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The National Insurance increase shows that levelling up has been consigned to the Conservative bonfire of easy promises

Boris Johnson playing Connect 4 with an elderly lady and a nurse whilst visit Westport Care Home in East London 7/9/21Picture by Andrew Parsons / No 10 Downing Street. Creative Commons 2.0 license

A country ruled by criminals needs two revolutions, one small and one big: The small revolution is to overthrow the criminal government, the big revolution is to radically undo the damage these criminals have inflicted on the country!

Mehmet Murat Ildan, Contemporary Turkish playwright, novelist, and thinker

 

This week, Boris Johnson announced that his government would not ‘duck the tough decisions needed to get NHS patients the treatment they need’, or ‘to fix our broken social care system’. After all the fanfare and promises, from an already morally bankrupt government, the reality is somewhat different. The proposed solution to increase National Insurance will not only do nothing to resolve the growing crisis in social care, or create a fairer system for social care provision, it will also create further burdens on an economy already creaking at the seams.

When Johnson refers to a ‘broken’ health and social care system, he is ignoring the elephant in the room. Who broke it? The actions of successive Conservative governments are to blame, through a decade of cuts that have deliberately starved the public sector of adequate funding, along with decades of allowing a private profit-seeking sector to benefit from public money, at the expense of those needing health or social care services. It did so as a result of its fixation with fiscal discipline and market-driven economic dogma.

The Covid-19 pandemic has exposed the folly of austerity, the toxic and harmful obsession with private sector involvement in the delivery of public services, and the consequences of the lack of strategic planning for such events, which have resulted in the NHS and social care struggling to function effectively during this crisis and led to unnecessary suffering and deaths.

Adding to the already existing shortage of nurses (over 40,000) and other health workers, insufficient ICU facilities, ventilators, beds and PPE, were the warning indicators that something was seriously wrong, as hospitals burst at the seams with very sick patients needing treatment. As a result, we are now facing a growing backlog of patients awaiting diagnosis or treatment (or who have even died waiting), with experts warning of the future consequences on staff already suffering from burnout, stress, and exhaustion. It is humanly unsustainable.

Social care services have not been immune from the same economic illiteracy. The warning signs preceded the pandemic. Social care is in meltdown now, and the proposal to increase National Insurance will not only fail to enable the fairer payment system for social care promised by the government, but it will also do little to alleviate the immediate problems caused by government policies.

Government officials have been clear that most of the money raised by the new tax will be spent on the NHS in the first three years, on the assumption that demand for state-funded care will increase from 2026, as people reach the spending cap. These proposals make no attempt to deal with an already failing underfunded system, and social care providers and charities have already indicated that the extra resources would not be sufficient to improve standards.

The problems faced by social care have been longstanding, exacerbated over decades by a mishmash of reforms by governments unwilling to grasp the nettle, as a likely result of the uncomfortable, but false, question of affordability and how it would be paid for. As a result, under an unfair means-tested social care system, which has for decades been served by private profit-seeking companies and charities relying on state funding to function, social care services have increasingly been impacted by years of funding cuts affecting local council budgets, putting increasing pressures on care standards, wages and employment terms and conditions, as private providers struggle to make their businesses profitable.

This is just pushing the problem yet again down the line, when social care can already no longer meet the needs of those requiring support. Recently published figures showed that nearly 300,000 people are on local authority waiting lists for adult social care, a situation which has arisen as a result of funding pressures and delayed assessments. Figures also reveal a chronic shortage of care workers which has meant that those requiring a home care package have had no option but to accept a ‘temporary’ placement in residential facilities.

The government’s decision to increase National Insurance, a regressive tax that will affect the poorest, not the richest, will lead to many of those already poorly paid workers losing substantial income, as figures now show. Coupled with the looming cuts to the universal credit uplift of £20 a week and rising energy and food prices, it will add more unnecessary pain and suffering to people’s lives. A study published this week by the Health Foundation has shown that the UC cut will hit areas with the worst health hardest and is likely to widen inequality in health and wellbeing, running counter to the government’s promised levelling-up commitment.

