Dead Right

How Neoliberalism Ate Itself and What Comes Next

Richard Denniss

• Publisher: Black Inc.
• Year: 2019
• Print ISBN: 9781760641306
• eBook ISBN: 9781743820810
• Topic: Politics & International Relations
• Subtopic: Conservatism & Liberalism
• Index: Politics & International Relations

An updated and expanded edition of the bestselling Quarterly Essay How did the banks run wild for so long? Why are so many aged-care residents malnourished? And when did arms manufacturers start sponsoring the Australian War Memorial?In Dead Right, Richard Denniss explores what neoliberalism has done to Australia. For decades, we have been led to believe that the private sector does everything better, that governments can't afford to provide the high-quality services they once did, but that security and prosperity for all are just around the corner. In fact, Australians are now less equal, millions of workers have no sick leave or paid holidays, and housing is unaffordable for many. Deregulation, privatisation and trickle-down economics have, we are told, delivered us twenty-seven years of growth... but to what end?Denniss looks at ways to renew our democracy and discusses everything from the fragmenting Coalition to an idea of the national interest that goes beyond economics. This is a sparkling book of ideas, and the perfect starting point for thinking about how we can best shape Australia's future.

AFTERWORD: 2019 – THE CHANGE ELECTION

In recent times, neoliberalism hasn’t been the only thing to eat itself. When the Liberal Party replaced former merchant banker Malcolm Turnbull with former lobbyist and bureaucrat Scott Morrison in August 2018, it did not just precipitate a collapse in the polls. The leadership change delivered a lethal blow to the notion that the Liberals are the champions of small government. The party has abandoned article after article of its faith in the invisible hand of market forces, and replaced it with faith in marketing slogans.

Morrison quickly turned the national debate about climate and energy policies into a farce. The Turnbull government at least showed a little interest in reducing greenhouse gas emissions and making the electricity industry more efficient. In contrast, Morrison’s first act as leader was to ape the Coles slogan by declaring that electricity prices would be driven “down down down.” Whereas previous Liberal leaders have argued that privatisation and deregulation would lower electricity prices, Morrison promised to wield the “big stick” of regulation, threatening to break up the big energy companies into smaller ones if they refused to lower their prices. In one fell swoop, Morrison angered voters and big business – that’s no mean feat. Like the “So where the bloody hell are you?” campaign he ran for Tourism Australia, Morrison’s “down down down” campaign has been a flop.

The Coalition’s shift from faith in market forces to faith in marketing messages hasn’t stopped with energy policy. The party long denied the need for a royal commission into the banks. However, the outrageous behaviour exposed by the banking royal commission has led even the most strident defenders of free markets to concede that the regulatory framework and the regulators were woefully incapable of protecting Australians from the bankers’ greed.

The right’s blind trust in free markets and personal responsibility is now in full retreat. The Liberals are so disappointed in market forces that, as well as proposing interventions in the electricity and banking industries, they have created new regulations, and a new regulator, to protect vulnerable older people from abuse and exploitation by the (privatised) aged-care industry. Even conservative think-tank the Institute of Public Affairs supports new rules for conduct on university campuses. As the Institute’s executive director, John Roskam, said, “If heavy-handed government regulation is what’s required to ensure freedom of speech and freedom of academic inquiry at Australia’s universities, then so be it.” Interventionism is the new black. For the modern conservative the seduction of red tape now dominates the reduction of red tape.

But the right’s loss of faith in market forces should not be taken as a sign of political collapse. On the contrary, the Coalition is moving even further to the right on social issues, and the extreme right is gaining power in a number of countries around the world. Although Donald Trump and Brexit supporters are obviously not “progressive,” neither are they small-government libertarians. Philosophies, policies and politics are changing swiftly.

