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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 he wrote his political science PhD thesis about, “was the reason I got interested in politics in the first place.”
As treasurer, Mr. Keating ushered in a remarkable transformation of Australia’s economy.
This was done by floating the dollar, introducing more competition in major sectors, demolishing tariff protection for industry, privatizing major public entities, and introducing radical deregulation.
Labour, once Australia’s left-wing party, has learned to love market forces.
Treasurer Jim Chalmers announced a series of super proposed changes on Monday, which are in line with the Albanian government’s leftist bias.
That love affair has ended with Dr. Chalmers sending out the breakup announcement earlier this year in a 6,000-word essay for the left-leaning publication The Monthly.
In the article titled ‘Capitalism After Crises’, Dr Chalmers referred to what he called ‘neoliberalism’, the so-called ‘Washington Consensus’ approach which he said Western governments had adopted up until the pandemic.
‘Over time it became a caricature of increasingly simplistic and uniform policy prescriptions for ‘more market, not less’, he wrote.
‘This school of thought assumed that markets would normally correct themselves before disaster struck.
‘It is now clear that the problem was not so much the markets as the poorly designed ones. Carefully constructed markets are a positive and powerful tool. ‘
To back up his argument, he cited the work of Italian-American economist Mariana Mazzucato, who was an adviser to UK far-left Labor leader Jeremy Corbyn.
Retired RMIT associate professor of economics Steve Kates, who was chief economist at the Australian Chamber of Commerce during the Keating era, said that although he might be a Keating student, this was a lesson missed for Dr Chalmers.
“He (Keating) was able to see that the capitalist system worked,” Associate Professor Kates told Daily Mail Australia.
‘Hawke and Keating were much better than what came before and what has come since.’
Griffith University politics professor Paul Williams said that although Dr Chalmers belongs to the right-wing faction of the Labor Party, which was the center of power in the Hawke and Keating years, the party is under a new address.
“With Anthony Albanese coming from the left, the political flavor of the Albanian cabinet is one of social justice for the underprivileged,” he said.
“I think this is a much clearer position from Labor that they are trying to address economic inequalities.”
Here are five signs that Dr Chalmers, in contrast to his childhood idol, is shaping up to be Australia’s most left-leaning treasurer in decades.
1. When it comes to your money, the government knows best.
Labor’s plans to legislate a ‘purpose’ for the super make it clear that the mandatory scheme is intended to fund ‘a decent retirement’ for taxpayers.
This would prevent Australians from having early access to money as happened under the Morrison government during the Covid pandemic.
According to Dr Chalmers, allowing Australians to withdraw $20,000 from their super at the start of 2020 was “a debacle” that resulted in the “loss” of $36 billion.
Whether the super belongs to the person who contributed it or to the funds that manage the money until the account holder is ready to retire, it has become an ideological divide.
National MP Barnaby Joyce told Seven’s Sunrise program that although “retirement is a great programme, I don’t think you should rule out allowing people access to their own money.”
Former Labor treasurer Paul Keating oversaw a radical reshaping of Australia’s economy in the 1980s and 1990s.
2. Super like social spending and national construction
Despite insisting that account holders not access their super while they are still working, Dr Chalmers told a financial forum on Monday that the $3.3 trillion under management should be “raised” and “expanded” further. beyond ‘generating income for retirement’.
Super should “achieve a double dividend: good results for Super funds and members and good results for our nation.”
Areas the Treasurer wants more superfunds to invest in include affordable housing, climate change mitigation and the ‘care economy’.
However, this may not generate higher returns as a retirement cushion.
Funds focused on green and ethical investments saw twice as much drop in performance last year as funds with a basket of investments aimed exclusively at offering the best financial returns, according to a report by the SuperRatings group.
3. Public vs. private housing
The Coalition ran in the last election promising to give Australians early access to the mandatory superfunds to put $50,000 into a housing deposit.
Labor opposes this, but has its own plan to solve Australia’s housing crisis, which largely involves direct public spending to fully fund more social housing or to stimulate and supplement private spending.
To this end, the Treasury is establishing an ‘Australian Housing Future Fund to facilitate institutional investment in affordable and social housing’.
The Coalition has decided to oppose the $10bn plan because it needs additional borrowing to finance, which Labor plans to do by issuing bonds adding to the debt burden that Albanese admitted on Wednesday was already biting to the government.
4. Growing spending
The budget deficit will be $1 trillion at the end of this fiscal year.
On Wednesday, Mr. Albanese admitted that defense, NDIS and health spending is putting the federal budget under “significant pressure”.
Mr Albanese said Dr Chalmers’ next budget will be one of “restraint”, yet the spending announcements keep coming.
The $15 billion National Reconstruction Fund is set to go before parliament and aims to funnel money into high-tech and green manufacturing.
Treasurer Jim Chalmers (pictured with his wife Laura) was forced to defend that he was inspired by a left-wing economist who wants governments around the world to remake capitalism.
When Mr Keating faced the comparatively paltry budget deficit of $3.5 billion in 1986, he responded with one of the most austere budgets in Australian history, slashing spending by 1.1 per cent in real terms.
5. The government must direct the markets
The National Reconstruction Fund is an example of industrial policy, something Keating scorned when he demolished the high tariffs, subsidies and regulations that protected and promoted the politically favored sectors of the Australian economy.
According to Dr Kate, the government’s attempts to “pick economic winners” had always been “a catastrophe”.
‘Government backing has been a failure everywhere it has been tried. They’re going to back the losers,’ he said.
‘As soon as you put government money on the line, there’s no risk involved, or not the same kind of risk as private, so there’s very little impetus to create growth and new businesses.
‘In the meantime, the other industries that exist now will close.
‘If you try “direct markets”, you basically don’t have markets that work properly.’
Dr Williams thought that Dr Chalmers had been issuing the most left-wing politics since the Whitlam Labor government in the 1970s, but believed it was only in shades of grey.
“They are not against capitalism, they just want to humanize capitalism and make it work for everyone,” he said.
Dr Williams said another factor in Dr Chalmers’ apparent fondness for the public sector could be his upbringing in Queensland with the Treasurer, living most of his life in the Sunshine State and representing Rankin’s Brisbane headquarters.
‘Queenslanders love government because it delivers benefits,’ said Dr Williams.
‘It’s part of Queensland’s political culture that governments can do good things for us.’
-David Southwell