Testing the vitality of the Australian Dream
In this story
Wayne Swan is angry. He is angry about Murdoch’s press, Rudd’s megalomania, how disunity blighted Labor’s message in government. But none of this is the principal source of his anger. Not even close. His pique – and it’s considerable – wells from reflection on the present: the Abbott government. “This government confected an economic emergency to gain permission for their cuts, which were ideological in the first place,” the former treasurer tells me. “Their catchcry ‘lifters and leaners’ is obnoxious, and where does it come from? Fucking Ayn Rand. And Hockey, the treasurer of this country, puts this shit in his speeches. The Liberals have a political romance with the US right.”
Swan’s anger is profane, focused and – for the time being – irremediable. Perhaps its public expression is more colourful now, freed from notions of propriety since being relieved of high office last year. His unscripted umbrage serves as a counterpoint to his tamer performances as treasurer, when political journalism resembled theatre criticism and Swan was criticised less for ideas and more for his unhelpful resemblance to a lame father. Back then, there was another criticism of Swan, that he was engaging in anachronistic class warfare. Swan was either damned as being contemptuous of wealth, or of cynically assuming that posture to rally a disintegrating voter base. Either way, the popular treatment was that Swan’s insistence on the “fair go” was irrelevant to a labour force largely indifferent to unionisation, and a people who were now far more ambitious for themselves.
In April last year, when Swan touted increased taxation for people with more than $2 million in superannuation, a Nielsen poll showed 52 per cent of respondents were opposed to the idea – despite the changes affecting just 16,000 people. It seemed proof that Australians’ aspirations were increasing commensurately with economic growth – that they would defend tax breaks for the 1 per cent in the hope that one day they would join this class and enjoy its quarry. Swan’s vision of progressive taxation suddenly seemed archaic. In a comment piece for The Sydney Morning Herald, journalist Peter Hartcher reflected upon the poll: “The government thought it was onto a winner when it decided to pitch the old concept of ‘soaking the rich’. It turns out to be wrong … The evidence is that Gillard is playing a losing game on an outmoded construct.”
Is this true? Did we long ago abandon egalitarianism? This was the real reason I was speaking to Swan – I wanted to check the status of the Australian Dream. We once cherished the modest ambition of a quarter-acre block in the ’burbs. The film The Castle captured the humility and simplicity of it. Is it over? Has a quarter-century of growth unshackled us from our modesty? Is the Australian Dream now about the acquisition of great wealth?
The American author Joan Didion had a sense for our need to edit and condense reality into digestible scenes or allegories: “We tell ourselves stories in order to live.” The same is true of political discourse – we tell ourselves stories to make coherent the phantasmagoria of political history. The reality of our political past is far more protean and contradictory than the clichés we hold in our minds. We twist and compress. Donald Horne’s “lucky country” is now considered a celebration, rather than a bitter lamentation on our cultural mediocrity. Similarly for political parties, we vote with shorthand: Labor will build schools, the Liberals a surplus. A pollster once told me there is an observable quantity of bias that is immovable. He called it the bedrock. For example, there will always be a substantial number of voters convinced of Labor’s incorrigible management of money. It never budges, and is transferred between generations. The parties’ perceived weaknesses are well known by their opponents, and so they are strategically mocked, reinforcing our simplification of history.
Our political rhetoric is also constantly reviving the past – Howard’s panglossian evocation of Menzies’ ’50s; the Rudd/Gillard government’s lifeless tributes to the Hawke/Keating reforms. Nostalgia becomes a form of historic censorship. Nostalgia can also impair governance, because it suggests that yesterday’s triumphs are as applicable tomorrow. Swan passionately referred me to a recent speech by Michael Cooney, a former speechwriter for Gillard and now head of the Chifley Centre. Cooney said: “It is urgent business for Labor thinkers to shake the grip of what I call a ‘nostalgia for the new’. Parties which are homesick for the past, no matter how recent, and movements which long to debate the issues of 15 or 30 years ago, can never effectively comprehend the real issues of our contemporary life.”
