February 25, 2007


Howard's workplace and welfare reforms and Australian values (Fred Argy, 26 February 2007, Online Opinion)

In his first three terms of office, John Howard resisted pressures to radicalise his reform agenda. He had to. There was no obvious economic rationale for a shift in gear, the public mood was still less than fully receptive to big reform leaps and he lacked Senate control.

By the end of 2005, all that had changed. First, wider public awareness of the prospective ageing of the population (hyped up more than a little by government and media), coupled with evidence of relatively low workforce participation rates in Australia (especially among those aged 25 to 54), provided a stronger economic and fiscal rationale for governments to address Australia's "hidden unemployment" problem.

Second, by 2005, community values had become less friendly to egalitarian policies in the workplace - reflecting such changes as the fracturing of worker solidarity, the growing equity investment culture (which aligned workers' interests more closely with those of companies), the cumulative effects of globalisation in encouraging competitive individualism and the increasing community hostility to government hand-outs for able-bodied people in the buoyant economic conditions.

Third, and most importantly, the Coalition gained control of the Senate in 2004 - removing one big hurdle to radical reform.

In this new political and cultural environment, Howard was able to give freer rein to his ideological propensities - especially his dislike of trade unionism and worker protection regulation.

WorkChoices became operational in April 2006. In essence, it involves a shift from regulated awards and collective bargaining to individual contracts, and a marked strengthening of managerial powers over the deployment and remuneration of staff (for example, hiring and firing, penalty rates, working times and access to foreign guest workers).

At the same time, the Howard Government has made welfare less accessible and more conditional, with much tougher penalties imposed for compliance failures (including "no-payment" for up to eight weeks), and it extended the new rules to many sole parents and people with disabilities, who will now be forced to look for part-time, low-skilled work.

The fear of losing eligibility to welfare benefits will also make it more difficult for employed workers to exit from unsatisfactory jobs or, if retrenched, to reject lower-paid jobs. The net effect of the changes in the welfare system will be to further increase the potential market power of employers relative to vulnerable employees. [...]

In terms of its impact on the distribution of market power, Howard's WorkChoices and welfare-to-work agenda should be seen as a fundamental break with the past. By markedly clawing back collective bargaining (even when wanted by nearly 100 per cent of employees), by greatly increasing managerial autonomy, by transforming what was an indirect power to make labour laws (through an independent arbiter) into a direct power under the control of the Executive, by completely disempowering many workers and by fundamentally redefining the right to welfare, Howard has taken a big step towards (and even in some respects beyond) the US social model and retreated much further from Australia's consensus-based "wage-earners welfare state".

What's notable is how similarly Third Way the reforms are across the Anglosphere.

A Tax-Cutting Democrat: Bill Richardson's New Mexico record (Jennifer Rubin, 03/05/2007, Weekly Standard)

In July 2006 the Wall Street Journal touted New Mexico's governor Bill Richardson as a man who "embraced tax cutting and benefited politically." The Journal quoted Richardson approvingly for advising his party that "we have to be the party of growth and the American dream, not the party of redistribution." Which party is Richardson talking about? The Democrats.

Indeed, the former U.N. ambassador and secretary of energy stands out as the only Democratic presidential candidate who has successfully enacted tax cuts and other pro-growth economic policies. When asked about the importance of tax cuts, Richardson says: "Cutting taxes and creating tax credits can be essential to creating jobs and a strong economy." One of his first measures after he was elected governor in 2002 was to cut New Mexico's top income tax rate from 8.2 percent to 4.9 percent over five years. "This was our way of declaring to the world that New Mexico is open for business," Richardson told the Journal in 2005. Echoing what conservatives have been saying for decades, he explained: "After all, businesses move to states where taxes are falling, not rising." At the midpoint of his first term, Richardson earned a "B" rating on the CATO Institute's 2004 Fiscal Report Card on America's Governors. Two years later, CATO explained the rating this way: "His income tax cuts were indeed substantial. The top marginal income tax rate has dropped a remarkable 35 percent as a result of Richardson's actions and is still the largest income tax rate cut in the nation over the past few years."

Richardson seems to relish his tax-cutting image. Reacting to a four-star rating for his pro-growth policies from Inc. magazine in October 2006, Richardson boasted in a press release: "New Mexico is a national leader in job growth, we have invested in better schools and improved access to health care and--most importantly for the business community--we have cut taxes year after year." In his 2007 state of the state address, Richardson continued to advertise his tax cutting credentials, declaring that New Mexico was a state "where tax rates go down, while salaries go up." Most recently, at the winter meeting of the Democratic National Committee, Richardson reminded his audience that he "first passed a specific tax credit for creating good paying jobs" and was responsible for a host of other tax cuts and credits that helped "local companies that showed great promise for success and job creation."

Anywhere else in the Anglosphere, but not in the BDS-0afflicted Democratic Party, he's exactly the sort of guy who'd be chosen to lead the opposition as it sought to out-Thatcher the party in power.

Posted by Orrin Judd at February 25, 2007 7:44 PM

"...completely disempowering many workers..."
By doing what---encouraging them to have the next job lined up before they quit the current one? How is this bad?

"...taken a big step towards the US social model and retreated much further from "wage-earners welfare state."

Right. Model yourself after a winner (USA) instead of a loser (France, etc.) What a wierd idea!

I heard it best in a real-estate seminar some 20 years ago. "If you want to become rich, hang around rich people and do what they do. Don't hang around poor folks and to what they do."

Posted by: ray at February 25, 2007 8:40 PM

If he still didn't seem so close to the Clinton Machine, he'd have a good chance to get my vote if the alternative is going to be Keating-McCain.

Posted by: Raoul Ortega at February 25, 2007 9:54 PM

Raoul, refresh your mind about Richardson and his pivotal role in the Clinton Capers before you make up your mind to support him. He's Hillary's personal laptop and will be her veep of choice should she get the nomination.

Posted by: erp at February 26, 2007 9:32 AM