACKWARDS, LOOKING FORWARD The rise and rise of the super-rich Taming the fossil fuel elite PART TWO: LIVING IN A DEREGULATED WORLD Stolen prope

POPULISM NOW!

DAVID MCKNIGHT is an honorary associate professor in the School of the Arts and Media at the

University of New South Wales He has worked as a journalist at the Sydney Morning Herald and Four Corners and has written or co-written many books including Big Coal: Australia’s dirtiest habit (NewSouth, 2013) as well as Rupert Murdoch: An investigation of political power (Allen & Unwin, 2012) and Beyond Right and Left: New politics and the culture war (Allen & Unwin, 2005).

He edited (with Robert Manne) Goodbye to All That? (Black Inc, 2010) In 2012 he was the author of Journalism at the Speed of Bytes, a study commissioned by the Walkley Foundation for

co-Journalism on the future of journalism in view of the crisis in newspapers’ business model

He is also a historian of the Cold War and espionage, having written an authoritative history of

Australia’s internal security, Australia’s Spies and Their Secrets (1994) and a history of the underground political tradition of the Communist International, Espionage and the Roots of the Cold War (2002).

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All reasonable efforts were taken to obtain permission to use copyright material reproduced in this book, but in some cases copyright could not be traced The author welcomes information in this regard.

This book is printed on paper using fibre supplied from plantation or sustainably managed forests.

The politics of populism

PART ONE: LOOKING BACKWARDS, LOOKING FORWARD

The rise and rise of the super-rich

Taming the fossil fuel elite

PART TWO: LIVING IN A DEREGULATED WORLD

Stolen property: privatising the public sector

Working in Australia’s jobs jungle

Tax me if you can

Banks: the money masters

PART THREE: REBUILDING THE COMMON GOOD

Towards a progressive populism

Thanks

Notes

Index

For Jane, companion, critic, comrade, collaborator Always a source of wise advice And to the memory of Andrew Casey (1953–2018), a labour movement activist in both Australia

and the world.

Mostly, when I hear people damning someone as a populist, they are talking about a right-wingversion But it’s not that simple In this book, I argue that a progressive version of populism existstoo A progressive populism takes up the genuine economic grievances of everyday Australianswithout scapegoating migrants or minorities in the way Donald Trump and the pro-Brexit forces havedone In fact, a progressive form of populism is the best way of defeating the racist backlash of right-wing populism because it addresses the social and economic problems which partly drive the rise ofright-wing populism As well, it asserts our common humanity, whatever diversity we also express.

I first discovered populism when I began teaching investigative journalism in the late 1990s atuniversity I had some understanding of the subject already, having worked on the ABC’s

investigative TV program Four Corners Like other journalists, I knew about the role of investigative

journalism in the Watergate scandal of the early 1970s However, to teach it as an academic course Ineeded to know about its historical origins I found that investigative journalism (originally calledmuckraking) began in the United States around 1900 during what Americans call ‘the ProgressiveEra’ It was called this because it was a period of radical ideas and activism about social reform.One expression of this was the emergence of a new political party, the People’s Party, in 1890–91 Itstood for the interests of ordinary people – farmers and workers – against the ‘robber barons’ in theprivately owned banking, oil and railway industries Friends and enemies alike described theapproach of the People’s Party as Populism and its supporters as Populists

The muckraking journalists were crusaders on issues which they shared with the Populists For

example, in his book The Jungle, writer Upton Sinclair exposed the dangerous and filthy conditions

endured by the Chicago meatworkers Years later his book was recognised as one of the forcesbehind the introduction of food safety laws One of the first female muckrakers, Ida Tarbell, exposedthe ruthless practices of Standard Oil in crushing rival companies in a series of articles published in

McClure’s Magazine , and eventually a book, The History of the Standard Oil Company Today,

Standard Oil is better known as Exxon and remains a ruthless corporation Lincoln Steffens’ book

The Shame of the Cities exposed the corruption of political machines linked to gambling, prostitution

and bribery Other muckrakers attacked the role of big money in government and the power of WallStreet Their journalism, I realised, was a key contribution to the progressive causes shared with thePopulists

The key idea of the Populists was that the interests of ordinary people were in conflict with those

of the elite Some of the Populists had conspiratorial ideas about money and power but theirmovement was a powerful challenge to aggressive, unregulated big business Having been on the Left

of politics since my teens, I found this history of a forgotten reform movement fascinating Its goals ofeconomic and social justice for ordinary people are still relevant today

Years later I rediscovered American populism when I read a book by journalist Thomas Frank,

What’s the Matter with Kansas? Published in the wake of the election of George W Bush, his book

pointed out that Kansas, now a conservative Republican state, was once a centre of radical activity.

One Kansas town produced a socialist newspaper, Appeal to Reason, which sold hundreds of

thousands of copies In the 1890s its farmers, driven to the brink of ruin by years of bad prices anddebt, held huge meetings where Kansas radicals like Mary Elizabeth Lease urged the farmers to ‘raiseless corn and more hell’ From this situation, the People’s Party emerged as the enemy of the ‘moneypower’ and as an alternative to both Democrats and Republicans It advocated publicly ownedrailways and banks along with a progressive income tax on the rich For this, Frank tells us, theywere reviled ‘for their bumpkin assault on free market orthodoxy’

In 2015 and 2016 I found myself hearing commentators talk about the rise of modern forms ofpopulism during the looming US presidential election Both Donald Trump and Bernie Sanders werereferred to as populists Sanders had opened his campaign with the statement: ‘This country and ourgovernment belongs to all of us, not just a handful of billionaires’ It was a modern echo of theprogressive side of the American populist tradition Although he didn’t win the Democrats’presidential nomination, Sanders shifted the political agenda and challenged the untrammelled power

of the wealthy in the name of ordinary people

Trump, a right-wing populist, represented the worst aspects of popular prejudice Yet he won Likemany others, I was stunned as I read the first online news reports announcing this How could it havehappened? One of the most illuminating insights came from Thomas Frank, who argued that Trump’spopulist campaign on economic issues was far more important than most people realised at the timeand had been the key to him winning crucial states The abandoned factories and crumbling buildings

in cities devastated by free trade deals had created a ‘heartland rage’ that swamped the Democrats.1All of this was ‘the utterly predictable fruit of the Democrats’ neoliberal turn’, he said ‘Every timeour liberal leaders signed off on some lousy trade deal, figuring that working-class people had

“nowhere else to go”, they were making what happened last November [Trump’s win] a little morelikely.’ Such sentiments inspired this book And all of this is relevant to Australia because both ourLabor and Liberal politicians have, in recent decades, largely accepted the principles of deregulation,privatisation and small government, together known as neoliberalism In part, this book is aninvestigation into the failures of these principles in Australia

The final reason for writing this book is more personal I grew up in a single-income, blue-collarfamily with my mother suffering from a severe mental illness Yet we survived and thrived thanks inpart to a strong public sector, especially in health and education This public sector was grounded inthe major parties’ consensus that it was both morally obligatory and economically sound thatimportant public services should be equally available to all and provided collectively Now thisconsensus is being broken apart and discarded This is not some misty-eyed memory about a non-existent golden age – an error often made by right-wing populists when they equate the WhiteAustralia Policy years with better conditions overall Australia is a better and more open societytoday, not least because it is more culturally diverse But in terms of simple practical things such asexpecting a secure well-paid job, social services and a home to live in, we are going backwards

When I started researching this book in the wake of the shock Trump victory and the vote for Brexit

I was already a critic of neoliberalism But as I probed more deeply I grew angrier and angrier Myresearch revealed that the orthodoxies of deregulation and privatisation, regarded as supremecommon sense by the political and economic elite, are radically transforming Australia The gulfbetween billionaires and the poor is widening as old egalitarian Australia crumbles; deregulatedbanks have become parasitic to the rest of the economy; corporate tax avoidance is out of control; andour pay and conditions are being eroded As it had with me, this has angered many ordinary

Australians Some falsely blame migrants and refugees while others rightly blame a corporate andpolitical elite To change things, we need to rebuild a new progressive agenda which unites ordinaryAustralians against these elitedriven policies.

Of prime importance in such a renewed progressive agenda is genuine action on the biggest danger

of all, irreversible climate change, which will hit ordinary Australians first A progressive populistapproach aims to unite Australians in the broadest possible new movement – one that will provide thenecessary people power to avert the worst kinds of changes in the future Nothing less than thesurvival of humanity is at stake

CHAPTER 1

THE POLITICS OF POPULISM

We forced discussions on issues the establishment had swept under the rug for too long We brought attention to the

grotesque level of income and wealth inequality in this country and the importance of breaking up the large banks we are stronger when we stand together and do not allow demagogues to divide us by race, gender, sexual orientation or

where we were born.

US presidential candidate, Bernie Sanders1

The establishment complains I don’t play by the rules By which they mean their rules We can’t win, they say, because we don’t play their game We don’t fit in their cosy club We don’t accept that it is natural for Britain to be governed by a

ruling elite, the City and the tax-dodgers, and we don’t accept that the British people just have to take what they’re given.

British Labour leader, Jeremy Corbyn2

With Donald Trump’s successful campaign to win the US presidency and Britain’s decision to

‘Brexit’ from Europe, we suddenly began to hear a lot of the word ‘populism’ in the politicaldiscourse At first it was used to describe the attack Donald Trump made on illegal Mexicanimmigration when he announced his candidacy for the Republican nomination in mid-2015 With histrademark bombast, he declaimed, ‘When Mexico sends its people they’re not sending their best …They’re sending people who have lots of problems … They’re bringing drugs They’re bringingcrime They’re rapists’ He then added, ‘and some, I assume, are good people’ His call to build awall on the US–Mexico border (‘which Mexico will pay for’) became a recurrent theme of hiscampaign and later, his presidency

Nor was his abuse limited to Mexicans After a Muslim US citizen committed a terrorist attack inSan Bernadino, California, Trump called for a ban preventing Muslims from entering the UnitedStates, at one point including those who were American citizens currently abroad Trump’s campaign

received what seemed to be a certain death blow in October 2016, when the Washington Post

revealed an audio tape of his boast that, because he was ‘a star’, he could grab women ‘by the pussy’and get away with it

By the normal rules of elections in the United States and elsewhere, his popular support shouldhave shrunk Trump’s coded appeals to racism, crude misogyny and calculated abuse should havefatally wounded his bid for the White House But his popular support grew and Trump eventuallyattained the most powerful position in the world In office, he has confirmed the worst expectations,responding to North Korea’s threat to the United States with a warning that North Korea ‘will be metwith fire and fury like the world has never seen before’, a thinly disguised threat to unleash a nuclearwar

How did we get into this situation? Trump’s election victory owed a lot to two factors One washis economic populism, which criticised free trade and globalisation This received a warm responsefrom many working Americans He threatened to withdraw the United States from the North AmericanFree Trade Agreement He promised to impose high tariffs on runaway US companies which movedproduction overseas He threatened restrictions on imported Chinese goods Globalisation, he said,helped ‘the financial elite’ while leaving ‘millions of our workers with nothing but poverty andheartache’.3 All the while he targeted the states hardest hit by economic globalisation Much of this

was downplayed or never reported by both social media and the traditional news media, whichpreferred to concentrate on his more colourful outbursts and tweets.