Swan agrees avidly. “The Hawke/Keating achievements were a macro-economic Big Bang. They were the start of our new economy. But you can only do it once. It’s now done. Let’s move on.”
One of our most enduring stories is our egalitarianism – our respect for the working poor, disdain for elites and insistence on an equality of opportunity. Modesty is central, overweening ambition or talent is denigrated. Safety is held above success. But have we outgrown this idea of ourselves? “Two years ago I was more despairing,” Swan says. “I thought perhaps we were becoming more American – more individualistic, materialistic, selfish. I’m more optimistic today, and that’s because of the response to the recent budget. They opened up the box of fairness, and it exploded. Their budget has completely backfired.”
Federal Labor MP Tim Watts agrees. “The public backlash to the budget is a rebuke to the idea that we’ve lost our interest in egalitarianism.” He cites BBC journalist Nick Bryant’s recent book, The Rise and Fall of Australia, which claims we’ve matured in our response to high-achievers. “We celebrate Cate Blanchett, [Geoffrey] Rush, in ways that we probably wouldn’t have decades ago. We’re happy to see Australians do well internationally.”
Swan had his shot at telling a story in power, and it was consumed by cannibalism. We have another tribe of storytellers now, and our reception of them suggests we need to reconsider the old accusations of class warfare.
Here’s the Abbott story: that the adults are in charge and are liberating an economy and national mood from interventionist governance. Our potential will be recognised through a hunger unspoilt by the moral hazard of welfare. In this vision, taxation, unions and government caps on university fees are leeching our spirit. In this, its most theoretical expression, there are things to commend it. In practice, it’s falling apart.
“In their story,” Swan tells me, “unions are a much greater source of pain, are much more important, than corporate tax avoidance. This is ideology. It’s the worst of ideology, because they aren’t prioritising. Whatever the faults of unions, it’s nothing compared to what tax avoidance is costing us.”
This week, a report revealed that Australia had seen hundreds of billions of dollars flow to offshore subsidiaries. Almost a third of major companies were paying fewer than 10 cents in the dollar in corporate tax. Major tax dodgers include James Hardie, Apple and Google. The report was damning, and the quantity of missed tax extraordinary, but it’s an old and obvious story. Only now has the treasurer agreed to focus upon it, and will raise it as an issue at next month’s G20 summit.
And Australians seem to agree. This year, the Australian National University released the latest addition to their longitudinal study of political attitudes, called the Australian Election Study (AES). ANU has been exhaustively sampling political attitudes since 1987, although some of the research dates back to 1967. The results are surprising, and a useful antidote to the ideologically authored narratives of Canberra.
While union membership has plummeted over the past 15 years – currently only 17 per cent of employees are members – hostility towards them has decreased, too. In response to the question “Do unions have too much power?”, 45 per cent of respondents answered “yes”, compared with the 66 per cent who answered affirmatively when asked if “big business” had too much power. In fact, it has not happened in any survey since 1993 that more people were suspicious of union power than corporate.
Our views on taxation versus social expenditure are fascinating also. During the dog days of the late ’80s, when much of the world was experiencing serious contraction, the gap between those wanting lower taxes and those wanting higher social expenditure was a chasm: 65 per cent to 15 per cent. Contrary to the story the Nielsen superannuation poll suggested, that gap constantly narrowed since 1987, until the two met in 2004. In 2007, more people favoured social expenditure over lower taxes. We seem to have become more egalitarian despite more than 20 consecutive years of economic growth.
“The government are completely out of touch with the people,” Swan tells me. “It’s becoming very obvious. The budget is a huge demonstration of that, but look at their policy on education. Removing government caps on uni fees. It will prevent poorer kids going. That galah Pyne sees education as a private good, not a public one.”
The AES also shows that we have become more favourable about income redistribution, not less. Half of Australians – a figure that has remained constant since the early ’90s – support the idea. Today, only 21 per cent oppose it. The nearest the numbers got to each other was in 1987, when they were 46 per cent for and 34 per cent against. We have become more aware of gender inequality, less sceptical of boat arrivals, and have maintained a very strong belief that abortion should be widely available. Though we remain a punitive people, with nearly half supporting a return of the death penalty, we have maintained our moderation – we are a country of gradualists, intolerant of ideological excess of any political persuasion. This picture would surprise many, but so much of our political discussion is the result of selection bias and selective exhumations of the past.