Analysis by Policy in Practice noted that by April 2022, the combination of the new Health and Social Care Levy and the removal of the uplift to Universal Credit would mean that carers would be £1035 per year worse off, despite the planned (but scarcely generous) increase to the National Living Wage. Its Director Deven Ghelani said: ‘The unfairness of paying for social care through a rise in national insurance, whilst cutting support for the lowest earners at the same time, means those that kept us going through the pandemic are the ones hardest hit.’

It isn’t any wonder that the media reported this week that many were already choosing to leave social care and find work elsewhere. When Amazon becomes a better alternative to working in social care and playing a vital role in society, then we should question our societal values. When we are told that affordability is key to public service provision, the cruel consequence must be that, down the line, people must suffer higher taxes to balance the budget. How can that even be a consideration for a government which is a currency issuer and has the power of the public purse?

Astonishingly, even the free-market Adam Smith Institute called these plans ‘morally bankrupt’, saying that the government was asking ‘poorer workers to bail out millionaire property owners.’ They also criticised the plan as a ‘kick in the teeth for all the young working people of this country who have already been hard done by the pandemic.’

Whilst the solution is simple, ditching the for-profit motive and replacing it with an adequately funded, publicly paid for, managed, and delivered social care system, getting politicians to agree is quite another matter. Obsessing over how it will be paid for, we have two extremes of economic nonsense being touted in the news and on social media. Both sides of the political spectrum are dedicated to raising taxes to pay for health and social care. The Tories, as these plans show, through punishing already poor people, and Labour by taxing the rich to raise revenue.

Quite rightly, one should tax the rich for reasons of equity and to strip away the power and influence their wealth brings them, but this week some left-wing progressive MPs have flogged the ‘taxing the rich’ to pay for social care narrative to death on social media. James Meadway, a former advisor to John McDonnell, also got in on the act saying that Labour should, ‘seize the opportunity to make the alternative funding case’. A wealth tax and other changes to tax arrangements would fit the bill, he suggested. At the same time, as his party came under pressure to set out a ‘costed plan’, the leader of the Labour Party, Keir Starmer, suggested that Labour would consider taxing wealth even more heavily to raise funds.

How depressingly predictable that the question of how you are going to pay for it is the standard response to funding public services, but the same question is never asked for bailing out banks or going to war.

Yes, of course, we want to see a more equitable society, but playing to Mrs Thatcher’s ‘There is no such thing as public money. There is only taxpayers’ money,’ assertion is a highly damaging tactic. When those supposedly on the progressive left associate themselves with an acolyte of the arch neoliberals Hayek and Friedman, it is scarcely an advert for confidence in them. Although the fact that such views are still underpinning policies and spending is not surprising, given the entrenchment of such narratives in political discourse. Playing to the understanding of one’s audience works every time.

What we need now, desperately, is an opposition which is prepared to put citizens before the profits of private companies and for politicians to reject the gibberish that the belief that taxes fund spending represents. It is hardly progressive to reinforce in the public mind the false household budget narratives of government spending; that tax rises will be necessary to fix what actually has been a deliberately broken health and social care system, or that they could be needed to keep the public accounts straight, as per Sunak’s coming ‘hard choices’ in the October Spending Review.

The insistence that there is no alternative to tax rises to pay for social care is both macroeconomically unsound and cruel to those who are already struggling to keep their heads above water. The consequences of higher taxes in these still uncertain times will be very hard on some of the poorest and most vulnerable in our society, and will do nothing to support the economy, businesses or the working population and their families, as the UC uplift is terminated, and energy and other costs rise. There still remains the looming potential crisis of rising unemployment as furlough ends, and even if there are sectors crying out for workers, there will likely be a mismatch in terms of skills requirements to fill new posts, and that will take time to correct.

In this respect, the government has put all its eggs into the free-market basket, expecting it to come up trumps, and it has failed, unsurprisingly. This government and decades of previous ones have trusted in the market to deliver. The invisible hand of the market, whatever that mythical beast is, has done no such thing. The private sector is a profit-seeking juggernaut which puts its own interests over public purpose. And therein lies the heart of the problem. Government has put fiscal discipline above people’s lives and allowed the private sector to run amok, in an unforgivable free-for-all bonanza of deregulation and profit-seeking.

The question is never, ‘is there enough money’ or ‘how will we pay for it?’ The question is do we have the real resources to deliver a better health and social care service, and if not, what are the solutions? That is the role of the government to plan and deliver through its spending and taxation policies. The government should be us, but now democracy is made a mockery, as government and corporations become one and the same thing, serving not the interests of the people or indeed the planet, but their own rapacious greed.

