2 neo-lib clowns

Josh Frydenburg showed his true colours during the second wave of coronavirus. He ripped into the Victorian Premier almost daily, and blamed him personally. Obviously if Daniel Andrews is in charge, and the outbreak occurred on his watch, then at some point in time, he will be held to account.

The major problem is that Andrews did a creditable job, trying to save the situation from becoming even worse. The people know there will eventually be a reckoning, but they are content to see it AFTER the crisis has passed.

Frydenburg proved himself to be as naive and gung-ho as we suspected, by allowing himself to be used as Morrison’s cats paw. Morrison knew that it was too dangerous for him to attack the Premier, because he continues with the fiction that the two of them have a good working relationship. So he rolled out the ambitious Victorian to deliver the attack.

Victorians do not like this Prime Minister, as a rule, but they tolerate him, while he is seen to be doing a passable job of leading the country. And when Victoria is being treated equitably. But Frydenburg, in his juvenile ardour, kicked Victoria, while he was kicking Andrews.

He started to harp on about the cost to the national economy, being spent on one state. That didn’t sound like we are all in this together. We all eagerly await the speedy apology from Head Office. It will probably come from the Treasurer, similar to that offered by Dan Tehan, when he railed against the Premier. Sorry, but not very.

Frydenburg showed the poverty of his neoliberal soul as well. He sounded aggrieved, as if it is his money, and Victorians are greedily sucking it away from his unlamented surplus. If there is one pleasure to be gleaned from this crisis, it is in watching the neoliberals squirm, as they spend OUR money. It goes against their grain, because these people do not really like the great unwashed. They would rather that we all suffered in silence.

He also implied that he values the economy above human life. In this he came close to joining those other beacons of callous stupidity, those leaders who have so stuffed up their responses to the pandemic that their names will live in infamy forever – Trump, Johnson, Bolsonaro. He must ensure that he does not appear on that particular list.

During some of his earlier car-crash interviews he fumed about the lack of a road-map out of lock-down. No body knew Josh! We had to wait and see, to be cautious, because as you all parrot every day, when it suits you, listen to the medical experts. Not the economists, the epidemiologists.

And while Victorians’ lives are being turned upside down, and our livelihoods decimated, he wants a plan. Sitting up in Canberra and sniping. To cover up for a Government which actually does need a plan. A plan on fixing inequality, a plan to cut greenhouse emissions, a plan to re-start the economy, a plan to house the homeless, and especially a plan to fix the Aged Care crisis, for good.

He wants to give tax cuts to businesses, while reducing the benefits to citizens, who are all facing hardship. As we know, Frydenburg and Morrison are not getting a pay cut. If you want an idea of the depth of Frydenburg’s intellect, and his commitment to Australia’s future, please study this statement:

“We are comfortable with the fact that people are accessing their money when they need it most.”

Treasurer Josh Frydenberg responds to fresh figures from the Australian Prudential Regulation Authority showing that 64 per cent of superannuation withdrawn early is going on discretionary spending and 11 per cent on gambling.

So the next time they speak about the future, you know what they are thinking. We deserve what we get, because we are a feckless lot, and if the best thing we can do is fritter away our retirement, well at least the deficit will look better. Very like the sentiment behind asset sales – let’s take the sugar hit now, and forget about the future.

“Let them eat cake!”

Privatisation – who is it good for?

Privatisation is one of those terms which politicians avoid using. That is because the public does not like the idea, or its outcomes. It can be used in a number of ways, but most of us regard it as meaning “selling off a publicly owned asset, usually to the detriment of good government”. In other words, selling off the silver.

Most politicians are unable to explain the benefits of privatisation, either because they are illusory, or because they know there are seldom any benefits. Privatisation is usually marketed as “increasing consumers’ competition and choice”. 

The stated reasons for the sale of a public asset are usually ‘increased productivity’, or ‘enhanced efficiency’, or some such other unquantifiable benefit, which might happen, in the near future. Generally it is the product of neoliberal ideology, which pushes the belief that the market will fix any problem, even when there is no problem. It also relies on the myth that private companies are more efficient than any public service. 

Although the idea of privatisation has been around for a long time, it was only when Mrs Thatcher and Ronald Reagan actually went through with it in their own countries, that the trend took off. As with most fashions, it has outstayed its welcome, but not before Australia got in on the act. 

Privatisation is unpopular

In 2016, before Scott Morrison became Prime Minister, Treasurer Morrison instructed the Productivity Commission to begin an inquiry into extending ‘competition and choice’ in the human services sector. Of course that was code for “let us privatise more of the Government’s services”.

