It is not easy to recognise the picture of modern Australia outlined by Kevin Rudd in a recent series of speeches delivered in quick succession across the nation. Nor is it easy to reconcile much of his behaviour as prime minister with the values he espoused in these speeches loosely coupled to Australia Day. Perhaps he was foreshadowing a fresh approach by his government to burden sharing during an economic crisis. If so, the details should emerge over the next few weeks as he announces new initiatives in response to rising unemployment.
Rudd's speech depicted an idealised Australia — untainted by greed, ever ready to help others less fortunate, never afraid to accept hard decisions taken in the public interest. Rudd nominated courage, resilience, compassion, mateship, and a fair go for all as the great values that "have enlivened our national soul for more than a century". Rudd said these enduring values are "part of our nation’s moral compass, they are part of our nation’s moral purpose. We see these great values etched deep in our pioneers, in those who championed women’s suffrage, those who have fought in the mud and the blood of the Somme, those who forged the spirit of Kokoda."
In Rudd's interpretation, Australia is being hurt by a crisis whose causes "ultimately go to a set of values that are the very antithesis of our own — values of unrestrained greed, encouraged by an ideology of unfettered markets". He said these values left no room for courage, compassion for others, or concern about the consequences of the actions of unfettered markets. "But now", he said, "we face the living consequences here at home of this unrestrained greed abroad".
Australians are not as innocent as Rudd claims. The Reserve Bank board's decision to push interest rates to a high of 7.25 percent last March — despite its own forecasts showing inflation was coming under control — is partly responsible for Australia’s economic slow down. Now, overseas events are playing a bigger role. Rudd rightly argues that greed and lax regulation in the US helped trigger the global crisis. So did economic theories, which assume that risks can be calculated with reassuring precision in a radically uncertain future.
But not all Australians rejected greed. Some financial operators collected fat fees for selling risky synthetic financial products to unsophisticated retail investors. Executives grabbed big salaries unrelated to performance. More fundamentally, many aspects of economic policy have long been based on the premise that the national good is best served by the pursuit of individual self-interest, not the values lauded by Rudd.
Moreover, many of Rudd’s decisions as PM show scant sign of the courage or compassion needed to move away from the focus on self interest. Rudd's October $10.4 billon stimulus package gave nothng to the unemployed, but $1400 to retirees who are multi-millionaires. His December 15 White Paper on cutting greenhouse gas emissions lacked the courage to make motorists pay even a cent for the pollution caused by petrol engines. The May budget retained a system allowing rich retirees to pay no tax, while those who earn far less in the workforce struggle to make ends meet after paying tax.
The states are no better. The NSW Labor government fails to provide major hospitals with enough money to pay doctors’ salaries or purchase morphine and other essential medical supplies. Invoices from small businesses regularly go unpaid for months. Yet the recent NSW mini-budget ignored an obvious source of revenue by continuing to exempt retirees from paying anything to register a car.
Nevertheless, Rudd insists that Australians will pull through the present crisis because their values are "anchored in the realisation that we are all in this together". Maybe! If everyone is to pull their weight, however, a bigger contribution is needed from those who receive upper and middle class welfare benefits, such as drugs for $5 a prescription when ordinary workers pay $32.90.
Highly profitable businesses, notably the banks, should also share more of the burden after this Tuesday's expected announcement of a big interest rate cut is made. The government has done a lot to help the banks during the credit crisis, but they have been extremely slow to cut the high borrowing costs they impose on other businesses battling to keep their heads above water.
The current danger for the government is that just about any subsidy or hand-out can be described as helping stimulate the economy. But growth will resume eventually and a big budget deficit will have to be eliminated. For this to happen, the government has to avoid splurging on new welfare measures beyond the need for a comfortable safety net. The tax base also has to remain intact.
This does not rule out an increase in unemployment benefits from their current pitiful levels, nor does it require the government to abandon promised spending on areas such as education and transport infrastructure designed to improve the productive base of the economy. The Treasurer Wayne Swan has indicated that he is aware of the constraints. Rudd's thinking is less clear, as he focuses on appealing to a largely defunct set of Australian values to justify further stimulatory measures.