The price of a hands-off approach has been and will continue to be a heavy one. Government, as an elected body, should have a responsibility to serve its citizens to ensure fair and equitable wealth distribution, to create the vital public and social infrastructure upon which the economy depends, to plan for the future whether in a post Brexit era, for future pandemics, or indeed for a just green transition to deal with the climate emergency. Words and actions, however, like oil and water, don’t mix in Conservative terms. It has done none of those things, and now we have seen how easy it was for Conservative MPs in the Red Wall, who were originally objecting to the NI tax rise, to dutifully line up behind their macroeconomically challenged leaders to vote for more pain and suffering. Levelling up has been consigned to the Conservative bonfire of easy promises, and the people yet again duped into acceptance that there will be no alternative to tax rises, either to fund social care or balance the public accounts.

The failure of government hinges on a lie used to justify austerity. The lie of monetary scarcity. Over decades, despite the rhetoric and promises, the issue of social care has been swept under the carpet, and now the system is barely functioning. It will not be fixed by increasing taxes of any sort. It can only be fixed by a government with the political will to do so. Shamefully, successive governments have made a political choice not to fund it adequately. They invited the private sector in, as if social care or the NHS should be beholden to the god of business efficiency and profit, not public service for human well-being. The real cost has been lives, disaffected, poorly paid staff who are on the edge financially and physically.

We should be shouting it out loud. We have a government that chose this path. A government that chose to let social care collapse for the lie of fiscal discipline. What a terrible price we and our loved ones are paying. It didn’t and doesn’t have to be like this.

There are two potential outcomes: Either that we carry on with ‘business as usual’, as the work and pensions minister Baroness Stedman-Scott put it earlier this week to the House of Lords, referring to the removal of the UC uplift, or something else.

We could imagine a world where monetary reality informs government policies and spending decisions. Where government puts its citizens first. A world in which we could have a functioning public and social infrastructure, funded, managed and delivered publicly. An economy, underpinned by full employment and a Job Guarantee, that works for everyone, not just for an excessively wealthy elite that uses its power and influence to dominate public policy. A society where real resources and wealth are distributed more fairly, and a just transition to a green agenda to address the climate crisis looming close behind. Just imagine! The way may be rocky and uncertain, but if we don’t try, we will never know.

 

 

 

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The post The National Insurance increase shows that levelling up has been consigned to the Conservative bonfire of easy promises appeared first on The Gower Initiative for Modern Money Studies.

Concentrate on real resources to solve real problems, instead of the financial cost.

Published by Anonymous (not verified) on Mon, 23/08/2021 - 1:36am in

Photo by David B Young on Flickr Creative Commons 2.0 licence

“When people live in a fair, caring society, where everyone has equal access to social goods, they don’t have to spend their time worrying about how to cover their basic needs day to day – they can enjoy the art of living. And instead of feeling they are in constant competition with their neighbours, they can build bonds of social solidarity.”

Jason Hickel, Less is More: How Degrowth Will Save the World

 

Over the last 11 years, this government has presided over a train crash of unnecessary austerity and cuts to public sector spending, justified on the spurious claim that they were not affordable due to the previous government spending beyond its means. The public were told that recovery could only be achieved if people pulled in their belts and made a sacrifice to get the public accounts back into order. Bankruptcy was just around the corner if we failed to do so. The public, none the wiser, accepted the household budget wisdom without question, it has been ingrained in the public consciousness since Margaret Thatcher. Since that time, every part of our public and social infrastructure has experienced the consequences of those public sector spending cuts, from the NHS to adult and children’s social care, along with local government and other public institutions whose budgets have been slashed to accommodate the scam narrative of financial affordability.

We have, over the last year, witnessed as never before the grinding reality of austerity and its consequences on the public domain.

