Gavin Mooney on the difference between compassionate acts and a compassionate society

photo courtesy of the Age and Getty

This piece first appeared in Crikey.

Floods aside just how compassionate is Australia
by Gavin Mooney, Health Economist and co convener WA Social Justice Network

The recent devastating floods have brought out all sorts of emotions. We have seen expressions of great compassion and generosity. And these are emotions that we seem genuinely to treasure when we see them, whether these be in our fellow citizens or in our leaders. In all the heart-wrenching devastation of lives and property, it is heart-warming to see so many showing their compassion for those who have lost so very much.

The question of compassion is one in which as a health economist I have a particular interest. I have recently sought to make a case that strong, compassionate communities are good for people’s health.
I also argued a few years ago, for example, that countries that were more compassionate treated drug addiction and drug addicts better and, while it was difficult to "prove", some leading drug experts expressed the view that I was on to something.

One of the difficulties here is how to quantify compassion. Can we find a measure that will allow us to see how compassionate we are as a society compared say to the Swedes or the Americans or the Brits?

Earlier I used just public expenditure as a proportion of total national income and Australia didn’t come out of that well. Across 33 OECD countries, for example in 2008, we came fifth from the bottom on 27.1%. On this indicator, the countries that came out well -- perhaps predictably -- were the Scandinavians with Denmark at the top with 48.2%.

Another possible measure is public social expenditure and here we do rather badly again.
These are somewhat crude but not silly measures of social compassion. In this context, public expenditure matters. It is difficult to see how we can build a caring society if we rely too heavily on the market. That may be OK for Tim Tams and TVs but for addressing poverty, inequality, Aboriginal disadvantage, mental illness and flood protection, we need public monies.

But I have just come across a paper that has some really worrying stats on Australian compassion. Well not strictly compassion but what is called "generosity" but it is pretty much the same thing. It examines what it calls "the generosity of social insurance".

What it does is rather neat. It argues that we can use certain public-sector programs to get an estimate of how generous (or in my language compassionate) a country’s welfare state is.

So, for example, we can take unemployment insurance. One measure of that program’s generosity is what proportion of income that replaces. Added to that is the "coverage ratio" i.e. the proportion of the population covered. Multiplying these together gives an index of "generosity" for that program. Clearly the higher the index, the greater the generosity.

The paper then does the same for sick pay and for state pensions. It adds the three indices together and comes up with an overall generosity index.

Not perfect but an interesting exercise.

Now the scary bit. Australia comes bottom of 18 OECD countries! Oh dear, we are the least generous of them all. Even the US, which is often seen as being the land of free enterprise, individualistic and unwilling to provide decent health care for its people (especially its poor), comes out quite a bit above us. According to this index, in comparison, countries such as Sweden and Norway are dripping with compassion.

I think we are a compassionate people -- if we are given the chance and all sorts of private acts in the past few days and weeks show that. But we need our governments to recognise that. We need leaders prepared to lead. Many -- most? -- of us who are well off would be willing to pay more taxes to help the less fortunate.

We do want a compassionate society. We do believe in the fair go.

Julia: stop messing about. Recognise that we Aussies really do have a decent streak in us -- we have just shown it. We want a caring community. We cannot get it -- and you will not get it -- if you continue to pander to our baser selfish interests and instincts.

Tax us more. Build a caring public sector. We want to be the custodians of a decent society. We want to be led to that compassionate society. It will also make us a healthier society. Let’s get on with it.

Andrew Thackrah on a mining boom built on myth

In the piece below Andrew Thackrah shows how much of the political and economic logic that underpins Western Australia's so called "mining led economic boom is built upon a series of myths.

In particular, the wealth generated by the mining industry, which enriches some at the expense of many, is built on the back of massive public investment and active intervention by the State Government to advance the interests of mining corporations and WA's business and corporate elite.

This piece first appeared in the online publication Australian Policy and History.

Mining, Myths and making it up in Western Australia

by Andrew Thackrah,
Postgraduate candidate, School of Humanities, University of Western Australia

Following then prime minister Kevin Rudd's announcement in May that the Commonwealth Government would introduce a new 40% 'super-profits' tax on the profits of some mining companies, a wave of hysteria swept through sections of the political class of Western Australia. In its Foundation Day editorial the state's main newspaper, The West Australian, said its inhabitants could be forgiven for feeling like 'they are living in a state under siege'. Prominent Western Australian identity and boss of Fortescue Metals, Andrew Forrest, has predicted the new tax could result in 30,000 job losses.