The People’s Inquiry  People’s Inquiry into Privatisation ran parallel to the Productivity Commission Inquiry, but instead of looking into ways to further marketise and privatise public services for the benefit of business, it asked how privatisation had impacted people, their lives, and the common good.

The report concluded, from public submissions, that there were multiple faults in the process, and that the outcome was negative in most areas, and that the public did not like the idea, nor its implementation.

 Some of the findings are below, but the full report is readily available. Peoples Inquiry Report.indd

In the electricity sector there were: 

  • job losses in the electricity sector
  • increased costs for consumers
  • service disconnections  
  • profits from assets going overseas instead of going back to the public  
  • reduction in research, development and maintenance of these assets  
  • reduced investment in apprenticeships and training  
  • loss of accountability, transparency and control 

This sector, amongst many others, has been privatised to within an inch of its life. These results are of particular interest now, because the electricity sector’s problems are a large part of the reason that Angus Taylor has continued to peddle the line that high energy prices are the fault of renewables, and that taking no action to mitigate climate change will keep energy prices low. This is obviously untrue, and the privatisation of the sector is a Government own goal. There seems no way to get them out of the mess, short of admitting they were wrong. I cannot see that happening.

In the Aged Care sector the following was observed:

  • reduction in care hours  
  • reduction of staffing and skill mix 
  • profit motive outweighing delivery of quality care 
  • erosion of pay and conditions for staff 

The case of the Aged Care sector is similarly topical. It outlines, and indeed anticipates, the difficulties in the sector, post John Howard’s opportunistic ‘selling off’ of the sector in 1997. It is all there – opportunism and staff cutting, profit-taking instead of caring. The industrial relations disaster which exacerbated the second wave of Covid-19 in Victoria, has its roots here.   

The reasons why privatisation fails to deliver

Most targets of privatisation have been in the area of utilities. These can be gas, electricity, water, telephony and communications. Recently the education, health, aged care, child care, prisons, welfare and really any government function have been included. 

With such a diverse range of services targeted, it is compelling to note that the reasons for failure are common to many of them.

  1. The public utilities were nationalised originally to serve the public interest. The utilities are products and services that are essential to all members of the public. A private company, motivated by profit, is likely to close down unprofitable operations. This means that services will inevitably be cut. (Telstra removing call boxes.)
  2. Most public utilities were natural monopolies. If you, for instance, sell the water supply industry, the new suppliers will not need to compete, as each is the monopoly supplier in its area. So the quickest and easiest way to maximise profit is to shed staff. Efficiency gains will be minimal, while maintenance suffers.
  3. Governments regulate public utilities. Pollution and environmental issues are more difficult to police, as the companies operate at arm’s length.  
  4. The 1980s saw a rise in income and social inequality. This was often blamed on privatisation. The transfer of assets owned by the many (public utilities) to a small group of wealthy investors (the few) made the gap greater than it had been.
  5. One major advantage of nationalised utilities is that their size permits them to take advantage of economies of scale. Privatisation usually involves the break-up of a large entity into many smaller ones. This is not conducive to financial success, although there is a case for an agility dividend. 

There is a good reason why the public has never warmed to privatisation. It is sold as a matter of competition and or choice, which it seldom is.

It rarely delivers a dividend, because it is a figment of neoliberals’ imagination. It is not the case that the market delivers. We all know that governments need to regulate the market when it fails, because markets do fail.

As Nancy Pelosi said this week, we can’t treat the U.S. Postal Service as a business which is failing. It is a service. We as a society need services, so don’t take our services away. They are sometimes too important to lose. 

John Howard destroyed Aged Care in Australia

There is a definite turning point in the quality and the humanity of Australia’s care for the elderly. The Aged Care Bill 1997 (Cth). was introduced as part of the new Howard Government’s 1996 Budget measures. It was to prove a huge gamble, which still wreaks havoc in the Aged Care sector. And it created a distinctly new group of players in our economy. It showed a government naively putting its faith in the market.

It started with John Howard

It was a curiously shallow and unsophisticated Bill, which did not even bother to hide its malicious intent. Each of the recommendations was ‘loaded’ against the elderly, and the Opposition of the time was ineffective in their efforts to mitigate the harm of the Bill, even if they had wanted to. It was led by Kim Beazley, and he was powerless at the best of times, let alone when he faced Howard’s massive majority.