One of the most interesting aspects of the AES data is that it shows us to be terrible adjudicators of our own, and our nation’s, economic health. We have a stubborn impairment when it comes to appreciation and perspective. If you look at the graphs over the years, our recognition of prosperity lags well behind the reality. It is as if we don’t want to believe how successful we’ve been. It begs the question of whether we are fundamentally gloomy and entitled, or in thrall to political rhetoric of resentment and crisis. There are stories everywhere, but few of them are actually capturing the moment.
There was another story from earlier this year. It was largely ignored. While the US middle class continues to atrophy, the Organisation for Economic Co-operation and Development (OECD) released a large report on international levels of income inequality. It showed that distribution of pre-tax income was incredibly unequal, and had worsened recently. But Australia, Canada, Ireland, Israel and Sweden “recently reversed the trend and experienced a fall in market income inequality during 2011”.
Australia’s fable of egalitarianism is largely correct – whereas the US middle class has hollowed out, ours has grown. “The reason for this,” Swan says, “is accessible education, healthcare and social welfare. They’re crucial. And they’re exactly the things being tampered with in this budget.”
This week, Treasurer Joe Hockey responded ardently to suggestions aspects of the budget – especially surrounding welfare cuts – would need to be abandoned. They had no chance of passing the senate. “No, the story is wrong. The bottom line is: if you can win a battle, you take that victory. But you never give up on the war.”
The next day it was announced that the government would be splitting a welfare bill – separating it into what Labor can support and what it won’t. The opposition has given in-principle support to some Family Tax Benefit cuts, but will oppose reductions to aged pensions. With the expensive deployment of forces to Iraq, and the stalling of key parts of the budget, Hockey warned that alternative cuts would have to be found. But crucially, he needs to find more than that: his government needs to find a middle ground with the Australian people.
I ask Swan about a speech the shadow assistant treasurer, Andrew Leigh, had given recently in Paris, at an OECD conference. Leigh sent me the speech when I talked to him about inequality, a subject Leigh specialised in as an economics professor at ANU. Leigh discusses the important link between inequality and social immobility. He describes the measurement of social mobility by economists, using what’s called the “intergenerational income elasticity” model. It demonstrates the relationship between a father’s income and his son’s, and finds that in America – the land of the free – the relationship is strong and the people static. “That’s exactly the point I was making in my Springsteen speeches,” Swan says, referring to the arguments for equality he made using the economic lessons of Bruce Springsteen songs. “The link between mobility and inequality. We have more mobility in Australia than in America. But it’s what’s under threat when you remove safeguards and opportunities. We don’t talk about that link. Of course we don’t.”
Leigh mentioned another story, one the Americans tell about themselves. It’s the great myth of Horatio Alger, the prolific pulp author of the 19th century who wheeled out novels for working-class boys. Each was made with the same rags-to-riches trajectory, each underscored with the ethic of graft and gumption. Much of America is still enchanted by the idea. This is, after all, the country that created the skyscraper in the ashes of the Great Chicago Fire, wrote the blues among slavery, and was designing space rockets while its leaders were assassinated. It’s a strange and dynamic place, America, a source of sui generis innovations – jazz, baseball, Hollywood, Silicon Valley. But the Alger myth is just that. Intergenerational stasis is the norm. It is a society of far more restrained mobility than our own. It makes me think about the Australian Dream, the changes politicians would have us believe it is undergoing and the reality of what it actually is: egalitarian rather than individualist, steeped in fairness rather than ambition.
“Australians reject the Americanisation of our country. The destruction of the US middle class is huge, and some people are aware of that here. But I don’t know if it will end disastrously for this government,” Swan says, then laughs. “I gave up predicting anything in politics a while ago.”
This article was first published in the print edition of The Saturday Paper on Oct 4, 2014 as "Avarice shrugged".
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