The rise of the populist right, as distinct from the neoliberal right – be it in the form of Pauline Hanson, Donald Trump or the Brexiteers – is closely linked to tensions caused by (the different but inter-related issues of) rapid population growth, high immigration rates and the ethnicity of people seeking political asylum. While it is typically the right that embraces the political potential of racist nationalism, it is important to remember that it was a neoliberal project, driven by the right for decades, to champion rapid population growth through high levels of immigration. As with the right’s recent turnaround on subsidies and budget deficits, its abandonment of support for high immigration rates reflects a deep schism on the conservative side of politics.

Since 2000, Australia’s population has grown by more than the entire population of Sydney, ensuring that already profitable banks, retailers and phone companies have had many more customers to milk. There is no doubt that a bigger population has led to increased revenue for companies and governments. However, hostility to this rapid population growth is due to the failure of governments (state and federal) to use the increased revenue to invest in schools, roads, hospitals, trains, parks and affordable housing, all of which cities need if they are to be full of contented, community-minded residents.

Support for, or opposition to, population growth has nothing to do with traditional left- or right-wing politics. The Australian right’s new-found condemnation of rapid population growth, and of the refugee intake in particular, has absolutely nothing to do with the neoliberal principles of individual freedom, free trade and the pursuit of economic growth. It is simply an attempt at populism. That said, it is important not to lose sight of the fact that while some people undoubtedly oppose population growth because of racism or xenophobia, many Australians are simply worried about inviting millions of new residents into cities where transport and other infrastructure can barely service existing residents.

These political and ideological tensions are not unique to Australia. The strategists behind the Brexit campaign emphasised the potential to divert billions of pounds spent on the European Union to the UK’s overburdened public health system. The side of the Brexit campaign bus was emblazoned with, “We send the EU £350 million per week, let’s fund our NHS [National Health Service] instead – Vote Leave.” Put simply, neoliberal goals have been used to justify both rapid population growth as well as spending cuts to the services that a growing population places under the most pressure. Unsurprisingly, the political right is now splintering over whether population growth is “good for the economy” or “bad for the community.” That key voices on the right locally are now devoting so much time to advocating the importance of Western culture and Australian values is proof that they have abandoned the fundamental neoliberal tenet that economic growth can solve all social and environmental problems. It was not that long ago that the right believed that the only values that mattered were market values.

And so it is that Australia has entered a federal election year with our political parties desperately distancing themselves from any association with the once dominant idea that markets are better than ministers at distinguishing right from wrong. The banking royal commission, revelations of abuse in taxpayer-funded nursing homes, the failure of water trading to protect the Murray–Darling, and the evacuation of a recently built high-rise residential building in Sydney all demonstrate to people that they cannot rely on markets to look after them.

More and more it is dawning on Australians that the reason for this failure is that the “invisible hand” of the market simply doesn’t exist. The loss of faith in markets has opened up the space for debates about what kind of society people want to build. In these debates, the ALP and the unions have emphasised the pursuit of fairness and the need to “change the rules” of the industrial relations and tax systems. The Greens remain committed to protecting the environment, while the Coalition has united over the dangers of another parliament in which Labor and the Greens have a majority. Although the end of neoliberalism poses problems for all political parties – which I’ll discuss in detail later – there is no doubt that the right has been most affected by this shift in ideology. After decades of telling voters that they had “no choice” but to cut taxes for the rich and cut spending on the poor to be “globally competitive,” it has become obvious that the Coalition did have a choice. Despite declaring a “budget emergency,” Tony Abbott was desperate to spend billions on a generous paid parental-leave scheme, and Kevin Andrews wanted to subsidise compulsory marriage counselling for those seeking a divorce.

Voters now know that it is governments, not markets, that make a difference. They have realised that the Liberal Party distinguishes between “good debt” and “bad debt,” and that budget deficits are only a problem if the ALP is in power. Voters have also noticed that many of those who said we didn’t need royal commissions into the banking industry or into sexual abuse in the churches are also declaring that we don’t need a federal anti-corruption watchdog.