A couple of weeks ago, a research economist at the IFS reported that more than four million people had been on an NHS waiting list before the pandemic and that Covid-19 had increased the pressures on the NHS. He warned that unless the NHS could find effective ways to ‘boost its capacity’, then longer waiting lists would be inevitable. No mention here of the fact that the government has starved the NHS of adequate funding, allowed vast sums of public money to pour into private profit, and is currently overseeing the end of the NHS, as we know it, through its US-style integrated care plans. The suggestion that the NHS is to blame and not the government is just a part of the trickery used by such institutions to shift public focus away from government spending decisions and policies. The reality is that you can’t run a public service on empty for too long before the cracks appear, and Covid-19 has split them wide. But still, the public are led by the nose to accept the notion of public sector culpability, rather than manoeuvring by the government to deliver political agendas.

Recently, the President of the Association of Director’s of Children’s Services, Charlotte Ramsden, asked ‘Where is the national plan for children?’ Yes, indeed where is it? The problem goes beyond the chaos of austerity within local authorities whose budgets have been slashed, forcing tough decisions about how limited funding can be allocated fairly across the competing needs of our communities. It also reflects the increasing pressures caused by rising poverty and families trying to survive on low incomes and being obliged to seek help at the growing number of food banks across the country. Tackling poverty should surely be part of the holistic vision for children’s social service provision, given that they are often dealing with the crises brought about by government austerity in the first place. It is shameful that this government has committed to removing the Universal Credit Uplift which has seen so many people through these challenging times.

While Rishi Sunak counts the beans, children count the real cost of successive Chancellors, more concerned with balanced budgets and their political reputation for fiscal discipline. As the Guardian put it succinctly in an editorial this week:

‘Reform is required as well as money. The children’s home sector requires rebuilding with children’s needs – and not financial incentives – centre-stage. Above all, poverty must be reduced. Its corrosive effects on family life, including poor mental health, addiction, homelessness, and hunger, are well known. To deny or ignore the impact of these on children is not only self-defeating, since the costs of treating the symptoms are so often higher than tackling the cause. It is also cruel.’

Also this week, a study published by the Sutton Trust and the Sylvia Charitable Trust noted that inequality in early years education wasn’t offering a fair start to children. Commenting on the government’s policy of funding only 15 hours of weekly childcare or nursery for three- and four-year-olds from low-income families, compared to 30 hours for children whose parents were in work, was deepening inequalities. Apart from the injustice of unequal access to child-care which favours the wealthier, it is short-sighted. Children who benefit from early years education and opportunities to socialise with their peers take those advantages with them throughout their lives. All children deserve a fair start. They benefit, and society benefits.

We should be looking at the roots of the additional pressures on public sector services, not just the services themselves. We should be examining them in the context of the social determinants of child health and security. Determinants such as poverty, the creation of low wages, precarious employment and involuntary unemployment, as well as inadequate, unfit for purpose housing, along with high rents and a crumbling public infrastructure. All these things create stresses in family life and give rise to the problems struggling people face. In turn, they affect the good functioning of society as a whole.

Over the past few decades, we have also seen increasing privatisation of both adult and children’s social care services. It has been based on two lies: that government has a finite pot of money; and that the private sector can deliver public services more efficiently and therefore more cheaply. For decades we have accepted the narrative of a competitive, for-profit model of social care provision, but its promises have fallen far short of the expectations in terms of delivery of efficient, high-quality services, and have impacted on those employed to deliver them in terms of low wages and poor terms and conditions of employment.

During the austerity years, as cuts to public spending increasingly fed through to local government and service providers, the crisis continued to intensify. The consequences of market-led provision, driven by competition, have progressively undermined the quality of care, and the last year has revealed the widening cracks; the result of a decade of government policy and spending decisions. Ironically, the assumed beneficiaries of this profit-led system of social care have suffered as cuts kicked in, leaving profit margins slimmer and companies considering exiting the care market. That is the prerogative of private companies whose rationale is making profit.

The virtues of the free market have been peddled for decades by governments serving the corporate estate and neglecting their responsibilities as elected bodies to serve the nation’s interests. Over the past year, it has been exposed for the con trick it is. This is exactly why we need to bring social care services back under the public sector umbrella of a publicly, paid for, managed, and delivered, accountable service.

As for paying for it (which is usually the next question) it is only the government that has the monetary and legislative capacity to address poverty and inequality and invest in public and social infrastructure to create a stable foundation for a successful and fairer economy. Whilst the government prevaricates, and discussion takes place about how social care can be funded, those needing support continue to be abandoned to fate. Last month, Boris Johnson, in the tradition of sweeping important decisions into the long grass (at least until the autumn) put on hold plans for a tax rise to fix the disintegrating care system, while further discussion continues.

