Big government is good
Australia is on track to eliminate cervical cancer by 2035. Co-inventor of the vaccine Professor Ian Frazer believes it will eventually be eliminated globally, like small pox. It is a truly remarkable feat of human ingenuity. Eliminating cervical cancer is also an unqualified success story of how government can and should improve the lives of its citizens. And it is not the only success story that should make us question the neoliberal commitment to what is euphemistically called 'lean government'. Big government is good.
Neoliberalism partly defines itself by its commitment to small government; the idea that government should stay out of (rich, white) people's lives, that the private sector is always more efficient than the public sector and that we should reduce burdensome red tape for business (but not unions). But it was big government intervention ten years ago that led to one of the world's biggest public health success stories and there's another ten-year anniversary approaching that should make us applaud the merits of big government that serves the interest of its citizens.
Cervical cancer vaccine pioneer Professor Ian Frazer.Credit:Paul Harris
One week from tomorrow, the Australia Institute will host an event to mark the 10th anniversary of the Rudd government's $52 billion stimulus package, which successfully prevented the global financial crisis from sending Australia into recession with the rest of the world.
Australia is known colloquially as the lucky country, but it wasn't luck that got us through the global financial crisis, it was cool-headed advice from a professional bureaucracy and political leaders who were willing to take decisive action.
Then Treasurer Wayne Swan has described the choice as being between 'going into recession or into deep deficit'. The choice to go into deficit was not without political consequences. 'Go hard, go early, go households' was how then Treasury Secretary Ken Henry described the advice to government on the stimulus package and it proved sage advice.
Growth during that period did not come from mining investment, dwelling construction or business investment. Indeed, as Ken Henry observed "In the first six months of 2009… the Australian mining industry shed 15.2 per cent of its employees…Had every industry in Australia behaved in the same way, our unemployment rate would have increased from 4.6 per cent to 19 per cent in six months."
Instead, it was largely public investment, trend growth in public sector employment and household consumption which drove Australia's growth. Australia Institute polling shows a majority of Australians agree the stimulus package kept Australia from recession.
It's hard to appreciate now just how much worse things could have been if the Rudd government had made different choices. The globe was staring down the barrel of another Great Depression, in some countries like Greece, things were at least as bad as in the 1930s. What if Kevin Rudd and Wayne Swan had waited too long to implement the stimulus package? What if they had chosen to implement austerity measures instead? We don't have to look far to see, but for the grace of big government and big public spending, where Australia could have gone.
Nine million Americans lost their homes in the subprime mortgage crisis that caused the global financial crisis. To put that in perspective, the 2016 census recorded that Australia had 9.9 million households in total. In Europe, austerity measures caused enormous social pain, the IMF estimates that 210 million people lost their jobs globally and many countries are only now beginning to recover from what is known elsewhere as the Great Recession.
It is easy to look back now and judge things with the benefit of hindsight, but it also raises important questions. At a recent special address to the National Press Club, Guardian Australia Editor and co-author of the book 'Shitstorm', Lenore Taylor, wondered if Treasury would today give the same stimulus advice in the face of a new recession? Would a Turnbull government take that advice? Turnbull was still clinging to the Prime Ministership by his fingernails as Talyor asked this question, but how would a Morrison government respond to advice to 'go hard, go early, go households' in similarly dire economic circumstances? The Coalition has spent the last ten years publicly advocating neoliberalism – rubbishing the impact of the stimulus, setting an arbitrary limit on public spending while in reality presiding over growing government debt.
Ten years on from the GFC, the neoliberal orthodoxy is looking pretty shabby.
Back then, there was no shortage of world leaders advocating austerity measures. Now, the IMF has concluded that excessive austerity in fact held back global recovery. "IMF advocacy of fiscal consolidation proved to be premature for major advanced economies, as growth projections turned out to be optimistic," the IMF's Independent Evaluation Office (IEO) concluded in 2014.
The IMF now also recognises that increased inequality – the result of austere, small government – actually harms economic growth: "The increase in inequality engendered by financial openness and austerity might itself undercut growth, the very thing that the neoliberal agenda is intent on boosting."
Former Treasurer Wayne Swan says he used to think of inequality as a social policy problem, a moral challenge, now he knows it is an economic challenge that is fundamental to a stable democracy.
Ten years on from the GFC, it is time to stop talking about small government and start thinking about how bigger government could deliver a better Australia.
Big government has given Australia Medicare and a world-class public school system, it has given us national highways and subsidised our now ageing fleet of coal-fired power stations and the kind of universities that helped to produce the research and technology that invents cancer vaccines. Big government delivered the public vaccination and screening programs (begun under a Liberal government) that will eliminate cervical cancer by 2035. Big government can do great things.
In a few weeks the Revenue Summit 2018 will discuss the need to increase public spending to strengthen our economy and society, and how to raise public revenue efficiently and equitably.
I want to see an Australia with enough revenue that people who can't find work don't have to live below the poverty line, with enough revenue to pay aged care workers a decent wage and to give aged care staff more than six minutes to shower, dress and get up each person they are caring for.
Do we pay for it with a new top tax rate for millionaires? More efficient taxes? By closing tax loopholes that allow multinational corporations to offshore their profits? With a tax on air pollution? Or do we pay for it by increasing the retirement age, by starving public schools of funding and selling off the ABC?
It's time to set bigger ambitions for the future of Australia than a smaller government, like curing cancer.
Ebony Bennett is Deputy Director of The Australia Institute.
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