Julia Gillard's ascension saw a new deal negotiated with the mining companies. The rate of taxation was reduced to 30% and the number of companies affected by the new arrangements was drastically cut. The hyperbole, however, has not subsided. Fresh mining industry-funded ads have claimed that electricity prices will rise and the value of superannuation funds fall if the new arrangements are introduced. With Tony Abbott promising to oppose Labor's 'big new tax', the proposed changes have become a red-hot election issue - nowhere more so than in the mining-centric state of Western Australia.

Western Australia is a mining state whose citizens' obsession with resources has shaped almost every facet of their lives. A degree of parochialism commonly creeps into political debates in the West. Ironically, however, in their strident defence of the significant role played by resource companies in maintaining Australia's prosperity, mining tax opponents have clearly highlighted just how much the dominant framework of political economy in Western Australia draws upon globally ascendant free-market ideology. In short, the history of mining in Western Australia bears striking parallels to the wider history of contemporary free-market capitalism. 

This reality becomes clear when one considers two of the key arguments deployed against the mining tax. First, it is suggested that the mining industry is a 'golden goose' that spreads prosperity throughout society and that government regulation will only succeed in 'killing off' the good times. The 'golden goose' defence of the mining industry was quickly deployed following the announcement of the super-profits tax. Shadow Treasurer Joe Hockey, for example, declared that Kevin Rudd was 'about to take money off the golden goose that's delivering Australia an age of prosperity'. 

Globally, this line of argument commonly has been used to defend the interests of domestically dominant industries. Yet, as British geographer Doreen Massey highlights in World City, her book on the City of London, the golden goose analogy serves to conceal more than it reveals. Massey notes that instead of the concentration of economic activity in London's finance sector over the last two to three decades being seen as '…an element in the production and reproduction of inter-regional inequality… it is taken as given and then interpreted as a source of London's largesse to the nation as a whole'.

The point here is not to deny that the finance and mining sectors have produced substantial wealth. Rather, the golden goose analogy serves to promote the notion that minimal government regulation actually spreads that wealth throughout society, obscuring the creation of inequalities (both local and global) upon which economic growth may actually rely. One only has to think of the economic stagnation in areas of northern England and Scotland and the continuing poverty of some indigenous Australians to be reminded of the losers in periods of rapid growth. 

The second key argument deployed by mining tax opponents is that mining fosters an entrepreneurial spirit that is entirely independent of government involvement in the economy. West Australian newspaper columnist Paul Murray, for example, recently made the extraordinarily simplistic assertion that 'mining has always met its own risk - and provided its own infrastructure. It doesn't want, or need, the Government as a "silent partner" in its business'.

The notion that mining has thrived when government has left the industry to its own devices simply flies in the face of history. As academic (and now Vice-Chancellor of Victoria University) Elizabeth Harman noted in the early 1980s, a paradigm has reigned in Western Australia where state and capital have worked together to ensure that the need for development is prioritised over other interests. Premier Charles Court was particularly pro-active in attracting mining investors to the state. 

A more recent analysis of WA economy by Peter McMahon of Murdoch University reveals that, while private enterprise has played a vital role in the state's history, it has not done so as a solo operator. McMahon notes that 'successive governments…were absolutely critical in developing W.A.' Recently the Barnett Government committed $3.5 million for the development of plans to build a new port in the Pilbara and boasted that the Government's decision to construct new power lines had ensured that a large resource project went ahead. Just as the finance industry was lured to London by conscious government regulatory and tax changes, so, too, the Western Australian mining industry is aided and abetted by the state. 

The 'golden goose' and 'entrepreneurial spirit' arguments outlined above follow from a specific aspect of free market thought - the notion that commercial enterprise guided only by a minimal state sees wealth 'trickle down' to almost all in society. Ideas like these have not emerged in a vacuum. David Harvey in his Brief History of Neo-liberalism explains how such free market notions have become dominant since the Western economic crises of the 1970s. They were championed by leaders such as Ronald Reagan and Margaret Thatcher as part of a conscious political strategy. The continuing reality of inequality reminds us that, rather than being grounded in common sense, free market ideas are a product of a historically specific context that leaves them open to revision and debate. Voters in Western Australia and beyond should look carefully at the rhetoric used by anti-mining tax campaigners. It says much about how the political and economic logic of the present is grounded in myth-making about the past.

Market illogic and the manufacture of "defecit hysteria"

Three hundred US economists have warned that current US economic policies risk plunging the US into a deep depression, unseen since the 1930's. 

As the economic circumstances of ordinary Americans worsen, the economists are warning against "deficit hysteria", the contemporary obsession with short term government deficits which lead governments down the path of severe austerity measures and massive reductions in public spending. 

The economists argue that defecit hysteria is a manufactured crises and is being used as cover for other agendas, including more privatization and slashing of social security and social spending.

The economists stress the need for increased public investment to thrust the US economy back into recovery.