With some MPs unhappy at the prospect of funding it through increases to National Insurance, a regressive tax which hits the poorest hardest, and others being concerned about what they see as intergenerational unfairness, they either lack the fundamental knowledge about monetary reality, or choose to ignore it. The facts would allow them to focus, not on how to pay for it, but on understanding the real issues that revolve around the real resources that will be needed to deliver a social care system that can function effectively, using the tools government has at its disposal, to ensure a fairer distribution of wealth and resources. An increase in National Insurance does not take into consideration the consequences of taxing people more during a period of economic uncertainty. Again, the principle of one person’s spending equals another’s income kicks in here.

No matter how much money you throw at it, if you have no strategy for ensuring that there is a functioning infrastructure for social care, with sufficient well-paid staff on good terms and conditions to deliver those services, you will fail. The question of how to fund it is a redundant one because the government is the currency issuer. But as it is also the political decision-maker, it can target its taxation policy to ensure it releases the labour and other real resources it needs to deliver a functioning social care system.

All talk about levelling up, or investing in public services cannot happen while we have a Chancellor dedicated to market solutions and fiscal discipline, and while politicians talk in terms of taxing to spend.

Last week, GIMMS reported on the IPCC’s report which put humanity on code red. As the droughts, wildfires and floods continue to be chronicled in the media, the UK government, as a host of this November’s COP26, persists with its rhetoric claiming that the UK is a climate world leader and that it has reduced its CO₂ emissions by 44% since 1990. This week the climate activist Greta Thunberg called out their lies and also suggested that global leaders were still treating the climate emergency as a ‘faraway, distant problem.’ She made those comments at a briefing, launching a UNICEF report, Children’s Climate Risk Index, which found that ‘approximately 1 billion children – nearly half of the world’s 2.2 billion children – live in one of the 33 countries classified as ‘extremely high risk’. These children face a deadly combination of exposure to multiple climate and environmental shocks with a high vulnerability due to inadequate essential services such as water and sanitation, healthcare, and education. The findings reflect the number of children impacted today, – figures likely to get worse as the impacts of climate change accelerate.’

While politicians, and the governments they represent, continue with their gilded climate rhetoric, in the same week, it was announced that the oil giant Exxon is expecting to produce 800,000 barrels of oil a day by 2025 in Guyana, which would exceed the estimates for its entire oil and natural gas production in the south-western US Permian basin by 100,000 barrels, that same year. It would represent ‘Exxon’s largest single source of fossil production anywhere in the world.’ Not only do experts believe that the company’s safety plans are ‘inadequate and dangerous’, but a top engineer has also said that worker’s lives, public health and Guyana’s oceans and fisheries, which indigenous locals rely on for a living, are all at stake particularly in the event of a spill. Vincent Adams, an environment chief said, ‘when they make all their billions, and they are ready to pack up and they’re gone, we’ve got to deal with the mess.’

While the company claims its climate goals are ‘some of the most aggressive’ in the industry, its oil operations in Guyana will flood the atmosphere with more than 2bn metric tons of CO₂. As environmental campaigners have suggested, ‘Exxon cannot reconcile the project with its public commitments to address climate change and reduce carbon emissions.’

Greenwashing on steroids!

Last week’s news that humanity may be on code red, will slowly but surely become tomorrow’s chip paper unless we take the warnings with the seriousness they deserve. The real commitment to radical change still remains on the drawing board with no clear direction or strategic plan, either domestically or globally, hinging as it does on the power of the global corporates to control the messages through lobbying and their financial firepower.

It is ironic that Alok Sharma points the finger of blame at the Chinese and suggests that we can only fight climate change if China does its part. Just another example of shifting the focus of blame; failing to acknowledge in the usual smoke and mirrors the connection between China’s exports and their destination.