The second key to his victory was his skilful use of social media, which he credited with being away to counteract what he called the ‘fake news’ propagated by mainstream news media OnFacebook and Twitter his popularity eclipsed that of Hillary Clinton and it was there that hecirculated his own ‘alternative facts’ The algorithms of social media, which suggest news based onpast activity, transformed this popularity into self-reinforcing echo chambers of Trump supporters.And all of this was fed by the crisis in traditional journalism, whose capacity to report news had beeneroded by the power of that self-same social media

The election of Donald Trump has taken us all into a new and dangerous place If it had been anisolated incident it would not matter so much But it was far from that A few months before Trump’selection, Britain went to the polls to decide whether or not to leave the European Union (EU) Thevote was voluntary but the turnout was high More than 30 million people voted, with a majority infavour of Britain’s exit, styled Brexit Another victory for populism, said the commentators

The British vote to leave the EU spanned traditional Right and Left and drew support fromunexpected places While the ‘Leave’ vote was highest in traditionally Conservative areas, it wasalso high in some working-class Labour strongholds For some, voting to leave the EU was a protestagainst the economic effects of the globalised economy, with its problems of unemployment and lowwages For others, their main concern was the immigration which had ensued from open borders ‘Wewant our country back!’ was a common cry Donald Trump, then campaigning for president, hailed theBrexit vote as a ‘great victory’ and drew parallels to his own opposition to ‘rule by the global elite’

A new populist Right was on the move globally

Soon populism seemed to be everywhere In Europe the established parties saw their dominancechallenged by right-wing populism In France in 2017 the antiimmigrant and anti-Muslim NationalFront achieved 34 per cent of the presidential vote, its highest yet That same year the far rightAlternative for Germany won an unprecedented 13 per cent of the vote and 90 seats in the Bundestag

In the Netherlands Geert Wilders’ xenophobic Party for Freedom advanced in the 2017 generalelections

In Australia too Trump-style political disaffection is taking hold A reputable study by academics

at the Australian National University (ANU) shows that key indicators, including satisfaction withdemocracy, trust in government and loyalty to major parties are at record lows among Australians.The study was conducted following the July 2016 election and found that only 26 per cent ofAustralians think the government can be trusted (the lowest level since it was first measured in 1969).Forty per cent of Australians were not satisfied with democracy (the lowest level since the periodafter Gough Whitlam was dismissed in 1975); and there was a record low level of interest (30 percent) in the 2016 election

The study’s lead researcher, Professor Ian McAllister, said that we are seeing ‘the stirrings amongthe public of what has happened in the United States of the likes of Trump, Brexit in Britain, in Italyand a variety of other European countries … it’s coming here and I would have thought this a wake-

up call for the political class’.4 Australian conservatives, hoping to take advantage of this disillusion,welcomed Trump’s victory, with Tony Abbott tweeting: ‘Congrats to the new president whoappreciates that Middle America is sick of being taken for granted’ Mining magnate Gina Rineharturged Australia to follow Trump’s lead and Andrew Bolt told his audience: ‘The revolution is on!’Very much part of this phenomenon, Pauline Hanson’s One Nation party achieved an unprecedentedfour seats in the Senate in the 2016 election

But what is populism?

To many, ‘populism’ is a shorthand term for pandering to people’s baser instincts, exemplified inTrump’s campaign and his presidency It inflames a desire to blame ethnic and religious minorities; it

is a lust for cheap popularity and it is a phony hostility to the Establishment and to ‘the elite’ – such isthe common understanding Populist leaders are seen to be posing as outsiders and as representatives

of the underdog Above all, populism is regarded as a right-wing phenomenon But it’s not thatsimple This book argues that a progressive version of populism exists too A progressive populismfights for the genuine economic grievances of everyday people without blaming minorities ormigrants In fact, a progressive populism is a very good way to neutralise this sort of scapegoatingbecause it addresses the social and economic problems which partly drive the rise of right-wingpopulism

Populism is a notoriously loose description of a political stance In many ways it is a style of doingpolitics rather than a series of particular policies Some people think populism means trying to be

popular, but this is misleading The words populist and populism come from the Latin word for ‘the people’ (populus) – what today we’d call the public The meaning survives in the expression vox populi, the voice of the people Generally speaking, populism is a style of politics which frames

politics as a conflict between the people and an elite But the identity of the people and the nature ofthe elite can vary widely On this basis populism can be either a right-wing or a left-wingphenomenon In some countries today, the traditional battle between right and left is being channelledthrough a populist filter

Academic Margaret Canovan conducted one of the early studies of populism She argues that thereare two broad strands to populist movements The first is rural, based on organisations of peasants orfarmers, a kind which typically emerges when these people are confronting modernisation Thesecond is characterised by highlighted tensions between the elite and the grassroots This can take theform of ‘idealisations of the man in the street or of politicians’ attempts to hold together shakycoalitions in the name of “the people”’.5 Canovan concludes that populism can take right-wing or left-wing forms but that ‘[a]ll forms of populism without exception involve some kind of exaltation of andappeal to “the people” and all are in one sense or another anti-elitist’.6

The American writer John Judis, author of the recent book The Populist Explosion, also argues

that populism is ‘not an ideology but a way of thinking about politics’.7 He too supports the view thatpopulism can exist in both left and right forms Left-wing populists champion the people against anelite or establishment (as in Occupy Wall Street’s slogan about the One Per Cent versus the 99 percent) Right-wing populists are against an elite ‘that they accuse of coddling a third group, which canconsist, for instance, of immigrants, Islamists or African American militants’.8

Judis notes that the original US People’s Party was formed in the 1890s when Kansas farmersunited with an early workers’ organisation and challenged the existing establishment of Republicansand Democrats The People’s Party developed policies against monopolistic railroads and greedybanks and in favour of progressive income tax and expanding public controls As one populist writersaid, they aimed to get rid of ‘the plutocrats, the aristocrats, and all the other rats’.9 To the AustralianLabor Party, emerging in the same tumultuous decade of the 1890s, the US People’s Party wassomething of a model and there were early proposals to call the new Australian party the People’sParty, rather than the Labor Party.10

This progressive strand within American populism re-emerged in 2015–16 when Bernie Sanders

competed with Hillary Clinton to become the Democrats’ presidential candidate At the start of thatcampaign he was seen as little more than an eccentric, rumpled, 70-plusyear-old running an unusualcampaign One newspaper described him as a ‘grumpy grandfather type’ who ‘embraces hisreputation for being gruff, abrupt and honest [and] promises to be bold’.11 As time went on, observersbegan to note the cheering, youthful crowds that he drew, his calls for a ‘political revolution’ and hisstrong social media campaign on Facebook.

Although he did not win the Democratic nomination, Sanders surprised everyone by doing wellenough in the battle for the presidential nomination to win 23 primary and caucus races to Clinton’s

34 With no big corporate donors, he raised millions of dollars in small donations from a growingsupport base, especially from the young Most surprising of all were his campaign’s public statementsand appeals Sanders attacked ‘the One Per Cent’ of super-rich people who had benefittedenormously from the globalised economy while others struggled to survive In one speech at LibertyUniversity, he said: ‘In my view there is no economic justice when the 15 wealthiest people in thiscountry in the last two years saw their wealth increase by $170 billion’ It was a fact he repeated allthrough his energetic campaign

Another Sanders target was the deregulated banking system that had caused the global financialcrisis Sanders charged: ‘Wall Street used their wealth and power to get Congress to do their biddingfor deregulation and then, when Wall Street collapsed, they used their wealth and power to get bailedout’.12 The contrast he pointed out in several speeches was with the 41 per cent of American workerswho didn’t take a single day of paid vacation in 2015 and with the third of workers in the privatesector who cannot even claim paid sick leave

Like Trump, Bernie Sanders was also widely regarded as a populist, reviving a long Americantradition in which the central conflict is seen to be between the people and the elite Sanders happilydescribed himself as a democratic socialist and pointed to the socialdemocratic states of Scandinavia

as models In his platform, Sanders said he supported: a national public healthcare system; an end tocorporate welfare; abolishing fees for college degrees; a full employment policy; raising the minimumwage to $15 an hour; and preventing ‘greed and profiteering of the fossil fuel industry’ The money toachieve these aims was to be raised by compelling wealthy individuals and corporations to pay theirfair share of tax

All of these policies, advocating a stronger role for government, effectively rejected the long dominance of the ideology known as neoliberalism – the ideology of small government, ofglobalising in the form of deregulated markets and of faith in market forces to guide and manage theeconomy Progressive populism in the Sanders mould attributes today’s social and economicproblems not to migrants or minorities nor to the ‘politically correct’ mainstream media, but to thefailure of neoliberal policies And because progressive populism addresses the forces driving therise of right-wing populism, it is the most effective antidote

decades-The political theorist Chantal Mouffe is not surprised by the rise of right-wing populism:

In a context where the dominant discourse proclaims that there is no alternative to the current neoliberal form of globalisation and

that we have to … submit to its diktats, it is small wonder that more and more workers are keen to listen to those who claim that

alternatives do exist, and that they will give back to the people the power to decide.13

And this is just what Trump promised Unlike the campaign of Hillary Clinton, issues of economicinjustice featured heavily in his winning campaign Just a few days before the November election,Trump told a huge crowd in an aircraft hangar in Pittsburgh: ‘When we win, we are bringing steelback, we are going to bring steel back to Pennsylvania, like it used to be We are putting our steel

workers and miners back to work’ 14 Trump touched a raw nerve No steel mills now exist inPittsburgh and hundreds of thousands of steelworkers had lost their jobs since the 1980s, in part due

to freer global trade Whether Trump was sincere in (or even capable of delivering) his promise tobring steel jobs back to Pittsburgh is not the point Identifying economic grievances and blaming them

on free trade and globalisation is almost unprecedented by a Republican candidate More importantly,

it was a challenge which Hillary Clinton, as a long-time supporter of neoliberal free trade, could notrebut As it turned out, Trump did win in Pennsylvania It was one of the three ‘rust belt’ states thatmade the difference to victory or defeat in the presidential election

Both Trump and Sanders were outsiders in US politics Both denounced the domination of bigbusiness and the banks and blamed them for much of US economic woes Both based their campaign

on appeals to ordinary Americans and both were described as populists Unlike Trump, Sanders was

a progressive populist When he talked about the elite and the establishment, he meant the economic elite and the corporate establishment Unlike Trump, Sanders did not scapegoat immigrants or ethnic

minorities

The groundswell grows

The groundswell of populism soon saw Sanders joined by the leader of the British Labour Party,Jeremy Corbyn When he began his election campaign in April 2017, Corbyn faced deep oppositionfrom many of his fellow Labour members of parliament Like most media commentators, they alsobelieved that because of his left-wing history and left-wing policies he could not possibly win Andcertainly he was in trouble at the beginning of the campaign, when polls were placing Labour up to 24points behind the Conservatives

From the start of the 2017 election campaign Corbyn framed the contest in the language ofprogressive populism He described the election as a battle of ‘the establishment versus the people’and promised to overturn ‘a rigged system’ that favoured the rich and powerful.15 Under him, Labourwould not be part of the ‘cosy club’ whose members think it is natural for Britain to be ‘governed by

a ruling elite, the City and the tax dodgers’, he said His opponents believed such deeplycontroversial rhetoric was guaranteed to result in a huge loss But his message was straightforwardand cut through the spin and PR fog of traditional political rhetoric And these policies provedpopular among the British people Early opinion polling showed that up to 71 per cent of peoplesupported his proposal to raise the minimum wage to ten pounds an hour.16 A similar proportion ofthe British public (62 per cent) supported his plan to raise taxes on the rich and high income earners