The economic crises confronting the US is borne out by recent data which shows that more Americans are poor than ever before (since data was collected). Unemployment and job losses continues to rise and there are now 43.6 million Americans who are poor, as measured by the US Census Bureau. 


Juxtapose this information with the graph below about US income growth (posted before) and we can begin to understand what David Harvey means by accumulation by dispossession, the process whereby the rich, the wealthy and upper middle class gain greater wealth and power at the expense of the rest.

West Australian families and the environment pay for the market's excesses

image courtesy of the Conservation Council

This excellent piece by Piers Verstegen the Director of the Conservation Council of WA appeared recently in the West Australian and can be found on Piers's excellent blog site Numbat News. There is also a Facebook site to keep up with latest activities of Piers and the Conservation Council.

State Budget rewards polluters but punishes environment and families

By Piers Verstegen

In a closed briefing to business and community groups on the State budget, Premier and Treasurer Colin Barnett said that this budget strongly reflects the policy agenda of the Liberal-National Government. Sadly, an examination of the budget reveals this agenda as one that places the environment as one of the Government’s lowest priorities.

The second budget produced by the Liberal-National Government continues the established trend of running our environmental regulators on the smell of an oily rag. Much less than 2% of the overall State budget is dedicated to the increasingly impossible tasks of reducing carbon pollution, managing waste, regulating polluting industries, controlling land clearing, managing national parks, reducing air pollution, protecting the marine environment and all the other functions of the State environment portfolio.

When you consider that environmental protection is the responsibility of States under the Australian Constitution, this is grossly inadequate. The inevitable consequence of this budget frugality will be increasing impacts on our environment, increased threats to our biodiversity and health, and carbon pollution skyrocketing out of control in WA.

For a realistic assessment of the environmental consequences of this year’s budget, one must look beyond the environment portfolio. On the other side of the ecological balance sheet, the budget increases the already very significant taxpayer subsidies for polluting and destructive industries in Western Australia.

For example, the budget earmarks over $100 million towards assisting the development of a polluting LNG processing plant on the Kimberley coast – in the middle of the southern hemisphere’s most important hump-back whale calving ground. If it goes ahead, this development would be responsible for increasing WA’s greenhouse emission by 25% on its own.

Premier Barnett has stated that the Kimberley is the Government’s number one environmental priority, and a small allocation has been made to allow for the creation of a new marine park at Camden Sound, North of Broome. This funding is welcome; however the government’s environmental credentials in the Kimberley must be weighed against the heavy taxpayer investment in opening up the north for damaging and unsustainable industries.

Expenditure in the energy portfolio, which could hold the key to a clean renewable energy future, is even more alarming. The budget reveals that more than 99% of capital expenditure by the government’s energy utility will fund polluting fossil-fuel generation; less than 1% will be spent on renewable energy.

And if this is not bad enough, the budget totally fails to account for the massive economic liability that will be passed on to future Western Australians as a consequence of Western Australia’s rapidly increasing carbon pollution.

The Rudd government have delayed the introduction of an Emissions Trading Scheme for the moment, but some price on carbon will inevitably be introduced in some form in the future. Failing to disclose this cost to householders who will be forced to bear that cost because of decisions made to subsidise polluting industries today is duplicitous.

The EPA have advised that WA carbon pollution is likely to increase by an alarming 75% in the next few years. Decisions made today will determine whether Western Australia unlocks its clean energy potential, or locks into a future where Western Australian’s will be forced to pay higher and higher carbon polluting costs.

The disparity between the government’s treatment of the environment and polluting industries is echoed just about everywhere you look in the budget papers.

For example, water charges for households will be increased, but Collies rapidly expanding coal-fired power industry will continue enjoy huge volumes of water almost totally free of charge.

Mining companies receive even more handouts as part of the State Governments $80 million mining exploration incentives package (they already receive generous tax concessions for expolration activities from the Commonwealth), but taxpayers will have to pick up the bill for environmental damage caused by mining as the government continues it’s policy to exempt miners from paying bonds to cover the cost of rehabilitation.

And while families pay more for power, the budget continues the generous energy subsidies enjoyed by mining and other industries supplied from the grid in regional areas.

Financially this budget is in surplus, but that fails to account for the massive environmental and economic liability that will be transferred to future generations as a consequence of the Barnett Government’s overwhelming focus on expanding and subsidising unsustainable and polluting industries in WA.

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A public health case for the super profits resources tax

The Resources Super Profits Tax – a public health initiative

by Luke Slawomirski*

Amidst all the hysteria surrounding the proposed RSPT, not a single person has made a key argument in its favour…. That it will benefit the health of all Australians.