Larry Elliott noted in the Guardian this week that China was responsible for 28% of global greenhouse gas emissions, with Britain, France, and Italy accounting for about 1%. However, he forgot to note at the same time that the consumables we all rely on in our homes, from electrical goods to computers, phones, and clothing, have been imported from China. As Sue Dalley in a letter to the paper said, ‘This suggests to me a rather different allocation of responsibility; it is time to engage in the urgent political review of just how we in the west must change our addiction to cheap mass consumption …’

It can be summed up by George Monbiot in an opinion piece in this week’s Guardian:

“The global emergency requires a new politics, but it is nowhere in sight. Governments still fear lobby groups more than they fear the collapse of our living systems. For tiny and temporary political gains, they commit us to vast and irreversible consequences. MPs with no discernible record of concern for poor people, and a long record of voting against them, suddenly claim that climate action must be stymied to protect them.

 

The Treasury refuses to commit to the spending needed to support even the government’s feeble programme. Johnson, charged with transforming the global response to climate breakdown at the November summit in Glasgow, blusters and dithers, seeming constitutionally incapable of making difficult decisions.

 

No government, even the most progressive, is yet prepared to contemplate the transformation we need: a global programme that places the survival of humanity and the rest of life on Earth above all other issues. We need not just new policy, but a new ethics. We need to close the gap between knowing and doing. But this conversation has scarcely begun.”

Whilst we as individuals can make our own personal choices, fundamentally it is only the government through its spending choices and policies that can take the radical action that needs to happen to ensure our children and their children have a future.

The government has many tools at its disposal to achieve its objectives, if it has any beyond ensuring the increasing disparities in wealth and allowing its corporate friends to continue to greenwash their way to continuing profits.

A mainstream newspaper this week ran an article about Green NS& I Bonds. Referring to the NS&I website which explained that all money invested in NS&I is passed onto HM Treasury and contributes towards government spending, it went on to indicate how that money would be used to fund green initiatives, from making transport cleaner, developing renewable energy, decarbonisation of public buildings such as schools, and investment in protecting the environment and the countryside.

Green Bonds could indeed play a significant role in a government’s climate agenda, but not in terms of funding such projects. That is just another example of the illusions which governments promote about how governments need to tax to spend, or to borrow by issuing bonds. The government has the capacity to fund green projects as the currency issuer. It doesn’t need to borrow from anyone or offer bonds to do so. The only benefit an investor might get apart from the interest at maturity is a nice warm glow thinking they’ve helped the government to achieve its green agenda, should it ever publish one.

However, as L Randall Wray noted in a recent MMT Podcast hosted by GIMMS Associate Members Christian Reilly and Patricia Pino, Green Bonds could play a valuable role as did the issuance of War Bonds during the second world war. Contrary to belief, they were not issued to pay for the war, they were issued to remove the purchasing power of citizens, to free up those real finite resources required to fight the war, and thus avoid the inflationary pressures which could have ensued. The same warm glow applied as people felt they were doing their bit to support the war effort, even if the reality was that the government did not need their savings to prosecute it.

That same principle could have the same applications in addressing a war of a quite different kind. The one concerned with human survival on a planet of finite resources. Only this time, we should understand the mechanics of Green Bonds, not as mechanisms to fund a green agenda but mechanisms to deliver a green agenda through re-allocation of resources.

 

 

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Neither Green Savings Bonds nor your pension money are needed for the government to invest in an environmentally sustainable recovery

Wind turbines in fieldsImage by Yves Bernardi from Pixabay

“We can pretend that extending the status quo into the future, unchanged, is one of the options available to us. But that is a fantasy. Change is coming one way or another. Our choice is whether we try to shape that change to the maximum benefit of all or wait passively as the forces of climate disaster, scarcity, and fear of the “other” fundamentally reshape us.”

― Naomi Klein, On Fire: The Case for the Green New Deal

 

This week, the Telegraph reported on a new poll saying that Rishi Sunak’s push to rein in government finances was backed by Conservative voters who were concerned that the government was spending too much and must do more to cut expenditure. According to Andrew Neil, who interviewed the Chancellor on GB News, he did not deny that he had indicated to Johnson that ‘he might have to take his credit card away’, and confirmed his statement made earlier this month that it was right that he should be ‘responsible with other people’s money’.  It would be interesting to be party to conversations between No. 10 and No.11 – Johnson promising the Earth without consulting his Chancellor – whatever next!

Whilst voters on the right worry about the state of the public accounts, on the left we have politicians supporting this narrative; Labour’s candidate for Batley and Spen stated in an interview with Owen Jones prior to election day that ‘People are … sick of thinking there’s a magic money tree, there isn’t, so we’ve got to be clear about that’.