Corbyn’s manifesto broke other unspoken rules of the economic consensus of neoliberalism Heargued that the railways and water supply should return to public ownership He promised to extendfree school meals by a tax on private school fees He also urged increased funding for social housing,and his pledge to abolish university fees helped build a powerful momentum among young people,who registered to vote at unprecedented levels and voted Labour on election day The Conservativeshad called the election, confident they would increase their majority in parliament, and Corbyn’scampaign of progressive populism destroyed their majority and almost beat them

There were close parallels between the movements around Bernie Sanders and Jeremy Corbyn.Officials from Sanders’ campaign helped Corbyn with ideas on strategy and fundraising Sandershimself visited Britain just days before the election campaign and drew comparisons between his

own policies and Corbyn’s:

Too many people run away from the grotesque levels of income and wealth inequality that exist in the United States, the UK and all over the world Globalisation has left far too many people behind Workers all over the world are seeing a decline in their standard

of living Unfettered free trade has allowed multinational companies to enjoy huge profits and make the very rich even richer while workers are sucked into a race for the bottom.17

The spread of progressive populist ideas has not been confined to the United States and Britain InSpain the progressive populist party Podemos emerged in 2014 and grew so rapidly that it secured 20per cent in the 2015 elections, campaigning on an anti-austerity platform, supporting increased publicspending and strong anti-corruption measures In the 2016 election it retained its electoral support InGreece, another new progressive party, Syriza, formed out of a coalition of left-wing andenvironment groups and received 35 per cent of the vote in the 2015 elections, later forminggovernment While the majority trend within European populism is right-wing, the significance of anew left populism should not be underestimated

Neoliberal globalisation

Driving the emergence of right- and left-wing populism is the set of policies known as neoliberalism.This became the mindset of the political class in the 1980s and was a very deliberate project to windback the welfare state, reducing the public sphere with its public goods of health, education, transportand culture, along with the tax system which paid for it.18 The neoliberal project is based on the ideathat the market is the most efficient distributor of goods because it combines the profit motive andcompetition It takes no account of justice, inequality or social cohesion Ultimately this promotes thetransformation of all human relationships (not just economic ones) into commercial transactions

It was neoliberalism with its floating currencies and deregulated markets which drove the presentform of globalisation But neoliberal globalisation means much more than a loosening of trade Itmeans the unplanned transfer of blue- and white-collar jobs from erstwhile industrial countries to lessdeveloped nations It also means national governments are less able to control what happens in theirown society and economy

When the political class adopted neoliberalism, it effectively transferred significant amounts ofpolitical power, the democratic power of governments, to private corporations While benefitting acorporate elite, the neoliberal experiment demonstrably failed in the global financial crisis and theeffects of that failure are still with us What had been a crisis of private debt was transformed bygovernment bail-outs into an alleged crisis of public debt This sleight of hand reinforced theneoliberal dogma that the problem was always governments The ideology of ‘small government’meant that governments imposed even more stringent cost-cutting measures

The failure of neoliberalism in Australia

The populist groundswell in the United States, Britain and Europe and elsewhere is reflected bysimilar movements in Australia, prompted by similar causes In the following chapters I examine theways in which neo-liberalism has failed to produce a good society as well as its role in fostering apopulist backlash

First and most significantly, 30 years of neoliberal globalisation and deregulation have produced apolarisation of wealth which has undermined Australia’s egalitarian ethos The gulf between thesuper-rich and the rest of us is widening We are becoming a more divided society with a tinywealthy elite at one extreme and a significant group of poor at the other.

Nor is it solely a matter of fuelling material in- equality As important as inequality (and moreimportant in the long term) is climate change The ideology of small government and deregulation isimpeding our response to accelerating climate change despite the clear warning signs in record hightemperatures and the bleaching of the Great Barrier Reef in Australia Whatever combination ofmarket and state arrangements is best at fostering renewable energy, it will need tough governmentaction to implement this and to defeat the power of the coal and oil industries To support such action

we need a broad populist coalition of all the diverse forces demanding real action on climate

And just as it has in the United States and Britain, privatisation is spreading throughout Australiansociety, changing services that used to be provided to all citizens into profit-making enterprises Thesale of public assets like seaports, airports and electricity poles and wires has simply createdexpensive monopolies Billions have also been wasted in attempting to privatise technical andvocational education Despite these failures, private companies are now being encouraged to movedeeper into education, aged care and disability services

Likewise, Australia has its own rust belt of closed factories and, for those in employment, jobs areincreasingly casual, part time and less secure The deregulation of Australian workplaces means thatfor younger workers, jobs with paid holidays and fair wages are becoming less common And thanks

to a variety of temporary overseas visa schemes a casualised, cashin-hand underclass is spreading inthe agriculture, retail and hospitality sectors Such workers are exploited and their labour conditionsundermine those of local workers This is not occurring accidentally but because economic orthodoxy(backed by employers) demands this labour deregulation The resulting job insecurity combined withlow wages is one factor stoking a right-wing populist backlash based on xenophobia and hostility tooverseas workers

While low-paid workers are made increasingly vulnerable, at the other end of the scale bigcorporations do everything they can to avoid paying tax, a practice made easier in the globalisedworld of neoliberalism In 2014, the Australian branch of the tech giant Apple paid $80 million in tax– just 1 per cent of its total Australian income of $6 billion Its rival, Microsoft, paid just 5 per cent

of its income Over several years big mining companies like BHP and Rio Tinto shifted billionsthrough Singapore, where tax rates can be a mere 2.5 per cent Nor is it just corporations Some ofAustralia’s richest families and individuals pay little or no tax When the Panama Papers wereleaked, up to 800 wealthy Australians were associated with shell companies in tax havens likePanama Meanwhile, ordinary Australians are left to pick up the tab for hospitals, roads and schools,effectively subsidising those who refuse to pay their share

Finally, compounding the problem of wealth inequality, the banking and finance sector has swollenenormously since it was deregulated In Australia we have some of the biggest and most profitablebanks in the world Together they form a rapacious oligopoly which extracts more than $30 billion inprofits each year from the rest of Australia In their zeal to lend money, deregulated banks havefuelled a housing price boom, the result of which is that fewer Australians now own their own homethan 40 years ago It’s now time to look again at regulating banks and the finance industry to ensurethat they act in the public interest

Overall, the spread of neoliberal orthodoxy through society has corroded many of the institutionsand relationships on which citizens rely and which offer protection from the vagaries of the market

This orthodoxy has shrunk the democratic space by removing all sorts of functions from the public tothe private sphere The real meaning of ‘small government’ is that we have ended up with a smalldemocracy, because governments are still the only institutions we have for exercising our democratic,collective voice The zealous advocacy of theories of self-interest, competition and small governmenthas led to a dead end.

All of this spawns populisms of both the Right and Left The crucial point of difference betweenthem concerns the meaning of and response to globalisation Are the problems of globalisationprimarily issues of economics and economic justice or are they mainly an issue of immigrants and ofchanging the ethnic mix? Progressive populists are alarmed by the damage that open economicborders, which import cheap products and export jobs, do to local jobs and the national economy.Right-wing populism dredges the deepest and most dangerous emotions to reject the changing ethnicmix which results after years of relatively open immigration

When right-wing populists define what they mean by the ‘elite’ they take aim at the progressivemiddle class, the so-called politically correct, who abhor racism and gender inequality Progressivepopulists, by contrast, define the ‘elite’ in economic terms as the super-rich and corporate moguls.When talking about ‘the people’, progressives seek to unify the middle class and working class in analliance for reform Progressive populists emphasise the common ground which the majority ofpeople share on issues of economic justice By focussing attention on genuine economic grievances, aprogressive populist agenda can undercut the way ethnic and religious minorities are demonised

Some see progressive populism as the natural continuation and revival of social-democratic andlabour politics which have been compromised by their turn to ‘third way’ politics One critic ispolitical theorist Chantal Mouffe She argues that the neoliberal consensus between conservative andonce-radical workers’ parties has created a favourable ground for the rise of populism because manypeople feel their voices are unheard and ignored in the representative system.19 The problem is thatthis often takes the form of a right-wing populism which sees ‘the people’ defined to excludeimmigrants and minorities

On this basis many people criticise ‘populism’ negatively She responds:

This is a mistake, because populism represents an important dimension of democracy Democracy understood as ‘the power of the people’ requires the existence of a ‘demos’ – a people Instead of rejecting the term populist, we should reclaim it.

In this book my intention is to reclaim populism by fostering a progressive version of it which putsthe interests of the common man and woman first, ahead of the priorities of a wealthy global elitewhose interests and priorities have dominated for far too long

PART ONE

LOOKING BACKWARDS, LOOKING FORWARD

CHAPTER 2

THE RISE AND RISE OF THE SUPER-RICH

There’s class warfare, all right, but it’s my class, the rich class, that’s making war and we’re winning.

Warren Buffett, billionaire investor1

With their collective wealth estimated at $US7.7 trillion, the global elite of the super-rich are thenatural opponents of progressive populism Some of that global elite are household names inAustralia In July 2016 over 200 of them gathered for a huge celebration in the dazzling blue waters

of the Mediterranean Trucking billionaire Lindsay Fox was throwing an allexpenses-paid birthdayparty and had invited his closest friends to enjoy a cruise from Athens to Venice via Corfu Fox’s ship

of choice was Seabourn Odyssey, renting for over a million dollars a week and containing 225 luxury

suites.2

Lindsay Fox’s own wealth totals $2.9 billion His fellow passengers included the mining

billionaires Gina Rinehart and Andrew Forrest According to the Australian Financial Review’s

2017 Rich List they are worth (in Australian dollars) $10.4 billion and $6.8 billion respectively.3Shopping centre king John Gandel ($6.1 billion) and retail giant Solomon Lew ($2.3 billion) alsotook part in the exclusive celebration on the high seas Further down the guest list for the stylishcruise were former Liberal Treasurer Joe Hockey, former Liberal Victorian Premier Jeff Kennett,media businessman Harold Mitchell and golfer Greg Norman.4

This public airing of the details of a party for Australian billionaires is rare It’s not always easy to

get information on the super-rich A key source is the Financial Review’s annual Rich List The 2017

edition identified 60 Australian billionaires, headed by the paper manufacturing magnate AnthonyPratt ($12.6 billion) The most modest billionaire (scraping in at just $1 billion) is Melbourne-basedPeter Gunn, who owns PGA Group, a private investment business that holds a property empire inoffice and industrial blocks and is also involved in cattle production Others among the ten wealthiestare James Packer ($4.75 billion), whose money is in casinos; Harry Triguboff ($11.45 billion), whomade a fortune from building tower blocks; and Frank Lowy ($8.26 billion), the Westfield shoppingcentre magnate The eighth wealthiest Australian is Hui Wang Mau ($6 billion), who made much ofhis money in Hong Kong property and took out Australian citizenship after studying in South Australia

in the early 1990s

The overwhelming majority of Rich Listers are men, with an average age of 66 years There areonly 22 women on the list, among them Gretel Packer ($1.02 billion) and Bianca Rinehart ($2.7billion) Their wealth, along with that of many others, is a testament to how important inheritance is inshaping the particular nature of Australia’s super-rich Another noteworthy feature is the number onthe list who have amassed their fortune by way of government connections rather than throughinnovative businesses Over 80 per cent have made their fortunes in the regulated industries ofproperty, mining, banking and the finance industry As two economists from the University ofQueensland and the University of New South Wales, Paul Frijters and Gigi Foster, have pointed out,these are all industries that require licences and concessions or special zonings from governments.5

Twenty-five Rich Listers are based overseas, several of them in China All in all, the collectivewealth of those on the 2017 Rich List is $233.1 billion, an amount boosted by the long property boomand the resurgence in the price of coal, iron ore and other minerals Studying the printed list gives an

insight into the lifestyles of the rich and super-rich The pages of the Rich List are littered withadvertisements for the toys and trinkets of the wealthy They include Bulgari diamonds, Gulfstreamprivate jets, watches by Rolex and Raymond Weil, and Ferrari cars whose prices range from a low

$188 000 to more than $400 000

What does all this wealth mean in the context of the wider society? A 2016 study by the aidorganisation Oxfam showed that the joint wealth of Harry Triguboff and Gina Rinehart (thenestimated at $21.6 billion) is greater than the combined wealth of 20 per cent of the Australianpopulation The top 1 per cent of the population, Oxfam calculates, own more than the bottom 70 percent.6

The rise of the super-rich is a global phenomenon The American business magazine Forbes

produces an annual list of the world’s billionaires In 2017 there were 2043 on the list, headed bycomputer entrepreneur Bill Gates, whose estimated wealth is $US86 billion 7 Others in the top tenare: investor Warren Buffett ($US75.6 billion); Amazon king Jeff Bezos ($US72.8 billion); Facebookmogul Mark Zuckerberg ($US56 billion) and the funders of the American right wing, the brothersCharles and David Koch, who are jointly worth $US96.6 billion Another name mentioned is that of

the current US president, Donald Trump, whom Forbes estimates has a fortune of $US3.5 billion,

almost half of it tied up in several Manhattan office blocks, including Trump Tower.8 Lindsay Fox

and some of the names already mentioned are among the 33 Australians in Forbes’s global list.

