Last year I attended a conference in Melbourne called “Engaging Labor in Power”. Labour MP Jon Cruddas offered some observations on 11 years of government and a discussion followed about what lessons from Britain’s Labour party the newly elected Australian Labor government might take. A mere six months later it is the Australian government that is offering lessons to Labour and Gordon Brown, the British prime minister and Labour Party leader.
As the sheen wears off Mr Brown’s bailout package, Kevin Rudd, the Australian prime minister (pictured), has just unveiled a $42bn economic stimulus programme which will see the kind of nation-building infrastructure projects that Mr Cruddas and others have been campaigning for, for years.
Firstly, Mr Rudd’s plan will provide $14.7bn for schools and public libraries with almost 10,000 schools getting new or upgraded buildings. Contrast this with New Labour’s contracting out of education to shonky used car salesmen who refuse to teach evolution and it’s all the more impressive. Mr Rudd’s government has taken responsibility for the education of its nation’s children and its targeted investment will yield job creation now and a better-educated workforce in the future.
A further $6.6bn of Australian government money has been allocated to build 20,000 new council houses. This commitment will stimulate the flagging construction sector as well as guaranteeing decent housing for those unable to compete in a bloated property market. $3.9bn more will see free insulation for 2.7mn homes – saving $200 a year per household in energy costs and reducing carbon emissions by some 49.4m tonnes in the next decade. This will be good for both the environment and the pockets of pensioners and working people.
Australia finds itself in a better position than Britain to roll out an initiative like this, due in large part to having retained tighter financial regulations than other Western nations (another debate for another day). But Barack Obama, the new US president, has not let the ballooning US deficit stop his spending plans and neither should Labour. This is not irresponsible spending; going into deficit is what governments do in recessions. Even the Tories were forced to recognise this in 1992, when Ken Clarke, former Chancellor of the Exchequer, increased government spending and borrowing following Black Wednesday. David Cameron, current leader of the Conservative party, though is sticking like glue to Thatcherite ideology and is again proposing the failed medicine of slashing spending and issuing tax cuts. The tax cuts would provide nothing but a wasteful and short term bonus to those who need it least, whilst reigning in spending and chasing a surplus in tough economic conditions is a sure fire way to grind the economy to a halt. Deficit spending is the only responsible path to recovery.
Of course, Labour has never really had any qualms about spending; the problem has been what they chose to spend the money on. For example, Mr Rudd government’s entire stimulus package will cost less than the renewal of the Trident nuclear programme. It’s time Labour recalibrated its priorities to better reflect its natural constituency, for its own good as much as the nation’s. The Australian plan has been warmly received by the public, who welcome the infrastructure investments and recognise the necessity of dealing with a looming recession. It is good policy and good politics. Spending on an outmoded cold war weapons system is neither, and this is reflected in Labour’s dismal approval ratings. Fiscal stimulation is about more than militaristic posturing and paying off the debts of reckless bankers.
Undertaking projects like the one in Australia, which are economically sound and socially just, is the only way that Labour can regain credibility with the British electorate. Seeing a foreign social democratic government making large and direct infrastructure investments highlights just how far Labour have drifted from their core values, but it also sets a fine example of where they could head next. Is Gordon watching?
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This post was written by Steven Littlewood