You could not make it up! While the planet overheats, in some places literally, landscapes and oceans degrade, and biodiversity and the natural world is under threat as a direct result of human behaviour, the state of the public accounts takes precedence over addressing the vast man-made politically created poverty and inequality, and even human and planetary survival!

And while the toxic consequences of neoliberal economic dogma prevail, and people get poorer and less equal while the rich go on raking it in, balancing budgets is apparently far more important than advocating the creation of a fairer and more sustainable economy.

This ‘past its expiry date’ understanding of how the government spends spreads its noxious tentacles into every aspect of our lives, suggesting that government spending is constrained by a finite pot of money that depends on taxation and borrowing. And that is before the political pundits or orthodox economists even get started on fearmongering about the size of the national debt. And yet, as destructive as the narrative is, it forms part of public and political debate on a daily basis on the news and social media alike.

It is disappointing, to say the least, that the winning Labour candidate in Batley and Spen is happy to sign up to the right-wing narrative of fiscal discipline and to reinforce this to her electorate, a narrative so beloved by Margaret Thatcher, who claimed that there was no such thing as public money. Dealing with the key challenges of the day, including saving humanity is, according to that message, limited to the tax paid in by working people. By that token, we will have to save up for it, or not do it at all! But do not worry, it is only the planet at stake.

This week the Chancellor, in his Mansion House speech about the future of financial services, yet again reinforced the false taxation paradigm, by claiming that the financial sector contributed ‘£76bn in tax a year’, which he stated was enough ‘to pay for our entire police force and our entire state schools’ system.’ It must have made the chests of those present puff out with pride at their contribution. Of course, on paper, one can do those calculations or costings, but the truth is that government does not need their tax, or anyone’s tax, in order to spend.

The Chief Bean Counter, yet again, leads the public astray with his household budget descriptions of how the government spends, and later in his speech reinforced the lie that it needs to borrow to fund its programmes. He confirmed the ‘final part of his vision’ which would give the public, he said, an opportunity to invest in the government’s green initiatives through NS&I Green Savings Bonds. It seems after a bank bailout over a decade ago which failed to spill the beans on how the government really spends, combined with a year of government borrowing from itself to manage the economic fallout from the pandemic, it is choosing yet again to reinforce the message that government needs to borrow from people or institutions in order to spend to save the planet. However, gilt and bond sales, although presented as a borrowing mechanism, have a quite different role and do not equate with borrowing. For more information on that point, you can find out here.

The government does not have to issue bonds, green or otherwise, to fund its spending, any more than it needs to issue bonds to savers to fund infrastructure schemes and create green jobs. That is just the smoke and mirrors of paper accounting. The government is the currency issuer, and with that comes the capacity to invest in creating a sustainable economy and create jobs, both in the public and private sectors, or through the implementation of a Job Guarantee programme which would act as an automatic stabiliser to smooth out the ups and downs of the economic cycle. It is the only body that has the legislative power to do so, and it is the only body with the monetary firepower.

And again, this week, in yet another game of smoke and mirrors, it was reported that the Government had been in private talks to direct billions of pounds of pension money into infrastructure and start-up companies to boost the economy. Industry sources have apparently been discussing how a portion of workplace pension schemes – those which staff have to join – would go into a fund which will launch this year. Yet again we are faced with the same government-sponsored tall tale, but the government does not need to raid pension funds to boost an economic bounce back, or indeed pay for a green agenda.

Such false narratives strengthen the false idea, which has been drummed into the public consciousness over decades, that the financial sector and markets hold the key to economic health, and that the government relies on their expertise and ‘talent, energy and imagination’, as Sunak explained in his speech, to revitalise the economy, which, according to him, matters more for this industry’s success than any government policy.

Is that the same financial sector that crashed the economy in 2007/8? The same financial sector that operated like a casino whilst believing it was invincible, and, in doing so, ruined the lives of hundreds of thousands of people; destroying jobs, depriving people of their homes and contributing to huge economic instability, which in the end led to the poison of damaging austerity.