Together the world’s billionaires form a global elite whose collective wealth amounts to $US7.7trillion They form part of the ‘One Per Cent’ made notorious by the Occupy Wall Street movement.The Oxfam study reports the startling fact that globally just eight people own the same amount ofwealth as the 3.6 billion least wealthy people ‘Collectively, the world’s richest eight men have a netwealth of $US426 billion [$A621 billion], about the same as the bottom half of humanity’, said DrHelen Szoke, Oxfam Australia’s chief executive That this co-exists in a world which sees one in tenpeople surviving on less than $2 a day ‘highlights how broken our economic system really is’

A member of the Forbes list who deserves special mention is Rupert Murdoch, who has an

estimated wealth of $US13.1 billion Murdoch was born in Australia, where he is a powerful mediamogul, but he does not appear on the local Australian Rich List because he has been an Americancitizen since 1985 In 2016 he married former supermodel Jerry Hall at Spencer House, an ancientLondon property owned by Earl Spencer, the brother of Diana, the late Princess of Wales As a token

of his love Murdoch gave his bride a marquise-cut diamond engagement ring whose worth wasvariously estimated at between $1.7 million and $4 million (the lower figure admitted by Murdoch’sown newspapers) The diamond’s design was based on the ring reputed to have been commissioned

by France’s profligate King Louis XIV for his mistress, Madame de Pompadour.9

Rupert Murdoch’s wedding and Lindsay Fox’s birthday cruise are ostentatious displays of luxuryfar removed from the lives of ordinary Australians But they symbolise something new in Australiansociety: the highly visible growth of inequality This inequality is one of the forces driving the rise ofright-wing populism, as the leader of the Labor Party Bill Shorten observed in a key speech definingLabor’s purpose:

Inequality kills hope It feeds that sense of resentment that the deck is stacked against ordinary people That the fix is in and the deal is done … It fosters that sense of powerlessness that drives people away from the political mainstream, down the low road of blaming minorities and promising to turn the clock back.10

Shorten went on to argue that to stem the growth of inequality, Labor would have to affirm the role ofgovernment and distance itself from free market economics: ‘I did not run for parliament to shrug my

shoulders and say, “Oh well, the invisible hand That’ll help you The market will decide”’ Thismarks a welcome shift in Labor’s direction, away from its embrace of the ideology of deregulation,market competition and small government.

There are many other reasons to oppose the growth of inequality One is to minimise the social andpolitical power that comes from great wealth Billionaires know that who runs a government – even aneoliberal ‘small government’ – matters Their collective influence and generous political donationscombined with a news media which reflects their interests systematically subvert the democracy ofone person, one vote As this happens government increasingly becomes a plaything of corporatespecial interests

Another reason is that as the gulf between the super-rich and average Australians deepens – which

it will continue to do if governments allow the market to call the shots – Australia will travel furtherdown the path towards a less civilised society and one with little social solidarity As life getsharder, many people look for someone to blame This can fuel hatred of migrants or ethnic groups andincrease the fear of those who are different In short, societies can turn ugly To prevent this, we need

to understand the facts on wealth, and to cultivate political ideas and movements that will constrainthe growth of inequality

Wealth in Australia

The antics of the individual members of the super-rich may be vulgar and colourful, but this is not thepoint Any argument about wealth and inequality should not be directed at individuals but at theunderlying social and economic dynamics that enable that wealth and its grossly uneven distribution.These dynamics have evolved thanks to a deregulated form of capitalism which has released many ofthe former constraints on the profit motive

However, investigating the facts is not always easy The stark reality about wealth in Australia is asensitive matter The Australian Bureau of Statistics has only been systematically collecting data onthe distribution of wealth (as opposed to income) since 2004 Before this, the last official inquiry intowealth was in 1915 The most recent study was undertaken for the Australian Council of Social

Service, the peak body of the community and service sector Its report, Inequality in Australia: A nation divided, contains the most up-to-date information.11

The study reveals what many suspected Australia’s wealth is concentrated in the hands of a smallgroup of people The top 10 per cent own close to half (44 per cent) of all wealth while the top 5 percent of Australians own 30 per cent of all wealth In dollar terms this means that the average wealth

of a member of the top 5 per cent is $4.4 million (which is certainly an underestimation, according toresearchers) while the average wealth of the bottom 5 per cent is minus $7000 (a minus figurebecause of indebtedness).12 Also, the kind of wealth owned by the top and bottom differs markedly.The wealth of the top 20 per cent comprises high-value private homes, share portfolios, investmentproperties and large superannuation accounts The ‘wealth’ of the bottom 20 per cent is made up of asmall amount of superannuation and items like an old car, wardrobes, tables and TVs

Perhaps more alarming is that the gulf between the super-rich and the rest of Australia is heading inthe wrong direction In spite of the blip of the 2008–09 global financial crisis, which temporarilynarrowed wealth inequality, wealth is accumulating faster in the hands of the already wealthy

According to Inequality in Australia: ‘The wealth of the top 20 per cent increased by 28 per cent

over the eight years to 2012 while the wealth of the bottom increased by just 3 per cent’.13 Thiswidening gap between middle and top income earners means that the top 10 per cent ‘are pullingaway from the living standards of the majority, and increasingly, people at the top end are leadingvery different lives to the rest of us’, say the report’s authors.14 As they point out, inequality is now acause for concern for global bodies like the International Monetary Fund (IMF) and the Organisationfor Economic Co-operation and Development (OECD) because it contributes to weaker economicgrowth.

Ownership of the assets which make up much individual wealth is one dimension of inequality.Another is income The figures on income reveal the same pattern of wealth accumulating at a muchfaster rate at the top than at the bottom For most Australians, income comes from wages, salaries orwelfare benefits In the 25 years before 2010, real wages increased on average by 50 per cent, but byonly 14 per cent for those in the bottom 10 per cent of income earners compared to 72 per cent forthose in the top 10 per cent Not only is income growth highly concentrated in the top 10 per cent, it is

even more concentrated within that 10 per cent The report says that since 1978, 75 per cent of the top

10 per cent’s increase in income has gone to the top 1 per cent But even this does not convey howbeneficial this has been to the super-rich: 65 per cent of this increase has gone to the top 0.1 per cent,which numbers 18 000 individuals.15

Remarkably, one of those who is most worried about low wages and incomes is the Governor ofthe Reserve Bank of Australia, Philip Lowe He is concerned about its effect on the broader economy,since low wages decrease demand for goods and services In June 2017, the Governor actually urgedworkers to put aside their fears about job security and demand a greater share of the economy’sprofits to drive up their wages Yet the Fair Work Commission, urged on by employers, decided to

lower wages by cutting Sunday and some holiday penalty rates for many workers in the hospitality,

retail, and fast food industries More broadly in the workforce, when people load up theirsupermarket trolleys, the dollars they use to pay for the tinned food, vegetables and ice cream areshrinking each year

By contrast, some of the most obscenely high incomes are those earned by the chief executives(CEOs) of major corporations Using a rare study of executive salaries conducted by the ProductivityCommission, a 2014 report by the Australia Institute found:

the average pay packet among the top 20 CEOs in Australia is almost $10 million, 150 times more than average weekly earnings at the time Among CEOs of the next 20 companies, incomes are about half this amount, around 75 times more than the $62 218 the average Australian worker earns in a year.16

Executive salaries have been soaring for 25 years Figures submitted to the Productivity Commission

by Egan Associates show that in 1993, a CEO earned 15 times as much as the average full-timeworker By 2007 the gap had grown to 250 times! This grotesque gulf is too much even for some of itsbeneficiaries The most honest comment came from the outgoing chief executive of Telstra, DavidThodey In 2015, on the last day of his job, Thodey told a journalist that he had made more than $27million in cash and shares in three years ‘I get paid a lot of money’, he said, ‘but I can’t sit here anddefend my salary against all the guys who are out there working every day, and I wouldn’t try to Ithink there is a real issue with income disparity between what an average person gets and some of thereally big salaries’.17 Top CEOs are not often so frank

Despite the alarming figures above, overall inequality in Australia isn’t as gross as it is in theUnited States, where 21 per cent of children live in poverty, a much higher percentage than most other

rich nations, including Australia where the same figure is 17 per cent.18 In Australia one of the greatmoderating influences has been widely spread home ownership In fact, owning a house or flat is themost common form of wealth amongst average Australians and is regarded as a form of security forold age The bad news is that the proportion of people who own their own home has been decliningsince 1981.19 Young people have been especially hard hit In 1981 more than 60 per cent of peopleaged between 25 and 34 owned their own home (meaning, mostly, they borrowed money and werepaying off the loan) By 2011 this had dropped to 48 per cent Part of the problem is that an increasingproportion of the housing stock now consists of investment properties Increasingly banks are lendingmore to investorlandlords than to would-be home owners From 2000 to 2013 bank loans to investorsrose by 230 per cent compared to a rise of 165 per cent for people buying a home to live in The otherscandal about investment properties is the extent to which they are subsidised by other taxpayers.Over two-thirds of property investors are ‘negatively geared’, which means that losses on theinvestment can be deducted from taxable income In simple terms this is a subsidy to those wealthyenough to invest in houses or flats Moreover, when it comes time to sell the property, the increasedvalue (capital gains) reaped from the sale of an investment property is taxed at a reduced rate of 50per cent Any attempt to change these generous laws is met with howls of disapproval from propertyinvestors.