The private (for profit) sector has six big players, who do what ‘for profits’ do; they maximise profits, usually at the expense of their customers – tick. They feed on their smaller competitors – tick. They amass market power – tick. They become too big to fail – tick. They refuse even basic accountability, although they are massively subsidised by taxpayers – tick. That subsidy currently sits at over 70% of revenue.

The worst part is that the governments of the day, (and both sides have been at fault) continue to believe that corporates are better at delivering value for money. This belief endures, even though successive Governments have watched as their performance declined, while their revenues increased. So there is no recognisable corporate ‘efficiency’ being exercised; there are only tax avoidance measures, increased fees and reduced costs, which apparently can include starving their residents. And they continue to sting the Government.

What did the Act change?

The proposed changes in the 1997 Act were to consolidate funding arrangements for the then separate nursing home and hostel sectors, and provide for a single residential care system to
determine the level of Australian Government subsidy for each resident.

They outlined a greater reliance on resident contributions to the cost of care, including through a system of accommodation bonds, and residential care benefits subject to income testing. They also proposed a relaxation of previous regulatory requirements, such as tight financial acquittal requirements, and their replacement by a ‘lighter-touch’ accreditation approach. https://agedcare.royalcommission.gov.au/sites/default/files/2019-12/background-paper-8.pdf

This grab-bag of ‘nothing regulation’ was the jackpot. It satisfied the neo-liberals, by making the system essentially ‘user-pays’; it consolidated the two areas of accommodations into one bite-sized chunk for the private equity groups, waiting on the sidelines; and best of all it really did use the term “lighter touch accreditation approach”, which just really means no oversight. (You have to love the euphemism team who drafted this Bill. Fun fact: euphemism: a mild or indirect word or expression substituted for one considered to be too harsh or blunt when referring to something unpleasant or embarrassing.)

What did the Royal Commission find?

There are so many issues which affect the Aged Care system that we needed another Royal Commission. That is because although we have had several in the last twenty plus years, no government has felt constrained to follow their recommendations, and so we are stuck with the ideologically driven mismatch of profit-takers and neglected frail clients.

The latest, which produced the Interim Report of the Royal Commission into Aged Care Quality and Safety was tabled on 31 October 2019. It stated that:

“the aged care system fails to meet the needs of its older, vulnerable, citizens. It does not deliver uniformly safe and quality care, is unkind and uncaring towards older people and, in too many instances, it neglects them.”

Commissioners Richard Tracey AM, RFD, QC and Lynelle Briggs’s AO investigation into Australia’s aged care system led them to describe the aged care system as “a shocking tale of neglect”.

“The neglect that we have found in this Royal Commission, to date, is far from the best that can be done. Rather, it is a sad and shocking system that diminishes Australia as a nation.”

We wonder why the sector refuses to countenance proper, honest auditing of their work, or their costs. We must wonder anew as to why the stewards of our taxpayer dollars do not insist. It is our parents’, and our grandparents’, lives at stake here.

According to Professor Joe Ibrahim, Head of Monash University’s Health Law and Ageing Research Unit, residential aged care facilities (RACFs) are currently not required to disclose how many staff they have, nor how they spend government funding.

It is hard to understand how a responsible Government can sit idly by and allow itself to be rorted so spectacularly. Matthias Cormann, Scott Morrison and Josh Frydenburg have all been robbed blind, even as they were apparently ‘on duty’, protecting the revenue. Perhaps their attention wandered, as they had to keep watch on the unemployed, who are always plotting some form of chicanery.

How much are we paying for the system?

Australian Government expenditure for aged care throughout 2018–19 totalled
$19.9 billion, an increase of 10 per cent from the previous year.

In 2018–19, over 1.3 million people received some form of aged care. The great majority received home-based care and support, and relatively few lived in residential care:
• 840,984 people received home support through the CHSP
• 133,439 people received care through a home care package
• 65,523 people received residential respite care, of whom 34,984 (approximately 53 per cent) were later admitted to permanent care
• 242,612 people received permanent residential aged care.

The sector, notwithstanding its perceived inadequacies, is expected to continue to grow its revenue by an annual rate of 5.4%. Its profit is expected to grow by an annual rate of 4.4%.

When asked about the finding that up to 50% of Aged Care residents were malnourished, Sean Rooney responded that the daily allowance for food per resident was $6, however that was at wholesale prices, and there were possibly supplements added, for some residents, and really that aged residents should not be compared to prisoners because they needed less calories. He leads the peak body, Leading Aged Services Australia.