Those to whom this may seem preposterous overlook a key underpinning philosophy for the tax, which Lindsay Tanner eloquently outlined in Parliament a couple of weeks ago. This is to prevent the (further) development and embedding of a two-tier economy driven by extreme commodity prices and a largely oligopolised market.

By extension, this situation naturally leads to some individuals growing wealthier while others are left behind, an effect compounded by inflationary pressures induced by super profits (anybody living and paying their rent/mortgage in WA will attest to this).
This is bad for our health.
Surely not! A rising tide lifts all boats; there’s a trickle down effect; more money coming in means people are happier and give more to charity; jobs are created; the tax will push cost of living up even further!

The last argument was comprehensively debunked by Ken Henry in front of a Senate Committee. A recent study by the Australia Institute dispelled the ‘rising tide’ myth. It is well known that charity contribution has nothing to do with wealth. An there’s no need to even speak of the tenuous link between wealth and life satisfaction.

More and more empirical evidence is emerging to show that the more unequal or economically stratified a society, the less healthy all its citizens are.

Let me be clear. We’ve know for a long time that being poor is bad for your health. What we are learning now is that being rich in itself is not enough if you live in a country with a steep socio-economic gradient (where the gap between rich and poor is large).

The work of epidemiologists such as Sir Michael Marmot and Richard Wilkinson is showing that, beyond a certain threshold of GDP per capita termed the ‘epidemiological transition’, absolute wealth ceases to exert any significant influence of health and wellbeing. Rather, it is how the wealth is distributed that counts.

Nations which consistently outperform their counterparts on a range of health and wellbeing indicators (such as life expectancy, coronary disease, obesity, smoking, depression, drug abuse, homicide, incarceration rates, suicide and so on) are ones where the wealth gap is narrower. These tend to be the Scandinavian countries like Norway (which, as it happens, has a functioning tax on its oil reserves very similar to the one proposed here).

Japan also stands out (no it’s not their diet or culture… the rise has only been apparent since WW2). It is a low-taxing country but the income gradient is relatively flat – the CEO of a company will earn maybe 20-30 times what the janitor earns.

Even some developing countries like Costa Rica outperform much more affluent ones on a range of measures. Kerala, a state in southern India, has lower infant mortality rates and comparable life expectancy to the USA, despite being much much ‘poorer’.

The USA, in spite of its wealth and tremendous spend on health care (12-13% of GDP), languishes around the middle of the table that includes developing as well as developed nations.

This same can be observed when comparing states within the USA, neutralising the argument that the differences are cultural and measurement related. Adjoining states with homogenous populations can exhibit considerable differences in population health.

Differences that are largely attributable to the levels economic (in)equality within them. These reductions in health manifest at both ends of the social spectrum.

So how does Australia rate?

Overall not too bad but slipping. We also have inordinately high rates of mental illness and drug abuse.

The point is that, based on the epidemiological research into inequality, permitting a 2-speed boom/bust economy to develop will be to the detriment of social cohesion and consequently bad for our health…of everyone.

So back to ‘the tax’.

The economic arguments for the RSPT are sound (almost all reputable economists in Australia endorse it) not least because it is coupled with a lowering of company tax. The environmental case is strong, as is the moral argument. And, as we can see, there is also a for public health case for instituting it.

So what’s the problem?

Firstly, I think the population is so strongly inculcated with the ‘more is more’ mantra that mounting any argument for wealth redistribution is extremely difficult. Anybody raising this as an issue is branded a communist. Tax is un-Australian and anti-freedom.

There is also the strong mythology around mining and wealth creation built into our national narrative. People like Andrew Forrest and Clive Palmer are seen as heroes not only because they have managed to become extremely wealthy (let’s remember that Kerry Packer got a state funeral here) but their image taps squarely into the mystique of Aussie machismo.

Latte-belt pinkos can squawk all they like about equality. Twiggy and Clive are the real men who turn the wheel of the Australian economy, put 4WDs in our driveways and jest skis on our waterways. This perception has been very astutely exploited by the pro-mining lobby in the RSPT debate.

The mining mythology makes it politically very hard to argue for the tax, but I think the Government has also made an absolute hash of selling it. Also, the lack of consultation has been astoundingly short sighted and arrogant. Meanwhile the Opposition, true to form, have trained the crosshairs squarely on the lowest common denominator, braded it a ‘great big new tax’ and prophesised impending economic doom.

On the grounds of this tax and the Coalition’s declaration to dump it, one can only hope that the Government scrapes in at the next election and commences the necessary reform to make this a more cohesive, progressive and ‘healthy’ nation.

*Luke Slawomirski is a public servant working for a Western Australian Government Department. He has a clinical background and a Masters Degree in Health Economics. He has strong interest in health policy, and, in particular, the social determinants of health. The opinions expressed in his piece are personal and not reflective of the view of the Government agency for which he works.