The 2019 federal election will be the first in decades in which neither major party will argue that voters will benefit most from the government letting the invisible hand of the market solve all our problems. Regardless of who wins, what is certain is that Australia has already radically changed direction. Now begins the process of deciding where to head. Talk about uncharted territory!

Leadership chaos is a symptom, not a cause

Australia’s current political chaos isn’t due to the rapid turnover of prime ministers in recent years. Rather, the revolving door of the PM’s office is indicative of a much deeper problem: like their counterparts in the United States and the United Kingdom, most Australian politicians have lost their faith in free markets and free trade and as a result no longer have the North Star by which they navigate. And as soon as they lose their rhetorical way and fail to provide “clear direction,” they lose the top job as well.

For decades, both major parties in this country believed that the most important goal was maximising GDP growth, and that the best way to do this was through free markets, free trade, and cutting taxes and the public sector.

The Hawke–Keating years are often held up as the “golden era” of policy-making in Australia, in which both major parties backed privatisation, deregulation, scrapping assistance to manufacturing and cutting public spending. However, though the budget may have been in surplus, the lack of debate about these policies, particularly about how they might reshape Australian society, is evidence of a significant democratic deficit. It wasn’t political genius that allowed Bob Hawke to cut tariffs or privatise the Commonwealth Bank; it was the support of the Liberal Party in the Senate. Imagine if, back in this golden age, manufacturing workers could have used social media to mobilise each other and the community, and if senators from minor parties had been in the parliament to take up their cause … It’s unlikely that many of the golden-era reforms would have passed. But in those days there was no social media, only a few loud voices were outside the major parties, and on the whole, in the early days of neoliberalism, most people believed captains of industry and Labor politicians when they joined forces to say what was best for them.

But those days are over. Just as John Howard had to fight to get his neoliberal WorkChoices through the parliament, so too did Kevin Rudd and Julia Gillard have to fight to get their neoliberal emissions trading schemes through. And while some, including this author, might mourn the fate of the carbon price, the same democratic contest that scrapped the carbon tax also caused the Turnbull government’s $65 billion plan to cut the company-tax rate to crash into the rocks. Populism is a double-edged sword, but it’s better than elitism.

Although it was unfair (let alone unsuccessful) of Hillary Clinton to label disenfranchised American voters “deplorables,” there is no doubt that voters around the world are revolting. They are revolting against the idea that free trade will help local workers or consumers, and that there is nothing a nation can do to help those who live within its borders. As a result of this rebellion, US President Donald Trump – a Republican – has declared a trade war with China, and UK Prime Minister Theresa May – a Tory – is Brexiting out of the European Union. Here in Australia, the formerly “free market” Liberal Party is enthusiastically hoping to provide subsidies to coalmines and coal-fired power stations, and some in their ranks even want to re-nationalise the electricity industry.

Political leaders used to avoid taking responsibility for their choices by blaming “the markets.” Decisions to cut welfare or assistance to the manufacturing, car and steel industries were justified on the basis that “the markets” demanded the Commonwealth budget be balanced. But the global financial crisis stripped those excuses away. For the first time, the public saw that there was a bottomless pit of money available to bail out the financial sector, which had long been lecturing everyone else about the need for fiscal restraint. People realised with crystal clarity that the regulators and rating agencies that had assured them that all was well had absolutely no idea what was going on.

For decades Australians were told that bankers earned so much because they were smarter than the rest of us. But then governments around the world, including ours, rushed to prop up, bail out and otherwise protect financial institutions from the consequences of their appalling decision-making. The financial sector here had led the charge against assistance for the manufacturing, farming and community service sectors. For decades bankers told us that bailing out industries would make them weak. No industry cited the need to rely on market forces more than the bankers. Until they needed a handout themselves.

While it may have taken the bankers, and some politicians, a few years to see what they had revealed, the public realised instantly that the bankers didn’t have an economic or ideological problem with subsidies, regulations and bailouts. Indeed, when they were on the receiving end, they asked for the biggest helping of public support in history.

