Jim Chalmers de-stresses after week from hell with trainwreck Sunrise interview over tax changes
As a boy, Jim Chalmers wanted to be Paul Keating, but as a man he threatens to undo much of his hero’s legacy.
Dr. Chalmers told the Sydney Morning Herald last year that Mr. Keating, the man about whom he wrote his political science dissertation, was “the reason I was interested in politics in the first place.”
As Treasurer, Mr. Keating ushered in a remarkable transformation of the Australian economy.
This was done by floating the dollar, introducing more competition in major industries, removing tariff protections for industry, privatizing large public entities, and enacting sweeping deregulation.
Labour, once Australia’s left-wing party, learned to love market forces.
Treasurer Jim Chalmers announced a series of proposed super changes on Monday, in line with the Albanian government’s leftist drift
That love affair is long over with Dr Chalmers announcing the breakup earlier this year in a 6,000 word essay for the leftist publication The Monthly.
In the piece titled “Capitalism After the Crises,” Dr. Chalmers addressed what he called “neoliberalism,” the so-called “Washington Consensus” approach that he said Western governments had adopted up until the pandemic.
Over time, it became a caricature for increasingly simplistic and unified policy prescriptions for ‘more market, not less,’ he wrote.
This school of thought assumed that markets would normally self-correct before disaster struck.
It is now clear that the problem was not so much markets as poorly designed markets. Carefully constructed markets are a positive and powerful tool. ‘
To support his argument, he cited the work of Italian-American economist Mariana Mazzucato, who was an adviser to UK Labor far-left leader Jeremy Corbyn.
Retired RMIT Associate Professor of Economics Steve Kates, who was Chief Economist of the Australian Chamber of Commerce during the Keating era, said that while he may have been a student of Keating’s, this was a lesson Dr Chalmers hadn’t learned.
“He (Keating) could see that the capitalist system was working,” senior lecturer Kates told Daily Mail Australia.
“Hawke and Keating were miles better than what came before and what has come since.”
Griffith University Politics Professor Paul Williams said that while Dr Chalmers belongs to the right-wing faction of Labour, which held power in the Hawke and Keating years, the party is under new management.
“With Anthony Albanese coming from the left, the Albanian cabinet’s political flavor is one of social justice for the underprivileged,” he said.
“I think this is a much clearer positioning from Labor that they are trying to tackle economic inequalities.”
Here are five signs that unlike his childhood idol, Dr Chalmers is becoming Australia’s most left-wing treasurer in decades.
1. When it comes to your money, the government knows best
Labour’s plans to set a ‘target’ for super-laws make it clear that the mandatory scheme is intended to fund ‘a dignified retirement’ for contributors.
This would prevent Australians from accessing the money early, as happened under the Morrison government during the Covid pandemic.
According to Dr Chalmers, it was ‘a debacle’ that allowed Australians to withdraw $20,000 from their super in early 2020, leaving $36 billion ‘lost’.
Whether super belongs to the person who contributed it or to the funds that manage the money until the account holder is ready to retire has become an ideological divide.
National MP Barnaby Joyce told Seven’s Sunrise program that while “pensions are a great program, I don’t think you should rule out people having access to their own money.”
Former Labor Treasurer Paul Keating oversaw a radical reform of the Australian economy in the 1980s and 1990s
2. Super as social spending and nation building
Despite insisting that account holders cannot access their super while still working, Dr Chalmers told a financial forum on Monday that the $3.3 trillion under management should be “increased” and “broadened” beyond only ‘providing income for their retirement’.
Super must “deliver a double dividend – good results for super funds and members and good results for our country.”
The treasurer wants more superfunds to be invested in such as affordable housing, climate change mitigation and the ‘care economy’.
However, this may not lead to a higher return as a buffer for the pension.
According to a report from the SuperRatings group, returns for funds focused on green and ethical investments fell twice as much last year as those with a basket of investments designed purely to deliver the best financial performance.
3. Public vs Private Housing
Going into the last election, the coalition pledged to give Australians early access to mandatory super-funds to put $50,000 towards a home deposit.
Labor opposes this, but has its own plan to solve Australia’s housing crisis, which largely involves direct government spending, either to fully fund more social housing or to boost and supplement private spending.
To this end, the Treasury is establishing a ‘Housing Australia Future Fund to facilitate institutional investment in social and affordable housing’.
The coalition has decided to oppose the $10 billion plan because it needs additional borrowing to fund, which Labor intends to do by issuing bonds that increase debt. Albanese admitted on Wednesday that he is already biting the government.
4. Growing expenses
The budget deficit will reach $1 trillion by the end of this fiscal year.
On Wednesday, Mr. Albanese admitted that defense, NDIS and health spending put the federal budget under “significant strain.”
Mr Albanese said Dr Chalmers’ next budget will be one of ‘restraint’, but the spending announcements keep coming.
The $15 billion National Reconstruction Fund will be proposed to parliament and aims to funnel money into green and high-tech manufacturing.
Treasurer Jim Chalmers (pictured with wife Laura) was forced to defend himself by being inspired by a leftist economist who wants governments around the world to reshape capitalism
Faced with the relatively paltry budget deficit of $3.5 billion in 1986, Mr Keating responded with one of the most austere budgets in Australian history, slashing spending by 1.1 per cent in real terms.
5. Government must steer markets
The National Reconstruction Fund is an example of industrial policy, something Mr Keating disdained when he removed the high tariffs, subsidies and regulations that protected and promoted politically favored sectors of the Australian economy.
According to Dr Kates, attempts by the government to ‘pick economic winners’ had always been ‘a catastrophe’.
“Government aid has failed wherever it has been tried. They’re going to support losers,” he said.
“Once you put government money on the line, there’s no more risk, or not the same kind of risk as private, so there’s very little incentive to create growth and new entrepreneurship.
“Meanwhile, they are closing the other industries that exist now.
“If you try to ‘steer’ markets, you don’t really have well-functioning markets.”
Dr. Williams thought Dr Chalmers had pursued the most left-wing policy since the Whitlam Labor government in the 1970s, but he believed it was only in shades of grey.
“They’re not anti-capitalism, they want to humanize capitalism and make it work for everyone,” he said.
Dr. Williams said another factor that could be Dr Chalmer’s apparent fondness for the public sector is that he bred in Queensland with the treasurer and lived most of his life in the Sunshine State representing Rankin’s Brisbane seat .
‘Queenslanders love the government because they provide the goodies,’ said Dr Williams.
“It’s part of Queensland’s political culture that governments can do good things for us.”
—David Southwell