Wealthy Australians have no problem buying a home In 2016 a record was set for harboursidehomes in Sydney A group of four homes in Coolong Street, Vaucluse (held by three differentfamilies) were jointly sold for a total of $80 million They are being knocked down to build a singlenew residence for Leon Kamenev, co-founder of the online food ordering service Menulog, andrevealed by the Rich List to be worth $560 million Another record was broken when a penthouseapartment near the Sydney Opera House was sold for $27 million off-the-plan In Melbourne,property developer Daniel Besen and his wife Danielle sold a four-bedroom, architect-designedhouse in Toorak for $26 million It features ‘a gym, custom-lit gallery, hidden wine and cigar loungeand an expansive underground garage’, according to one report Meanwhile on Queensland’s GoldCoast a beachside mansion sold for a similar amount.20

For many others, life is not at all easy According to the latest study three million Australians livebelow the poverty line.21 That three million is over 13 per cent of the population and includes 731

000 children (one in six) with the number of children in poverty increasing in the ten years to 2014.

Remarkably, around one-third of those in poverty were found to rely on wages as the main income,according to this study These Australians are widely described as ‘the working poor’

To get some idea of what poverty means to people, the Bureau of Statistics regularly exploresfinancial stress, asking people whether they have taken certain actions because they lack money.22 Atypical question is: ‘Last year, were you unable to pay a gas/electricity/ phone bill on time?’ Otherquestions asked whether help had been sought from a welfare/community organisation; whetheranything had been pawned or sold; whether people had been unable to heat their home or whetherthey went without meals On the basis of this kind of information, we can begin to answer thequestion: who are the poor?

The large majority of those living in poverty are from three groups: the unemployed; people over

65 years of age; and sole parents with one or more children Housing is the biggest cost for mostbudgets and 60 per cent of the poor rent their homes Just what this means for someone below thepoverty line is revealed in research done by the religious charity Anglicare, which produces a RentalAffordability Snapshot based on one weekend a year In 2016, on a typical weekend, it found there

were 75 410 properties available for rent across Australia Of these, a single parent with twochildren receiving a Parenting Payment could afford only 780 – less than 1 per cent of theseproperties Someone on a Disability Support Payment could only afford 389 or 0.5 per cent, whilethose on the Aged Pension could afford only 4.3 per cent of these rental properties.

The power of the super-rich

At the other end of the spectrum, the super-rich can exert a great deal of power, including ongovernment policy One revealing example was a mid-2010 protest in Perth – not the normal kind ofprotest rally, but one led by billionaires At one point the mining heiress Gina Rinehart, sporting astring of pearls, stood swaying on the back of a truck and bellowed into a microphone Her voicebecame increasingly hoarse as she led the 2000-strong crowd in chanting, ‘Axe the tax! Axe the tax!’Behind her, in a spotless yellow and blue mining shirt, stood another billionaire, Andrew Forrest.Forrest attacked the ‘socialist’ Rudd government and suggested Australia was ‘turning Communist’.The rally was called by a mining lobby group and comprised mostly mining industry employees whohad been bussed into the centre of the city, where they were handed neatly printed placards.23

The billionaire mining tycoons’ target was a new resource tax on the booming profits of the miningindustry, introduced shortly before by the Rudd Labor government If the rally presented the innocentpublic face of the protest, something more sinister was going on behind the scenes According toeconomic commentator Paul Cleary: ‘As soon as Rudd sprang the new tax on the industry, the bigthree companies decided they had to kill this plan – and they were prepared to play dirty’.24 The bigthree were Rio Tinto, BHP Billiton and Xstrata, collectively worth $450 billion and largely foreign-owned Led by BHP Billiton, they set up a ‘war room’ in BHP’s Melbourne office to run a $22million TV and print media scare campaign, for which Gina Rinehart kicked in $750 000.25

The media blitz, titled ‘Keep Mining Strong’, convinced many people that the industry had ‘saved’Australia during the global finance crisis and that the new tax would cost jobs and repel investment.26The campaign succeeded beyond the expectations of the mining lobby Seven weeks after the tax wasannounced, the Prime Minister Kevin Rudd was deposed and his super-profits tax went with him AsCleary records: ‘Having subverted a functioning democracy, mining executives were celebrating inairport lounges around the country’ In case the deeper message behind these events was unclear, theRio Tinto CEO, Tom Albanese, spelt it out to a meeting of 500 mining executives in London Othergovernments around the world who wanted ‘a new tax to plug a revenue gap’ must ‘learn a lesson’

from the Australian events, he said The Australian newspaper was in no doubt about the meaning of

this statement, headlining the speech as ‘a warning to other governments’.27

One person who witnessed these events up close is former Labor Treasurer Wayne Swan Askedabout the power of corporate Australia, he said: ‘When you’ve seen the way they operate behind thescenes, through climate change and through mining tax issues, they are brutal, they are powerful, theyare selfish, they take no prisoners … the power that business expects to exercise in our democracy isfar in excess to the amount of power it ought to have’.28

Murdoch and the 2013 election

Australians witnessed a different display of the feral power of the super-rich in August–September

2013 This time the instigator was global media giant Rupert Murdoch, whose weapon of choice washis vast stable of influential Australian newspapers The fact that the Australian-born Murdochbecame an American citizen (so he could legally extend his ownership of American TV) means hecannot vote in Australian elections But in the 2013 election campaign Murdoch exercised far morepower than any individual citizen Shortly before the start of the election campaign he signalled hissupport for the leader of the Opposition, Tony Abbott, tweeting, ‘Conviction politicians hard to findanywhere Australia’s Tony Abbott rare exception Opponent Rudd all over the place’.29

To run his campaign Murdoch flew in one of his trusted lieutenants, Col Allan, then working on

Murdoch’s New York Post but formerly an editor of Sydney’s Daily Telegraph Reports soon

emerged that Allan had held meetings with editors in which he instructed them to campaign against

re-electing Rudd’s government The day after Kevin Rudd announced the election date, Sydney’s Daily Telegraph’s front page bellowed: ‘KICK THIS MOB OUT’ It was the start of a co-ordinated

campaign among Murdoch’s newspapers and was particularly hysterical in the swing states of

Queensland and New South Wales Among a string of hostile headlines, Brisbane’s Courier-Mail depicted Rudd as a masked bandit (‘KEV’S $733 MILLION BANK HEIST’) while the Daily Telegraph photoshopped Labor leaders in Nazi uniforms.

Some protested against the blatant bias The activist group GetUp! made a TV advertisementattacking bias in Murdoch’s newspapers After screening for four days on Channel Nine in Brisbane,the advertisement was banned by all the commercial TV networks The last week of the campaignsaw Kevin Rudd attack Murdoch, referring to ‘the blatant bias of the Murdoch press’ He added, ‘I’vetaken it head-on and I think Australians have been waiting for someone to do that for a long time’ Incontrast, Tony Abbott defended Murdoch, stating ‘I’ve got a lot of time for Rupert Murdoch … he’sone of the most influential Australians of all time and … we should support our hometown heroes’

As the election campaign intensified, the Murdoch tabloids ramped up the attack On Sunday 1

September the Sydney Sunday Telegraph ’s entire front page was bluntly headlined: ‘AUSTRALIA

NEEDS TONY’ with a large photo of Tony Abbott’s face pictured against a background of the

Australian flag In Brisbane, the Sunday Mail, the Sunday edition of the Courier-Mail , ran the

headline ‘RUDD NEEDS A MIRACLE’ with an article predicting that Kevin Rudd is ‘slidingtowards election defeat’

On the eve of the election, Friday 6 September, the Melbourne Herald Sun ran its editorial on the front page with the headline ‘TONY’S TIME’, and a ringing endorsement inside The Courier-Mail

ran a visually striking image of a spotlight on a stage containing a forlorn clown’s hat The headlineread ‘THE CIRCUS IS OVER’, recalling an earlier headline attack on Labor, ‘SEND IN THECLOWN’, directed against a particular Labor candidate The circus story was accompanied by aprominent editorial extract that proclaimed that ‘More than any recent Opposition leader, Mr Abbotthas earned a chance to prove himself as Prime Minister’ This barrage of hostile headlines enduredfor the entirety of the campaign, during which the Murdoch press carried not a single headline critical

of the Tony Abbott–led Opposition

Some regard newspapers as obsolete in a digital era, a form effectively displaced by social media.But this is to ignore aspects of social media For example, on Facebook much of the content comesfrom elsewhere and newspaper stories feature regularly in news feeds But newspapers also do morethan provide content to social media because they still set a national agenda by influencing TV newscoverage and radio talk shows The power of the press, including the Murdoch press, persists

Popular pressure for change

The resurgence of the super-rich and the growth in inequality is clearly a moral issue But it is morethan that Hard-headed economists are increasingly critical of the trend towards inequality incountries like Australia for purely economic reasons A key study by the research department of theIMF concluded: ‘There is now strong evidence that inequality can significantly lower both the leveland durability of growth’.30 The IMF study, significantly titled Neoliberalism: Oversold?, now

criticises the hard-line policies of open economies and austerity which the IMF itself once ruthlesslyenforced A study by the OECD similarly concludes that ‘rising inequality is bad for long-termgrowth’ and acknowledges that ‘the lion’s share of income growth in recent decades’ has gone to therichest one per cent and increasingly the 0.1 per cent.31 It suggests reforms in the areas of women’sparticipation in work; better quality jobs; wider skills and education; and more redistribution ofincome

Reforms on this scale (and beyond) cannot be implemented by governments alone Apart frombeing timid, reforming governments need a social movement inspired by a belief in the common good

to demand change and to back them up Something like this occurred after the experiences of the GreatDepression of the 1930s and the Second World War Under popular pressure from these upheavals, anew national consensus was forged across political boundaries Both sides of politics committed tobuilding a new Australia, one which was fairer and more equal than before Policies were introduced

to promote full employment, home ownership and a regulated wage system At the same timeinvestment in public education and public health was dramatically increased As a result, incomeinequality declined from the mid-1950s until the 1980s, when the seeds were sown to reverse thistrend.32

The experience of the past 40 years shows that the deep gulf between super-rich and ordinaryAustralians is not inevitable The degree of inequality can vary widely As the following chapterswill argue, inequality is exacerbated when governments give free rein to the market’s naturaltendencies The cry for ‘small government’ fuels inequality The key to a more equal society mustinvolve not only active, reforming governments, but also a broad coalition of popular forces whowant to curtail the power and privileges of Australia’s super-rich

CHAPTER 3

TAMING THE FOSSIL FUEL ELITE

It’s very important that we sustain our faith in coal … So let’s have no demonisation of coal Coal is good for humanity.

Former Prime Minister Tony Abbott1

In just the past two years up to half the coral on the Great Barrier Reef has died … Scientists have known this was going to happen for years … Somehow we thought that common sense would prevail – that politicians and businesses and people would change course before it was too late.