So here we are, ten years after the GFC, having had a royal commission into the spectacular failure of our biggest banks not only to act prudently, but to obey the law. We’ve heard evidence that they’ve been stealing from the sick, the illiterate and even the dead. The only people who’ve come off worse than the bank CEOs are the regulators, who flip between claiming they had no idea what was going on and claiming that they did know but chose not to act.

The public are over it. People no longer believe the economy doesn’t need managing, because the deregulation of the banking system has been an abject failure on both economic and moral grounds. Instead they ask: if governments can bail out the banks, why can’t they protect manufacturing, spend more on health, or invest in much-needed infrastructure?

And no one believes that “repairing” the budget is a priority because as soon as the Liberals won office on the back of a scare campaign about “budget emergencies,” they began spending like drunken sailors: on maternity leave for high-income earners, subsidies for new coalmines and enormous tax cuts for the big banks.

The 2019 federal election is where all these chickens come home to roost. Recent Coalition prime ministers may claim that their message didn’t “cut through,” but the reality is that voters just want them to cut the crap. The 2018 Victorian state election was proof that nothing is “broken” in Australian politics, and that it is not only possible, but also advantageous, for politicians to offer a reform agenda. In a complete repudiation of the “neoliberal common sense” that has long dominated Australian politics, the Victorian state government of Daniel Andrews promised to spend big on services and infrastructure, invest heavily in skills and education and fund large one-off investments by increasing public debt.

Andrews not only won in a landslide, but when the Labor and Liberal vote is combined there was no meaningful swing away from the major parties. Most disenchanted Liberal voters simply switched to the ALP; the vote for minor parties and independents rose by a mere 1.3 per cent. It’s not impossible to introduce reform in Australia, or to make people’s lives better. It’s just no longer possible to convince the population that the best way to improve their quality of life is by under-investing in infrastructure, or by cutting spending on essential services and cutting taxes for big business and high-income earners.

Simultaneously, the problems Australia now faces require more government involvement than the invisible hand of the market: climate change, infrastructure for crowded cities, affordable care for an ageing population, and fast internet for an increasingly connected world.

When it comes to policy-making, all political parties have enthusiastically embraced the end of neoliberalism. But when it comes to explaining their radical shift in appetite for government intervention, some parties are navigating the terrain better than others. The federal Coalition government is clearly struggling more than most. These former “free marketeers” are currently building the Snowy 2.0 and the NBN, both of which are publicly owned. They have introduced an expensive regulatory system for unions and charities. It turns out they are quite keen on “the dead hand of government” and “red tape and regulation” when they are in charge of picking what gets built and who gets regulated.

Prime Minister Scott Morrison agrees. When asked, back when he was treasurer, if he was “pro-market” or a “government interventionist,” he replied: “I think those boxes are dated and often built for a different economy. Of course I am pro-free market, every Australian treasurer should be … I have never felt intimidated by interests, orthodoxy or ideology.”

Yet there is no doubt that the neoliberal box has, for decades, been a significant obstacle to Australian premiers and prime ministers addressing community issues. It was a lot easier for politicians to blame “the market” for the rising costs of privatised services than fixing problems. Similarly, blaming credit-rating agencies and the need to be “globally competitive” for decisions to cut spending on health, education and infrastructure was a lot easier than admitting to voters that tax cuts for big business were simply a higher priority than increased spending on schools and hospitals.

But now that our prime minister and his party are proudly out of the neoliberal box – and no longer afraid of budget deficits – they need to find another explanation for choosing to subsidise coalmines but not dental care, and for why the nation can afford to spend ...

Table of contents

• Cover Page
• Title Page
• Copyright
• Contents
• Foreword
• Introduction
• The Big Con: Neoliberalism as Economics
• The Fear Incentive: Neoliberalism as Culture
• The Democratic Deficit: Neoliberalism as Politics
• Government is Good
• Afterword: 2019 – the Change Election
• Sources
• Back Cover