The sector appears to be hugely profitable, and to pay very little tax. Although how would we know? They keep their operating costs secret, so we know their revenue, but we do not know their operating costs, so their profit remains a mystery. According to the ATO, the total combined income of all for-profit aged care providers was just over $5 billion in 2015–16, with a total profit of $529.3 million and after tax profit of $402 million.

Companies can use various accounting methods to avoid paying tax. One method is when a company links (staples) two or more businesses (securities) they own together, each security is treated separately for tax purposes to reduce the amount of tax the company has to pay. Aged care companies are known to use this method as well as other tax avoiding practices.

Another practice is by ‘renting’ their aged care homes from themselves (one security rents to another) or by providing loans between securities and shareholders. Tax Avoidance by For Profit Aged Care Companies Australia Report 2018

The big players

Bupa, Australia’s largest for-profit aged care provider made over AU$ 663m in 2017. Over 70% (AU$ 468m) of this was from government funding.

Opal, the second largest for-profit company had a total income of AU$ 527.2m in 2015-16 (76% Government funding).

Allity had total income of $315.6 million, 67% of which came from government funding

Japara had a total revenue of AU$ 275.5m in 2018, 72% (AU$ 198.7m) of which came from government funding.

In FY2018, Estia had a total revenue of AU$ 266.8m, 74% (AU$197.3m) of which came from government funding.

In 2018, Regis had total revenues of AU$ 280.5m, 71% (AU$ 198.2m) of which came from government funding.

As a basic principle, companies that receive millions of government subsidies must be held to a higher standard of transparency and must be publicly accountable. The fiasco which is the Aged Care sector has been sold off to profiteers, and we get what you would expect. If you don’t pay attention, they exploit the system, and the aged suffer.

The system is way too important to leave in the hands of companies whose first allegiance is to their shareholders. We need to re-build a strong public sector, augmented by not for profits. Throw away the neo-liberal playbook. Sink some money into aged care, because the community wants it. Our politicians have probably got a cosy little retirement haven set up for themselves, and probably paid for by us. The rest of the community should not dread old age, because our government of the day is too miserable to provide for ALL of its citizens.

Why we need a welfare state in Australia

Welfare state, a concept of government in which the state … plays a key role in the protection and promotion of the economic and social well-being of citizens. It is based on the principles of equality of opportunity, equitable distribution of wealth, and public responsibility for those unable to avail themselves of the minimal provisions for a good life. Read more here https://www.britannica.com/topic/welfare-state

An ancient idea

The welfare state as an idea has been around for thousands of years. The Romans, as an example, developed an ad hoc system for providing grain to the people when there were shortages. By the 2nd century CE it had been formalised, to include bread and other essentials, as the population became too great to be fed from local sources. The state imported the food, through the use of hundreds of ships, mainly from North Africa. They then distributed it. The program was never an afterthought. With a large and feisty population, it was considered essential to the maintenance of civic peace, and it lasted until at least the fall of the Western Empire.

In modern times

The modern version of the welfare state is generally attributed to an unlikely leader – Otto von Bismarck. In the 1880s, as the political leader of the relatively new German Empire, he passed social welfare legislation, which he described as “practical Christianity”. His programs included old-age pensions, accident insurance and employee health insurance. Many were borrowed directly from the Prussian model. Bismarck himself was from Prussia, where they had proved popular, and had underpinned a strong and cohesive society.

He was not motivated by a soft heart however, but by political opportunism. He saw that by providing social programs he could achieve several aims. He would counteract the rising appeal of the Social Democrat Party, he could make staying in Germany more attractive to those considering leaving for America, and he would vie for the allegiance of German Catholics, who were torn by divided loyalties, between Germany and the Vatican.

Other European countries followed his lead. The times were changing; Victorian England’s rapidly developing middle classes were appalled by the social inequality around them. As wealth expanded throughout North America the Progressive Era was spawned. Many in the developing Western democracies realised that private philanthropy and religiously inspired charity was ill-equipped to deal with the scope of the problem, of a newly created industrial working class.

The 1880s have gained a reputation for a change in attitude, wherein poverty was re-discovered, and individualism was finished. Poverty was identified as more of a social evil than a failure of character. The poor had been blamed for their own misery, but some early social researchers discovered that poverty was not caused by a lack of moral fibre, or even degeneracy, but more by the stranglehold of the upper classes on opportunity. Old age and sickness were especially dreaded by the poor, because they were seen as being particularly merciless, inevitably miserable, and impossible to mitigate. They were by then either too sick, or too old, to work.

