An Analysis of Paul Howes’ Latest Speech

by on 24 May, 2012

Untitled David Elson concludes that if Paul Howes articulates what the modern ALP believes, then Australians should hope they lose office and don't regain it for a very, very long time:

There’s a lot of talk that Paul Howes National Secretary of the Australian Workers Union is the new modern face of the Australian labour movement, bringing fresh ideas and an understanding of the economic realities facing Australia in the so called “Asian Century”.

Based on Paul Howes recent National Press Club Address these complimentary commentaries are unfounded.  While there was one shining moment where Paul attempted to distance the Labor from the electorally toxic Greens the majority of his speech was pure unadulterated protectionism, unionism and economically illiterate justifications for extreme market interventions on the part of the federal government.  Nothing we haven’t seen from our current Australian federal government.

Let’s take a look at some of his points and policy prescriptions:

In his introduction Paul echoes Wayne Swan’s stance attacking “billionaires and mega corporations” [as opposed to regular corporations?] who are plundering our public resources without giving anything back.  Assuming he is referring to our states’ mineral resources this is clearly a-non-too-subtle attempt to drum up support for the new mining tax.  The fact of the matter is Australian mining companies pay plenty of taxes already and that their royalty payments have been keeping our state government fiscally afloat for a number of years now.  Attacking these companies with new taxes as China’s economic growth is slowing, and as the storm clouds of a second GFC gather on the horizon is most unwise indeed.

Paul also stated that the media alone couldn’t be blamed for the labour movements [ALPs?] current woes before going on to blame the media, even equating the Sydney Morning Herald’s 1891 hyperbole with current criticisms. He offered the following quote:

“Our greatest peril comes from the intrusion of the labour struggle into the field of politics – only the most extreme and violent men will control the situation.”

In hindsight the above appears oddly prophetic.

Paul provided statistics indicating the current and ongoing importance of China’s economy for Australia’s exports, however he then went on to equate Australia’s investment in the upcoming Olympics with the economic fallacy of  big Government “picking winners” in a free market economy.  Anyone familiar with the recent loses at Ford, the large staff reductions at Holden, the failure of Tim Flannery’s much vaunted hot rocks technology and the ongoing controversies surrounding Solyndra know that it is not so easy for a government driven bureaucracy to “pick  winners” within our current globally competitive world.

Paul then continues on in a similarly economically illiterate manner, mistakenly stating that Australia has only now become a high cost country relative to our competitors (apparently due to the high Australian dollar), ignoring that our Asian neighbours and competitors have consistently had  lower labour costs then Australia for decades if not longer.  Paul then goes on to rule out “racing to the bottom” by apparently reforming our very restrictive workplace employment laws and conditions, this is where the biggest cognitive dissonance occurs in Paul’s partisan speech.  Paul praises the market interventions of our Asian neighbours’ government into their local economics, while glossing over and at times blatantly ignoring that;

  • These countries often intervene to ensure that their cost of electricity is kept low in contrast with Australia which has implemented interventions to increase the cost of electricity.
  • The cost of labour in countries within the Asian region are often much less than that of Australia, even in those nations which are not developing nations (ie South Korea, Taiwan).
  • The organisation of labour is largely absent, despite the title of the dominate nation within the region:-  The “People’s” Republic of China.
  • That unlike most western nations, the people of China, Malaysia, Singapore, and so forth do not have a welfare entitlement mentality and set aside savings to cater for themselves and their families, freeing up a lot of tax monies for investment in public expenditure which have a real return to the government and its people.  It is no surprise that these countries are characterised by financial responsible governments with relatively low debt loads.

There was a short glimmer of hope though.  A light that was as quickly extinguished as it appeared. Paul Howes criticised, with much validity the power of the big four banks within Australia’s financial system [although it should be stressed that it is this strength along with the Chinese driven resources boom that left us largely unaffected by the GFC], Paul correctly identified that it was lack of competition within the banking sector which had led to the current state of affairs.  Sadly the most effective solution to this; relaxing key restrictions to entry and allowing large foreign banks entry to Australia’s market was not proposed, instead stipulating that the government needed to  be more active in forcing these banks to follow the government line.  One can only imagine what method he would use to accomplish this.

If this is what the next generation of ALP leaders believe, then following the next election we should hope that the ALP will be entering the political wilderness for a very long time.

The full text of Paul Howes’ speech can be found at:

David Elson is a senior public servant who has long taken an interest in the economic impact of Federal policies particularly those pertaining to environmental or social issues and in the cultures of Australia's Asian neighbours.  He lives in Brisbane, Queensland with his Taiwanese wife and is an avid squash player.

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