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 doctoral dissertation on, ‘was the reason I was 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 into major sectors, demolishing tariff protection for industry, privatising major public entities and bringing in sweeping deregulation.
Labor, once Australia’s party of the left, learned to love market forces.
Treasurer Jim Chalmers announced a raft of proposed super changes on Monday, which are in line with the leftwards drift of the Albanese government
That love affair is well over with Dr Chalmers sending the break-up announcement earlier this year in a 6000-word essay for left-leaning publication The Monthly.
In the piece titled ‘Capitalism after the crises’ Dr Chalmers laid into what he called ‘neoliberalism’, the so-called ‘Washington Consensus’ approach he said Western governments had adopted up until the pandemic.
‘Over time it became a caricature for ever more simplistic and uniform policy prescriptions for ‘more market, not less,’ he wrote.
‘This school of thought assumed that markets would typically self-correct before disaster struck.
‘It’s clear now that the problem wasn’t so much more markets as poorly designed ones. Carefully constructed markets are a positive and powerful tool. ‘
To back his argument he cited the work of Italian-American economist Mariana Mazzucato, who was an adviser to UK Labor hard-left leader Jeremy Corbyn.
Retired RMIT Associate Professor of Economics Steve Kates, who was Chief Economist for the Australian Chamber of Commerce during the Keating era, said although he might be a student of Keating this was one lesson lost on Dr Chalmers.
‘He (Keating) could see that the capitalist system worked,’ Associate professor 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 although Dr Chalmers belongs to Labor’s right faction, which was the locus of power in the Hawke and Keating years, the party is under new management.
‘With Anthony Albanese coming from the left, the political flavour of the Albanese cabinet is one of social justice for the disadvantaged,’ he said.
‘I think this is much a clearer positioning 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 as Australia’s most left-wing treasurer in decades.
1. When it comes to your money government knows best
Labor’s plans to legislate a ‘purpose’ for super make it clear the compulsory scheme is intended to fund ‘a dignified retirement’ for contributors.
This would prevent Australians getting early access to the money as happened under the Morrison government during the Covid pandemic.
According to Dr Chalmers allowing Australians to withdraw $20,000 from their super in early 2020 was ‘a debacle’ that resulted in $36 billion being ‘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.
Nationals MP Barnaby Joyce told Seven’s Sunrise program that although ‘superannuation is a great program, but I don’t think you should rule out letting people have 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 as social spending and nation building
Despite insisting that account holders not access their super while still working Dr Chalmers told a financial forum on Monday that the $3.3trillion under management should be ‘elevated’ and ‘broadened’ beyond just ‘delivering income for retirement’.
How Jim Chalmers compares with other Labor treasurers
Jim Chalmers professes to admire Paul Keating but his record is far from being pro free market when compared with his Labor hero.
Keating in 1983 was instrumental in floating the Australian dollar, when Bob Hawke was prime minister, and as treasurer he laid the groundwork for the early 1990s privatisations of the Commonwealth Bank and Qantas.
The man Dr Chalmers worships was also the last federal Labor treasurer to deliver to budget surplus – way back in 1989.
But Chalmers is hardly the most left-wing treasurer Australia has ever had.
Ben Chifley, who served as both prime minister and treasurer after World War II, in 1947 sought to nationalise Australia’s banks.
Nor would Dr Chalmers be the most disruptive with Jim Cairns, as treasurer, in 1974 voicing support in cabinet for an immediate 25 per cent cut in import tariffs during Gough Whitlam’s last year as Labor PM.
Mr Cairns was also forced to resign as treasurer in June 1975 for playing a role in the Khemlani loans affair where a rogue minerals and energy minister Rex Connor sought $4billion from a Pakistani banker Tirath Khemlani to buy back Australia’s mines.
Super should ‘achieve a double dividend – good results for super funds and members and good results for our nation’.
Areas the Treasurer wants to see more super funds invested into include affordable housing, climate change mitigation and the ‘care economy’.
However, this may not lead to higher returns as a cushion for retirement.
Funds focused on green and ethical investments saw returns last year drop by twice as much as the funds with a basket of investments purely intended to give the best financial performance, according to a SuperRatings group report.
3. Public vs private housing
The Coalition went into the last election promising to allow Australians early access to compulsory super funds to put $50,000 towards a house 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 stimulate 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 extra borrowing to fund, which Labor plans to do by issuing bonds adding to the debt burden Mr Albanese admitted on Wednesday was already biting the government.
4. Growing spending
The budget deficit will be $1trillion by the end of this financial year.
On Wednesday Mr Albanese admitted defence, NDIS and health spending is putting the federal Budget under ‘significant pressure’.
Mr Albanese said Dr Chalmers’ next budget will be one of ‘restraint’, however the spending announcements keep coming.
The $15billion National Reconstruction Fund is set to be introduced to parliament and its aim is to funnel money towards green and high-tech manufacturing.
Treasurer Jim Chalmers (pictured with wife Laura) was forced to defend taking inspiration from a left-wing economist who wants governments around the world to remake capitalism
When Mr Keating faced the comparatively paltry budget deficit of $3.5billion in 1986 he responded with one of the most austere budgets in Australia’s history, drastically cutting spending by 1.1 per cent in real terms.
5. Government must direct markets
The National Reconstruction Fund is an example of industry policy, something Mr Keating scorned as he demolished the high tariffs, subsidies and regulations that protected and promoted politically favoured sectors of Australia’s economy.
According to Dr Kates government attempts to ‘pick economic winners’ had always been ‘a catastrophe’.
‘Government backing has been a failure everywhere it has been tried. They are going to back losers,’ he said.
‘As soon as you put the government’s money on the line there’s no risk involved, or not the same kind of risk as private, so there is very little impetus to create growth and new enterprise.
‘Meanwhile they will be closing down the other industries that exist now.
‘If you try to “direct markets” you basically don’t have properly functioning markets.’
Dr Williams thought Dr Chalmers had been issuing the most left-leaning policy since the Whitlam Labor government in the 1970s but he believed it was only in shades of grey.
‘They are not anti capitalism, they just want to humanise capitalism and make it work for everyone,’ he said.
Dr Williams said another factor Dr Chalmers’ seeming fondness for the public sector might be his Queensland breeding with the Treasurer living most of his life in the Sunshine State and representing the Brisbane seat of Rankin.
‘Queenslanders love government because they deliver the goodies,’ Dr Williams said.
‘It’s part of Queensland’s political culture that governments can do good things for us.’
– David Southwell
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