Professor Emma Johnston2For more than ten years Guy Pearse was a young, ambitious and dedicated member of the LiberalParty with hopes of winning a federal parliamentary seat in his home state of Queensland.3Significantly for what was to occur later, Guy Pearse grew up amid the beautiful rainforests and coralreefs near Townsville in north Queensland An interest in politics and a family connection led him tothe Liberal Party, which he joined in 1989 He was soon spotted as a smart, confident young man and

at 22 he was working for a new Liberal senator, jetting down from Townsville to Canberra everycouple of weeks, where he was chauffeured in Commonwealth cars to press conferences and partygatherings Endorsed by some Liberal MPs, he won a place at Harvard University, where his buddinginterest in environment policy was encouraged On his return to Australia he was employed in thenew Howard government to write speeches and to work with the Environment Minister, Robert Hill.This was just before the Kyoto climate conference of 1997 and so he was asked to write a number ofspeeches on climate change for Hill When the requests for speeches dried up, Pearse looked outsidegovernment for his livelihood and began a career as a consultant and lobbyist In this capacity, heworked for the Business Council of Australia and for the tourism, sugar and timber industries Healso enrolled in a PhD on climate change at the ANU in Canberra

As part of the research for his PhD, Guy Pearse interviewed 56 prominent players in thegreenhouse policy debate, including political leaders, bureaucrats, academics and campaigners.Among them were also a dozen members of the Australian Industry Greenhouse Network (AIGN).This was an organisation of Australia’s biggest carbon polluters, which included key parts of themining lobby, the aluminium producers, and the logging and oil industries The topic of Pearse’sthesis was not directly about the activities of the AIGN and, promised anonymity, its representativeslet their guard down ‘I got much more than I bargained for’, Pearse said later.4 This was when hebegan to learn of the power and influence of the fossil fuel elite in Australia

AIGN lobbyists were often called upon to help shape the advice departments gave to thegovernment on environmental issues Said Pearse: ‘I was told that in at least two federal departments(Industry and Treasury) AIGN lobbyists had written cabinet submissions, ministerial briefings andcostings on key greenhouse policy issues numerous times over a decade or so’.5 While Pearseconducted his interviews, Prime Minister John Howard was backing away from supporting the Kyotoagreement to limit greenhouse gases In June 2002, on World Environment Day, Howard announcedthat Australia did not intend to ratify the Kyoto Protocol It became clear, Pearse said, that

‘Australia’s biggest polluters enjoyed unparalleled access to the Prime Minister’s office and

succeeded in having their greenhouse policy agenda adopted almost in its entirety’ Some of theleaders of the AIGN boasted to Pearse that they nicknamed themselves ‘the greenhouse mafia’.6

The revelations about how carbon polluters had hijacked government climate policy did not remainburied in Guy Pearse’s thesis He took the courageous step of becoming a whistleblower, and in

2006, appeared on ABC TV’s Four Corners program Asked to explain his reasons, Pearse said,

‘Having found out what I’ve now found out, I find it impossible to continue with a clear consciencewithout speaking out’ The price for this was that his chances of either a political career or a secondcareer as a lobbyist in the halls of power in Canberra were destroyed But the fossil fuel lobby hadseized the steering wheel of climate policy and the problems this would cause were only justbeginning They continue today

Australia becomes a carbon battleground

Guy Pearse recorded his experiences in his 2007 book High and Dry, written in the hope that

Australia would pursue better climate polices if Kevin Rudd and Labor were elected But he warnedthat Rudd would face a ‘tough fight’ with the greenhouse mafia when he tried to implement hispolicies It was a prescient warning The big polluters would again demonstrate their naked power, tothe point that their no-holds-barred attack was instrumental in defeating Rudd’s climate plans.Subsequently, they launched a campaign of lies against the mild carbon tax introduced by Rudd’ssuccessor, Julia Gillard

When the Rudd Labor government was elected in December 2007, it was riding a wave of publicsupport for action on climate change Unlike the Howard government, it had not allowed the fossilfuel lobby to write its policies Under Prime Minister Kevin Rudd, Labor first tried to implementwhat it called a Carbon Pollution Reduction Scheme (CPRS) This was an emissions trading scheme

in which polluters would pay for carbon emissions produced in Australia Even before it wasintroduced, the fossil fuel lobby flexed its muscles The privately owned electricity-generatingcompanies were threatening black-outs: ‘There will be real problems in maintaining a reliableelectricity supply’, said the head of the electricity generators’ association As the trading scheme tookshape, the electricity companies ‘fought back with everything they had … [and] ran a disciplined andruthless campaign to undermine public support for the Rudd scheme’.7

In early 2009, the Australian Coal Association, whose members included major global playerssuch as BHP Billiton, Rio Tinto, Glencore and Peabody, declared its fierce opposition to the schemewith an advertising campaign under the slogan ‘Cut emissions, not jobs’ The association did notexplain exactly how it would ‘cut emissions’, but the message was that 16 mines would be forced toclose and 10 000 jobs lost if the CPRS went ahead This campaign aroused fears in many coal miningcommunities despite business commentators pointing out that investment in the coal industry wasbooming, based on predictions that coal exports would double.8

This campaign was a major factor in the Rudd government’s notorious 2010 policy retreat, when itdropped its emissions trading scheme and put on hold any other plans for tackling climate change.Coming in the same period as a hostile advertising blitz against the government’s separate proposalfor a new tax on mining more generally, this caused a crisis within the government In June 2010Rudd was replaced as Prime Minister by his deputy, Julia Gillard Following a new election, whichresulted in a governing Labor–Greens alliance, Prime Minister Julia Gillard proposed another

method of pricing carbon pollution by levying a carbon tax on the biggest polluters Introduced in

2011, this proposal, too, was met with fierce resistance from the fossil fuel lobby Once again, thecoal industry giants bankrolled a scare campaign Again, the advertisements targeted regional miningareas and their members of parliament to create a fear of looming unemployment This time theproposal included generous compensation and assistance to the coal industry but the fossil fuel lobbybrushed this aside On the eve of the carbon tax laws being passed, the Coal Association claimed that

21 coal mines would close and several thousand jobs would be lost.9 Another exaggerated claim wasthat the cost of electricity would rise 20 per cent, a claim which the national competition regulatorlater found to be misleading and to have no ‘independent verification’.10

While many people swallowed such claims, business insiders were scornful An article in the

Financial Review pointed out that the Coal Association’s claims of ‘job losses’ referred not to existing jobs but to possible future jobs The claimed losses were of jobs that might have eventuated

if there had been no carbon tax This was ‘not at all the same as putting that many real people out ofwork’.11 Hard-headed investment analysts commented that the carbon price ‘was unlikely to forcesignificant mine closures’.12 Other financial commentators were even more blunt, one describing theCoal Association’s stance as ‘the best solution to greenhouse gas emissions is to do nothing, or atleast nothing that affects the coal industry’.13 Veteran business journalist Ian Verrender commentedthat ‘the idea that an industry can hoodwink an entire nation by spending some small change on glitzytelevision advertisements never ceases to amaze’.14 In the end, Australia’s first serious attempts tocontrol carbon emissions came to a halt when Labor was defeated in 2013 by a political leader whoargued that ‘coal is good for humanity’ and should not be ‘demonised’

What is true of Australia is true of the world The attack on pricing carbon in Australia was part of

a long-term global campaign by some of the most profitable corporations on the planet With theglobal coal and oil industries at their core, the fossil fuel lobby has used lobbying, lies, spin andbullying to insist that the world keep following the path towards a climate catastrophe In the UnitedStates coal and oil companies have been sponsoring anti-science front organisations for many years

According to the New York Times:

[the fossil fuel industries] have for decades waged a concerted campaign to raise doubts about the science of global warming and to undermine policies devised to address it They have created and lavishly financed institutes to produce antiglobal warming studies, paid for rallies and websites to question the science and generated scores of economic analyses that purport to show that policies to reduce emissions of climatealtering gases will have a devastating effect on jobs and the overall economy.15

One of the most zealous promoters of climate denial was the giant oil corporation Exxon (laterExxonMobil) Research by the Union of Concerned Scientists found that between 1998 and 2005Exxon ‘funnelled approximately $16 million to carefully chosen organisations that promotedisinformation on global warming’.16 ExxonMobil also successfully urged the Bush administration towithdraw from its commitments to the Kyoto Protocol and to change the head of the InternationalPanel on Climate Change (IPCC) But with the Trump administration in the United States, the foxesare now in charge of the henhouse Trump’s new Secretary of State, Rex Tillerson, was the CEO ofExxonMobil for ten years In March 2017 President Trump issued an executive order to reverseregulations on energy production and in June he withdrew the United States from the Paris Agreement

on limiting carbon emissions.17

Gambling with our future

The fierce resistance of fossil fuel companies to meaningful change shows how high the stakes are forthem On the other side are those who realise how high the stakes are for the whole of humanity

One group of people who are acutely aware of our situation are climate scientists Some of themare privately making family decisions influenced by their knowledge of the looming crisis ProfessorDave Griggs is the head of the Monash Sustainable Development Institute at Monash University Henotes that his colleagues sometimes talk in very personal terms about climate issues:

We’ll talk about where we’re planning to retire to … how we are planning to safeguard our families in the future And the

consensus seems to be Tasmania Tassie because it is furthest south, it’s the coolest.18

According to Professor Griggs, climate scientists can become clinically depressed at times:

You get days when you are down because … what you know and what you can see coming is not good For people living in

Australia it means a lot of people will suffer and a lot of people will die The problem is nobody’s death certificate will say this

person died of climate change It will say they will die of heat stress, cardiac arrest or they died in a bushfire.

Another climate scientist, Dr Sarah Perkins-Kirkpatrick from the University of New South Wales, is

an expert on heatwaves During a recent heatwave, the temperature at her house reached 45°C in the

shade She told the ABC’s Lateline program that before giving birth to her child, she had

conversations with her husband along the lines of ‘Are we doing the right thing? Is it right to bringkids into this world?’19

Is this alarmism? One person who has painstakingly charted the gamble with our fate is Lord

Nicholas Stern, chair of the British government’s 2006 Review on the Economics of Climate Change In his 2015 book Why Are We Waiting? he argues that we are on a trajectory for a median

increase of 4°C, ‘a temperature not seen on the planet for tens of millions of years Its consequencescould be catastrophic’.20 ‘Catastrophic’ is an unusually strong word for a former top British Treasuryofficial and World Bank economist to use The opening lines of his book are similarly stark: ‘Thepeople of the world are gambling for colossal stakes’

A lot of people are lulled into a false sense of security by the way the scientific data is expressed

The rise of average global temperature by 0.8 degrees sounds terribly small Even when scientists

tell us that a rise of 1.5 degrees is already locked in, it does not look dramatic But a report to theWorld Bank makes a vital point about averages During the last ice age, when much of central Europe

and the United States were covered with deep ice sheets, average global temperatures were only

about 4.5 to 7 degrees colder than now As well, radical, human-induced climate change will take

place in just over a century, not over thousands of years, as in previous ice ages.23 In a similar vein,some people take comfort from the honest admission by scientists that there is still a degree of

‘uncertainty’ in the projections for the future But uncertainty cuts both ways It doesn’t necessarilymean that all problems are likely to be more distant or less intense Uncertainty can mean that the bigproblems arrive earlier and are worse than scientists expect

Another problem is that many people, including those on the progressive side of politics,

complacently see climate change as just another issue But we make another mistake when we think

of it as merely an ‘environmental issue’ Whatever your political beliefs, climate change should bethe centre of human concerns and hence political action Globally, climate change is making everyother single problem more serious It exacerbates famine and poverty and it is beginning to be a factor

in the movement of refugees and in wars As Guardian journalist George Monbiot comments:

‘Curtailing climate change must, in other words, become the project we put before all others If wefail in this task, we fail in everything else’.24 He echoes writer Naomi Klein, who points out:

‘Climate change is not an “issue” to add to the list of things to worry about, next to health care andtaxes It’s a civilizational wake-up call’.25

Even environmental groups who understand the dangerous path we are on can underestimate thedif-ficulty of the massive transformation that is required They often assume that technology is on ourside and that advanced solar systems and wind turbines will automatically displace the coal-burningelectricity system Their assumption is that climate change is a policy problem to be solved byrational decision-making by governments along with some prompting by protests and petitions Suchstrategic assumptions are deeply flawed

Climate change is an epochal challenge Dealing with it will involve a conflict with corporateinterests whose power we underestimate and who will oppose meaningful change until it is forced onthem

Being right is not enough

The existential stakes for humanity in climate change and the sabotage of climate reforms by the fossilfuel industries present us with a historical challenge What can be done to avoid or minimise alooming disaster?

