Academic journal article Journal of Australian Political Economy

The Coalition Economic Reform Agenda in the Aftermath of the Mining Boom

Academic journal article Journal of Australian Political Economy

The Coalition Economic Reform Agenda in the Aftermath of the Mining Boom

Article excerpt

Between 2005 and 2012 Australia underwent the most dramatic mining boom since the Victorian gold rush. Investment in the sector, broadly defined, quadrupled (ABS, 2012). The boom also fuelled growth in a wide range of industries servicing the sector, in particular engineering construction and business services. And when coal and iron ore came off the boil, construction of LNG projects helped to take up some of the slack. The mining boom was an important factor in boosting the economy in the years after the global financial crisis, helping to extend the long period--now approaching a quarter century--since Australia last experienced a recession, an achievement unique in the country's history.

The mining investment boom has now come to an end as construction of mines and related infrastructure is progressively completed. At the same time, commodity prices have dropped sharply as supply on world markets has surged, reducing the country's terms of trade (Figures 1 and 2). The combination of a fall in investment in the mining and engineering sector along with declining terms of trade has produced an income recession, with no growth in net national disposable income for four years (ABS, 2016a).

Although the mining 'bust' is by no means as severe yet as others in Australia's history, with export volumes still climbing three years after the investment boom peaked, the bust has nonetheless been the most important economic development in recent years. In particular, it has formed the context or, more accurately perhaps, the pretext for the emergence of a revived push for 'economic reform' by the Australian ruling class. This article offers a critical assessment of this process.

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The Economic Reform Project

The agenda for 'economic reform' by the Australian ruling class (1) has been spelled out in a series of important policy documents, including a major report by the Business Council of Australia in 2013 (Business Council of Australia, 2013) and the Commission of Audit report in May 2014, and embodied in the federal government's budgets of 2014, 2015 and 2016. The agenda is also reflected in a series of inquiries into taxation, superannuation and workplace relations and the launching of the Royal Commission into Trade Union Corruption.

The reform project is driven primarily by the need to revive business profitability in Australia while protecting the interests of the wealthy in the context of the income recession. To this end, proponents of the agenda seek to reduce the cost base for Australian capitalism and to integrate business more effectively in international flows of trade and investment in order to access new sources of investment, cheaper labour power and extended markets.

Reducing the cost base for Australian capitalism involves three main components: lowering company taxation, reducing the cost of labour and paring back cross-subsidisation of weaker areas of Australian business. Reducing the burden of company tax includes cutting income tax on companies and high income individuals and shifting the onus of taxation onto low to middle income owners.

Lowering the cost of labour involves both direct and indirect measures. The former include undermining unions, reducing penalty rates and minimum wages and expanding the pool of labour lacking in basic labour rights of Australian citizens, that is, increasing the rate of exploitation at the point of production. Indirect measures include winding back the provision of public health, education and social security (age pensions, unemployment benefits, single parents' allowances, etc.) and shifting the cost of service provision from the government to the 'user', as in Medicare services and vocational and higher education. These latter can be understood as reducing the rate of growth, if not the dollar amount, in public outlays on the reproduction of labour power, thereby creating the budgetary wherewithal to cut company tax. …

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