Self-help had been seen as an essential element of living a life of some dignity, but it was finally accepted that governments were the only mechanism for lifting the people out of their grinding poverty. These attitudes were again driven by the middle class, who were discovering the power of their vote, and politicians were aware that sooner or later the poor would themselves obtain that right (to vote).

Legislation for pensions and social insurance began to be passed, in most of the industrialising countries. America was shocked by the problems associated with industrialisation, urbanisation, immigration and political corruption, and responded with social activism and reforming zeal. https://en.wikipedia.org/wiki/Progressive_Era

World War I, The Great Depression, and World War II have been identified as important events, which expedited expansions of the welfare state(s). That was the defining nature of the rise of the Welfare State. It was managed differently, according to local circumstances, in many countries. There were also a multitude of reasons for its emergence and growth as a political and economic choice.

Labour aligned, or social democratic governments were more likely to institute versions of the Welfare State, due to a belief in progressive ideals. These included equality, the removal of poverty, and a general commitment to humanitarian values.

But it was also seen as a way to build national cohesion, and to promote social and civic harmony, where it might not otherwise exist. A surprising footnote from the Fascist era is the reliance of both Hitler and Mussolini, on generous social payments to their citizens. They were consciously buying industrial peace, and forging national cohesion.

Australia’s introduction to the Welfare State

While John Curtin is best remembered as a war-time Prime Minister, his work, alongside that of his Treasurer, Ben Chifley, was crucial in establishing a Welfare State on Australian lines, designed for Australian conditions. Curtin was influenced by the economic theories of Keynes, and had long wanted to transform life for Australians.

He had seen the damage caused by the Great Depression of the 1930s, and took the opportunity offered by wartime conditions to transform the nation. In 1942 he imposed uniform taxation on the states, which changed the financial relationship between the two levels of government forever. It also allowed him to increase revenue. The removal of the states’ right to levy their own income taxes was to be compensated by the Commonwealth ‘picking up’ their liability for social programs.

With a uniform income tax he was then in a position to expand his vision of a socially activist Commonwealth Government. The states, especially New South Wales and Victoria, had been adding elements of a social safety net since the beginning of the century. He and Chifley, between them, completed it. Early examples were the Widow’s Pension Act, and the Unemployment and Sickness Benefits Act.

By the end of that same year (1942) he had set up a Department of Postwar Reconstruction, which laid the groundwork for establishing a Commonwealth Housing Commission, the postwar Rural Reconstruction Commission, the Secondary Industries Commission and the Commonwealth Reconstruction Training Scheme. Many of these programs were designed to assist in re-building Australia, after the war ended.

In 1944 he set up the Department of Immigration which was to be responsible for organising postwar immigration to Australia. These changes were the basis for the enormous growth of the Australian economy in the postwar years.

John Curtin was a believer and a doer. He was lucky to be succeeded in the Prime Mininstership by another committed to the dynamic re-construction of Australia, post-war. Curtin and Chifley both maintained that the key principle of a successful re-construction was full employment.

Robert Menzies was of a similar mind. He defeated Chifley in the election of 1949, and won seven elections in a row, on a platform which included full employment. In 1961, he was lucky to be re-elected, because the unemployment rate had ‘blown out’ to 2.1%. He won that election by just one seat.

The Welfare State in Australia is under constant threat, by both sides of parliament. This is counter to the wishes of the population, and is driven by a political class who look after only themselves. They rely on the apathy of the people, who do not inspect governments closely, and who are disengaged from the political process. Politics and society are of no interest to most voters.

The Liberal Party has been infiltrated by many IPA-type neo-liberals, whose political mantra can be simplified to a “survival of the fittest” trope. The Labor Party, although not equally infested with IPA members, is slightly less crass, paying lip service to an egalitarian motif, while rubber-stamping much neo-liberal legislation. It leaves voters stuck between a rock and a hard place.

Where to from here?

In the Age of Coronavirus, with widespread economic devastation, we need action similar to that which re-constructed Australia in the period immediately after World War 11. We need to accept that we need massive stimulation, and we need to spend our way out of the coming Depression. We need Australians to be protected from hardship, because, hopefully, they will demand it.

Scott Morrison is a man shackled to his party, by his own ideology, and his heedless ambition. He needs to form a National Government, including at least the Opposition Leader, and to govern for the whole country, and all the people. You can see that he is torn between being a small-time political hack, and a real leader. He could really lead us out of this particular disaster. It just takes character, and a commitment to everyone’s welfare. That is why we call it the Commonwealth of Australia.