Most people’s first thought is to continue to expect governments to champion the common interest.But the climate crisis is also a crisis for our political system Contemporary governments and thepolitical parties which form them are not designed to act in the long term Governments are attuned tointerest group pressure and represent an establishment of existing players, not future generations.They operate in the short term and are dominated by spin, not substance They function cautiously andare characterised by inertia At best, they are capable of small incremental changes Declarations of acrisis and the need for bold plans are dismissed as alarmism For these reasons, waiting forgovernments alone to act decisively on the climate crisis will take a long time Too long

Yet democratically elected governments, responsible for the public good, must be part of thesolution Part of the problem is that people can be naive about the power both of science and rationalargument It’s easy to assume that if a sufficient number of scientists and public figures provideunshakeable evidence of the danger of continuing to burn fossil fuels, then governments willultimately be convinced and so will act But this is not how a major social and economic

transformation occurs Being right is not enough, something that is demonstrably clear if we look atthe forces which oppose change, above all at the powerful fossil fuel lobby They do not base theirstand on what is rational or right They are focused on self-interest and rely on their strength topressure and threaten governments to achieve their goals In crude terms, that is what those who areconcerned about the climate must also do Being right is important, but it must be backed by thepressure exerted by a powerful social movement Lacking the resources of the fossil fuel elite, thismeans that a very significant section of the community will have to take repeated public action todemand change Building a countervailing public force involves much more than convincing largenumbers of people to sign online petitions and much more than good results in public opinion polls.Even electing a sympathetic government is not enough unless a powerful and broad movement exists

to back such a government when it inevitably comes under fire Major social and economictransformations require social movements which enjoy wide support and which take mass action.Governments rarely lead

So far Australia doesn’t have such a movement, so the pressure needed to force governments toadopt effective climate measures is not sufficiently powerful This is surprising because the number

of people who understand the need for climate action is very large They include members ofprofessional environmental organisations, church groups, youth and student bodies, as well as asignificant group of medical, scientific and health bodies, along with trade unions and all kinds ofother organisations And that is not to mention the many concerned individuals who belong to noorganisation but try to minimise their own carbon footprint

There are also a good many activists, some of whom are committed full-time Their tactics rangefrom paddling kayaks in front of coal ships to nonviolent occupation of mine sites Their campaignsinclude trying to convince investment managers to divest from coal and promoting home-based solarpower The result is an extraordinarily diverse series of actions carried out by passionatelycommitted activists Scarcely a day goes by without some public expression of support for genuineaction on climate change organised by one of the multiple groups that care about the climate Yet it isclearly not enough to compel the changes required

Having a diverse set of movements is not a problem in itself, for diversity is a strength But wherethere is no common strategy, too much diversity can also mean fragmentation Most importantly, it can

mean that the combined strength of all people who want genuine action on climate change cannot be

mobilised It means that there is no mechanism or movement to focus resources and launch collectivenational actions at crucial moments

This dilemma was starkly illustrated when the 2013–14 Budget of the new Abbott governmentsystematically wrecked all the climate-related reforms which Labor and the Greens had introduced,including the carbon tax Some environment groups protested but they were powerless to respond in away that threatened the government By contrast, the public reaction against the health and welfarecuts of the same budget – largely organised by the trade unions, welfare groups and the Left, quicklybecame a powerful force in the national landscape and prevented most of the cuts from proceeding

We don’t have united national mass mobilisations on climate change Instead, we have afragmented and episodic series of campaigns Each climate group focuses on its own patch Majorenvironment groups compete for donors’ dollars There seems little sense of a common purpose – oreven of the need to have a common purpose

Linked to this are the limitations of the ‘activist outlook’ Most successful and transformativesocial changes begin with committed activists who take advanced actions, but they succeed when theactivists go further and found mass movements Today the activist outlook in the environment

movement concentrates on multiple campaigns or dramatic actions by the highly committed Whilethese are valuable, what is also needed is an orientation to a kind of political action which mightengage ordinary people with day jobs and other responsibilities Without this, supporters in thegeneral public are left with nothing to do but watch, donate and applaud So, the other side of theactivist coin is the passivity of their supporters Of course, it doesn’t have to be this way If activistsextend their role to that of building a broad-based movement, one which has a place for mass actions

by these ‘ordinary people with day jobs and responsibilities’, then transformative political progresscould be made

Changing this situation requires the environment movement to expand its strategy Rather thanfocussing on symbolic, media-oriented protest actions, it needs to develop a new strategicperspective, which aims to create a broad and deep social movement that will take action on thestreets In effect, this is a populist perspective since it means building a broad coalition of the peopleand isolating the fossil fuel elite and their supporters

Easy to say but hard to do

A new populist coalition on climate

The argument for a new populist coalition is simple: the forces which are blocking real climate actionare so powerful that we need an even more powerful countervailing force This means mobilising thebroadest possible range of people to take action and demand change Such a coalition must be morethan the usual suspects It should extend beyond environmental groups It should include trade unions,religious groups, students, and all kinds of concerned citizens, conservatives and businesspeopleamong them Only a coalition has the potential to gather a vast number of people together, who willinevitably differ on many other issues The strength that comes from a coalition can give hope andinspiration to previously separate groups and individuals Coalitions are also vital for isolating youropponents and showing how little popular support they actually have

Building such a coalition requires that participants lay aside differences in the hope that the unityachieved will create something bigger and more powerful Coalitions are not formed automatically oreasily Potential partners from different social groups will have different political perspectives anddifferent attitudes to tactics They will agree on some things but disagree on others The mutualhostility between Labor and Greens supporters despite their shared concern about climate change isnotorious It’s also true that some Liberals are genuine in their advocacy for action on climate, a factthat some progressives have trouble acknowledging One way of minimising this damaging rivalry is

to draw opponents into mass action around a shared goal

Constructing coalitions requires a significant degree of negotiation between potential allies.Looking for points of agreement is vital Emphasising differences is usually destructive The point isnot for all members of a coalition to agree on most major issues Rather, it’s to identify commonground and make a single issue the priority

To take an example: is fighting climate change a left-wing cause? Many activists believe it is.Some in the climate movement are more explicit and argue that capitalism is the real cause of climatechange and that the movement for a liveable planet is part of an anticapitalist struggle Yetcharacterising the movement in this way narrows the potential of any mass movement on climatechange by setting up an ideological hurdle for participating in the movement More than this, it is notaccurate to say that capitalism is the cause of climate change Horrendous environmental problems

occurred under state ownership in both China and the Soviet Union Moreover, Australia still haspublicly owned coal-burning power stations competing with privately owned renewable energycorporations The main issue here is the fossil-fuel-dependent energy supply, which has been driven

by the private sector and state ownership alike

To people outside the Left, blaming ‘capitalism’ sounds like a way of smuggling an old agenda intothe new agenda around climate change The main effect of this characterisation is to repel potentialsupporters of such a movement While it’s true that economic issues are central to climate change, theimmediate problem is not capitalism as such Rather it’s a particular form of capitalism, neoliberalcapitalism, which makes a fetish of small government, promotes deregulation and always looks for amarket solution to problems To radically reduce carbon pollution, we need to restructure theeconomy and to re-regulate it We also need to identify and denounce the profit motives behind thecampaigns of the coal and oil companies But this is not the same as loose talk about overthrowingcapitalism

To build the necessary broad movement we need to acknowledge that particular communities arevulnerable Coal miners and others employed by the coal-burning power industry must be protectedand supported in a ‘just transition’ Already, the pro-coal forces are portraying supporters of climateaction as comfortable members of an elite out of touch with ordinary Australians In 2011 the fossilfuel lobby successfully harnessed this sort of right-wing populism to attack carbon pricing byattacking the famous actor Cate Blanchett, who took part in a TV ad that favoured carbon pricing Onehostile headline said: ‘Carbon Cate – $53m Hollywood superstar tells Aussie families to pay up’.26This kind of attack on ‘elitist environmentalists’ makes it vital that climate change is framed as athreat to ordinary people and not one mainly of concern to high-profile individuals Conversely, it isvital to point out that coal and oil companies are a truly powerful elite interested only in profit

Is a broad, progressive populist coalition on climate a realistic goal? On the eve of the November

2015 Paris climate talks, Australia participated in a global mobilisation called the People’s ClimateMarch This was a collaboration which had been initiated by major environment groups six monthsearlier The People’s Climate March consisted of huge rallies in capital cities and dozens of localactions in regions and towns It drew in a vast swathe of concerned citizens from religious, health,scientific, youth and trade union fields At its height, it had over 200 signed-on partners in thecommunity, ranging from grassroots groups to organisations with million-dollar-plus budgets It notonly proved that such groups can work together, it also provided common ground for those who arepolitically divided The success of the People’s Climate March shows that an even broader and morepowerful progressive populist movement is possible Around the world similar genuine massmovements were an important factor in setting the scene for the talks that resulted in the ParisAgreement on climate The agreement, while limited, is the best hope for the global co-operationneeded to slow warming

PART TWO

LIVING IN A DEREGULATED WORLD

CHAPTER 4

STOLEN PROPERTY: PRIVATISING THE PUBLIC SECTOR

And here’s a point you won’t find in any textbook, but all the stuff-ups of recent years should have woken us up to: when you give businesses access to the government’s coffers, a surprisingly high proportion of them lose all sense and start

acting like robbers in Aladdin’s cave.

Ross Gittins, economics editor,

Sydney Morning Herald1

The law doth punish man and woman Who steal the goose from off the common, But lets the greater felon loose, Who steals the common from the goose.

Tickler Magazine, 1821

One afternoon in 2014, Mary, a woman in her early 70s, was having lunch with her Bible study group

in the shopping centre in Bankstown, in Sydney’s southwest A young man approached them and asked

if they would like a free laptop computer as part of a deal for enrolling in a Diploma in CommunityServices at the private training college he said he represented It sounded enticing and the womenasked some questions The deal involved signing up for a government loan to cover course fees, butthe young man assured them they would never have to repay the loan because this wasn’t requireduntil you earned over $50 000 a year Given that the group were all age pensioners this was hardlylikely Most of the group enrolled and received their free laptops Later, Mary brought a friend along

to sign up The private college offered Mary $400 as a spotter’s fee but she refused because shethought she had already got a very good deal.2

Mary wasn’t the only person seduced into borrowing large sums of money to pay enrolment feesfor a course at a private college For several years some of these colleges had been using commissionagents or ‘brokers’ to aggressively market their skills training courses In various states of Australiapeople with disabilities, non-English speakers and even homeless people were cynically signed up to

a government loan scheme, often having been bribed with ‘free’ laptops or even cash advances ofseveral hundred dollars In the suburbs targeted by the agents many laptops were later exchanged forcash in pawn shops.3

Until ten years ago most vocational training was delivered by state-run colleges of Technical andFurther Education (TAFE), along with a small specialised sector of private providers It was therethat students obtained the skills needed in the construction, fashion, IT and hospitality industries aswell as in business and marketing But this situation changed radically when Australia’s politicalelite from both the Labor and Liberal parties caught the privatisation bug and acquired the deepconviction that private enterprise was always more productive and responsive than the public sector

In the field of vocational training, this was supposed to mean that private, for-profit colleges would

be a far more efficient and effective way to train people than the established, publicly owned TAFEsector

So in 2008 the Brumby Labor government in Victoria introduced the notion of ‘contestability’ Thismeant that private providers were to be encouraged to ‘contest’ the skills training courses operated

by the publicly owned TAFE institutes Shortly after, a supportive federal Labor governmentintroduced a new scheme (called VET FEE-HELP) to grant subsidised loans to students who enrolled

in higher level vocational skills training courses The loans were for vouchers to be ‘spent’ at privatecolleges of the student’s choice, the rationale being to boost competition in the sector Theideologically driven advisers who devised this new scheme assumed that in a loosely regulatedmarket, efficient private providers, unburdened of red tape and motivated by competition, woulddrive down costs and drive up quality.

