Webdiary - Founded and Inspired by Margo Kingston

Longtime Webdiarist and contributor Tony Phillips makes a welcome (and overdue) return with this critique of Howard's education handout. Great to see you again, Tony. His last contribution to Webdiary was Greens riding the minor party wave as Vic campaign closes. Great to see you again, Tony.

***

The “centrepiece” of John Howard’s campaign launch was on the face of it, a huge dollop of social democracy. A $6 billion handout without fear or favour to everyone. No Anglo-Saxon “mean” testing here. In a nutshell every child at secondary school makes their parents eligible for up to an $800 tax rebate, for primary and pre-school kids parents can claim up to $400. The response from the left leaning has been paradoxically very Anglo-Saxon liberal, this is just upper class welfare has been the claim.

The claim is true and it isn’t. The policy is actually closer to middle class welfare. Howard’s upper class welfare has more to do with things like the private school handout formula, the negative gearing regime, the capital gains tax breaks, and sundry subsidies to big business in the form of cash, tax breaks, or exemptions from the environmental costs they inflict on the country.

Paul Keating more than once said, "you have to keep the middle class interested". He was referring to keeping afloat political support for social services and government help that was needed to prevent large gaps of inequality opening up. Thus the concept of the “social wage” and the need for redistributive policies that accrued benefits to all members of society. Also, of course, it is a verity of modern economics that some non-market redistribution is always needed to keep open a level of equality of opportunity in a market economy. Otherwise the rich just keep purchasing advantages to ward the cold winds of competition away from them and their offspring, and tend to get richer along the way.

Howard sees redistribution as basically about looking after his own interests and the vested interests that support him. Thus, for example, in education and health the effect of his largesse has been basically about redistributing wealth toward the wealthy. The $3 billion, and growing, propping up private health care is classic case. The market has failed but in its place Howard has put subsidy - taxpayer dollars prop up private businesses and allow a largely comfortable clientele to enjoy a subsidised extra level of health care. At the same time the percentage of GDP spent on health in Australia by comparison with other like economies has risen, indicating the policy is one of both inefficiency as well as inequity.

In this latest case of school handouts he is repeating this policy pattern, but in election mode he is doing so strategically, that is, he is also looking after his own interest. However, the basic public policy concerns of efficiency and efficacy, let alone questions of equity, are markedly not present here.

In strategic terms the policy is aiming again at those aspirationals in marginal outer suburban seats. The ones with jobs and kids (or planning for them) who are looking to the cheaper private schools in terms of socioeconomic mobility or at least status preservation. Of course he's also handing another $800 to either the rich schools (’cos they'll put prices up) or to the middle class, who can afford $12,000 plus a year in school fees per child. But the $800 will actually mean quite a lot to those whose budget is more likely to be in the $2-3000 per year, per child range.

What Howard is trying to do is the opposite of Keating, and in a capitalist society where wealth buys influence and PR, something much easier. He’s trying to keep the respectable working class, from whom the aspirationals of today’s marketing-speak are drawn, interested in middle and upper class welfare. To give enough of them enough of a titbit to give his government those key votes needed to get over the line.

For the roughly 70% of families who don’t have kids at private schools this policy offers little more than a nudge towards considering moving to one. Some poorer members of this group may not even claim the full $800 rebate, since they must spend $2000 to get $800 back. For the other 30% of families, well perhaps 15-20% are likely to gratefully pocket the cash but probably would have voted Liberal anyway. But of the others…, well in the marginal seats, Howard and his people must be calculating this pork may make the difference he needs. For him it’s good politics: he looks after his electoral interest and still sticks to his pattern of redistributions that favour the wealthy in the private sector.

Of course his other ongoing policies, of 230,000 new immigrants a year, negative gearing tax breaks for housing investors that effectively leave them paying 20-25% less for houses than home owners, and the rampant spending promises that will push up inflation, these will all come back to belt those same aspirationals. Through house prices, through interest rates, through loss of amenity, and in terms of (lost) future opportunities for their kids.

But he's counting on them lacking the education to see it.