Exactly the opposite happened In something akin to a frenzied gold rush, the private traininggroups staked out claims in the new territory Between 2008 and 2013 the private sector’s share ofenrolments increased from 14 per cent to 48 per cent One company, Careers Australia, grewmassively in just four years, from 5000 students in 2011 to 20 000 students in 2015.4 The publiclylisted company Australian Careers Network boasted that its student numbers had increased by 417per cent in only one year, from just under 5000 to 25 000 in 2014 It told shareholders that there was

‘an average revenue yield per student of $3303’.5 In the government’s eyes, the new privatisedscheme was meant to fill skill shortages by encouraging student demand to drive the process Instead,the private providers drove the process, chasing short-term profits

Subsidised by an uncapped loan scheme, the fees for private courses shot up For example, aDouble Diploma in Business and Management cost just $6800 at a Queensland TAFE, while one fromCareers Australia cost more than $23 000 Effectively, the loans scheme was providing privatetraining groups with a lucrative and guaranteed income stream as long as they could attract students.For them, enrolling students was risk free If the students could not repay the loan, it was theCommonwealth that picked up the tab, not the college The estimated cost of loans in 2017–18 whichwill never be repaid is $2.3 billion.6

According to a 2015 investigation by The Age newspaper, the private colleges employed an army

of salespeople, known as ‘brokers’, who collectively earned millions by recruiting students The Age

went on: ‘The dodgy brokers … specifically target people living in public housing, the intellectuallydisabled, the drug addicted and non-English speakers’.7 It was one of these brokers who approachedMary and her Bible study group in Bankstown

Amid the growing public unease with this plan to privatise education, the Senate set up an inquiryinto how the for-profit education providers were regulated and funded After hearing manysubmissions, the inquiry reported that students and taxpayers were ‘the victims of a provider-ledfeeding frenzy’ and that for some private providers and some brokers, ‘extraordinary profits are beingmade at the expense of the taxpayer and at the expense of students … Such activities have heavilydamaged the reputation of vocational education as a whole’.8 More than that, the quality of skillstraining was judged to be poor The committee reported that it had heard ‘ample evidence of shoddytraining, inade-quate trainers or assessment that lacks robustness’.9

By late 2015 Australia’s vocational training system was in crisis The federal government froze itsloans scheme, which had ballooned from $25.6 million in 2009 to $1.76 billion by 2014, and bannedthe use of inducements such as laptop computers to recruit potential students By this time theAustralian Competition and Consumer Commission (ACCC) was investigating many privateproviders for misleading and unconscionable behaviour As a result several private colleges hadeither been deregistered and at least one suspended from the stock exchange.10 After an investigation

by the Australian Skills Quality Authority, one of the biggest colleges, the Australian Institute ofProfessional Education, had its registration cancelled.11 This college had an 11-floor campus in theSydney CBD and 8000 students who were left in limbo The sector was widely described as ‘scandalplagued’ and full of ‘rogue colleges’

At its best, the motive for opening up the TAFE sector could be seen as an attempt to hugely expandskills training At worst, it was a calculated ideological attempt to erode public education.

The populist backlash against privatisation

The vocational education scandal saw some advocates of privatisation have second thoughts One ofthese was the current chairman of the ACCC, Rod Sims The Commission had been set up by Labor in

1995 in the early days of its enthusiasm for privatisation when Qantas, the Commonwealth Bank andthe Commonwealth Serum Laboratories had been sold to the private sector The role of the ACCC is

to enforce regulations designed to guarantee a competitive marketplace based on the belief thatcompetition between old and new private institutions would deliver cheaper and better goods andservices to the consumer

For 30 years Sims had been a faithful warrior for the private sector, but by July 2016 he had hadenough and spoke publicly about his loss of faith in privatisation The vocational training scandal wasjust one of a series of botched privatisations which disturbed him He was especially critical of theway state governments had privatised state seaports by extending their advantage as naturalmonopolies The recent sale of seaports at Newcastle, Botany and Port Kembla made him

‘exasperated’ but it was the proposed manner of the sale of the Port of Melbourne that he thoughtespecially unprincipled.12

The Victorian state government had attempted to massively increase the rents paid by the containercompanies which used the ports The proposed rent increase was a simple exercise of monopolypower by the port authorities, since the container companies could not take their business elsewhere

It was inevitable, Sims maintained, that such an increase would be passed on to the public at large,who would pay higher prices for goods which passed through the port To make matters worse, hepointed out, government compensation would be a condition of the port sale, should a competing port

be developed.13

Something similar happened with the Port of Newcastle Shortly after it was sold for $1.75 billion,the new owner jacked up charges for using the shipping channel In the case of Port Botany and PortKembla, both were deliberately sold together to a single owner, explicitly to limit competitionbetween them There was not even a nod to the lofty economic theory that deregulation andprivatisation would be beneficial; these sales were simply pragmatic grabs for cash by stategovernments that were happy to sell monopolies to a profit-hungry private sector

This was the kind of privatisation, Sims said, ‘that had sparked a populist backlash’ against it.Extending his criticism, he added that deregulating the electricity market and selling poles and wires

in Queensland and New South Wales had seen power prices double there over five years.14 Whenordinary people complained about privatisation increasing prices, they were right, he said In asimilar fashion, the privatisation of Sydney Airport was a case study in what not to do Just before itsold Sydney Airport, Sims pointed out, the government doubled the charges for aircraft landing It put

no restraints on the airport’s now-notorious parking fees and offered the airport company the right offirst refusal on the building of a second Sydney airport 15 Nearly all airports in Australia are nowprivate and gouge their customers in the same way

Sims still believes in privatisation, but he is worried by the move to privately deliver ‘humanservices’, in particular those associated with the National Disability Insurance Scheme (NDIS)

‘Simply assuming, as we have often done, that the private sector can do it better, without more, can be

a recipe for a repeat of the VET-FEE disaster’, he said, referring to the vocational training fiasco.16Sims is right about the sweeping assumptions which all political leaders initially made about thebenefits of privatisation Two decades later it’s now time to test these claims and see if they stack up

Cheaper electricity?

Privatisation comes in many guises The attempt to privatise technical and vocational education was avoucher system which fostered the creation of a new private sector Other privatisations involve thesale of public utilities; that is, essential parts of the infrastructure such as electricity generators andnetworks Before privatisation, public utilities had not been thought of as profit-making enterprisesbut as what their name implied, a public service The process of selling these began in Victoria in theearly 1990s, with the part sale by Labor of one of the Loy Yang power stations This was followed bysales of many other state-based grids As with vocational education, private sector advocates praisedthe alleged superiority of these arrangements over continued public ownership One thing on whichnearly everyone agreed was that electricity would be cheaper, thanks to privatisation But this didn’thappen

In 2013 Dave Richardson, an economist from the progressive think tank the Australia Institute,investigated privatised electricity and got some surprising results Most striking was that afterprivatisation, the cost of electricity had increased sharply Between March 1995 and December 2012,the price of electricity increased by 170 per cent, while the consumer price index (CPI) rose by only

60 per cent.17

At the same time, Richardson found, the productivity of the electricity, gas and water industries hadslumped The overall productivity of all Australian industries between 1995 and 2012 had risen by

33.6 per cent, but in the electricity, gas and water industries it had fallen by 24.9 per cent A possible

explanation for this was that the private industry was now employing more people with no direct role

in producing electricity When Richardson checked this hypothesis he had another surprise Whilejobs in the electricity, gas and water sector had risen by 86 per cent, the number of workers in salesand marketing jobs had shot up by 500 per cent; managerial positions had increased by 217 per cent;professionals by 191 per cent; and the number of technicians and trades workers (who directlyproduce electricity) had increased by only 28 per cent.18 He thought the steep rise in sales andmarketing workers was almost certainly a result of privatisation, which broke up a singlegovernment-run agency into competing parts, each of which needed additional staff in billing sectionsand marketing departments as well as managers and related professionals

In 2017 Richardson repeated his research for the years 1996 to 2017 and found that the ratio ofelectricity price increase to CPI increase was only slightly less than the 2013 results, even though theAbbott government had repealed the carbon tax The number of sales workers was also slightlyreduced, to only 400 per cent higher than in 1996 As Richardson pointed out, ‘that 400 per centwould have been an unproductive activity 20 years ago; nobody was required to sell electricity.Electricity sold itself and only needed management to understand how to produce it’.19

Combining all of this research, it seems likely that the newly private electricity generation anddistribution companies were all competing as predicted (that’s why they needed lots of sales andmarketing employees) but they were not competing on the price of electricity Sims was right when he

argued that this kind of privatisation would create ‘a populist backlash’ Ordinary people haverealised that it has led to higher electricity prices, and that it is a corporate elite which reaps thebenefits Although the ‘backlash’ is still incipient in Australia, there is a widespread – and sound –perception that ‘the people’ are being exploited by this elite, and this is the substance of populistthinking And there are other good reasons for this perception.

The roads to riches

The creation of private roads and tollways is another costly result of the Australian policy elite’sideological dogma about privatisation Both sides of politics have exaggerated fears of governmentstaking on public debt to fund major infrastructure and these fears have shaped Australia’s big cityroad network at enormous cost to ordinary people The desire for ‘small government’ has created acorporate giant: Transurban, a private toll road company which extracts extraordinary revenue frommotorists and which rarely pays tax

Transurban has a virtual monopoly on private roads in Australia, controlling 13 of the 15 toll roads

in Melbourne, Sydney and Brisbane These include CityLink in Melbourne, the Cross City Tunnel andWestLink M7 in Sydney and the Clem7 in Brisbane It also owns two toll roads in the US state ofVirginia, making it one of the biggest private motorway companies in the world It is a profit-makingmachine, its tolls revenue having surged 400 per cent within a decade to (in Australian dollars) $1.5billion, with a 50 per cent rise to $2.3 billion expected within a few years.20

Melbourne’s CityLink is a good example of Transurban’s money-spinning Investigative journalistsRoyce Millar and Ben Schneiders found that Melbourne’s first private toll road has generated $5.78billion in revenue since 1999 ‘By the time its Kennett-era contract ends in 2034, that figure is likely

to be well over $20 billion … This on a project that cost $1.8 billion’.21 A controversial clause inthe original contract allowed for compensation if the state government builds roads or otherinfrastructure which compete with CityLink – contradicting the ideological commitment tocompetition The agreements with toll road companies are known as Public Private Partnerships andtheir terms can be very generous For example, it’s important to note that Transurban’s increasingprofit has not come about because of increasing traffic volumes In the six months prior to December

2016, Sydney tolls grew faster than traffic numbers Revenue was up 9 per cent even though the trafficincrease was only 3 per cent.22 In that six months Australian motorists had paid more than $1 billion

Sydney’s dense network of private toll roads had a different effect on James Fiander The cost ofdriving on toll roads between his old home on Kellyville Ridge in Sydney’s north-west and the cityled him to move closer to the inner-city suburb of Pyrmont ‘It worked out to about a round number,