It calls to mind the words of another Chancellor, Gordon Brown who, addressing the City of London just two months before the run on Northern Rock said:

‘Over the ten years that I have had the privilege of addressing you as Chancellor, I have been able year after year to record how the City of London has risen by your efforts, ingenuity and creativity to become a new world leader… I congratulate you Lord Mayor and the City of London on these remarkable achievements, an era that history will record as the beginning of a new golden age for the City of London.’

No sooner had he said it than the financial edifice came crashing down. Clearly, the beginning of this new age was put on hold!

Like governments before, even in the light of the great financial crash politicians such as Sunak are following the same path, bowing to markets and the financial sector as if they are the authors of economic well-being.

And like governments before, it is relinquishing its responsibility for the state of the economy and the health of the nation or the planet, with the implication that the state’s role is a limited one. Even though its vast power has been demonstrated clearly over the last year and more and has prevented an economic meltdown.

It is government policies and legislation that make the rules by which private companies operate, and it is shameful that for decades successive governments have given the financial sector free rein to do as it pleases, with dire consequences. It is also shameful that the government suggests that it needs the money of private savers, the financial sector, or other institutions in order to spend. It is equally shocking that successive Chancellors have pulled the wool over the eyes of the public about how the government spends, by continuing to bow down to the gods of the market and the financial sector.

Wherever you look, the household budget paradigm rules, to the detriment of the biggest challenge we have ever faced. The future of humanity. And still, in the face of rising temperatures and seas, the question on everyone’s lips is: ‘who will pay for it?

This week, an article in the Guardian put the oil industry on the spot over the decades of denying the effect of their business on the climate. It suggested that whilst we cannot get back the 40 years lost to the oil industry’s climate lies, that it should now pay for those deceptions with higher taxes to fund the green agenda. Of course, again, the household paradigm rules in the same way as the left clings to the idea that we should get the excessively rich to pay more tax to pay for the radical environmental programmes that will be needed.

Again, the bottom line is that tax does not fund government spending; the only body with the real monetary capacity as the currency issuer to pay for what we must do is the State. That does not mean to say, however, that they should not be made to bear the burden of their lies, indeed they should – through legislation and taxes designed to drive a move away from damaging carbon-based energy towards developing sustainable technologies harnessing wind, water, and the sun. That is the power of the state, assuming it chooses to use it, rather than deferring to the market for solutions. So far, this government’s record on environmental action has been lukewarm and as changeable as the weather.

Again, this week, in another article commenting on the appointment of Sajid Javid to the position of Secretary of State for Health, the author focused on the problem of MONEY, or rather lack of it, writing:

‘But in every battle Javid fights from now on there will be another familiar problem: money. How to fund a reshaped, modernised health service from Treasury coffers already run bare by the pandemic. How to modernise social care without blowing another hole in the public finances, or putting up taxes, or slashing pensions

Putting aside the idea that this government has any intention of reshaping the health service or social care as publicly paid for, managed, and delivered services and has, in fact, been working for the very opposite, once again the ‘state coffers are bare’ message predominates. It reflects the strategies of successive governments for decades, on both the left and right, who have introduced the private healthcare sector into the mix, in the belief that the private sector is more efficient and uses public money wisely, regardless of the fact that public money is going into private profit and results often in poorer quality and restricted services. Corporate welfare has been the aim of the government game, influenced by those very same corporations advising on policy.

However, the idea that the government has to make choices between putting the finances straight and people’s lives, is not only cruel in its conception but also incorrect. The government does not have to blow any holes in the public finances, put up taxes or slash state pensions. Quite simply, all the government has to do is authorise its central bank to spend.

The question, as someone noted this week on social media, is not how are we going to pay for it, but how are we going to resource it? Do we have the nurses, doctors, other health professionals, hospitals, and other facilities, not to mention social care workers, to provide good health and social care? And if not, why not? Who has failed to make provision through its policies and spending decisions? Where does the blame lie? At the feet of the government, of course.

It is all the more concerning that Javid, a former chancellor who promised an end to austerity and then broke his pre-election pledges by ordering his ministers to identify savage departmental cuts, on the basis that they had been ‘elected with a clear fiscal mandate to keep control of day-to-day spending’, and who said that ‘this means there will need to be savings made across government to free up money to invest in our priorities’, is now in charge of the Department of Health and Social Care. The public should at least know what his priorities might be.

We now have a truly clear idea, based on previous and current experience, that it means pouring public money into big corporations and the pockets of relatives, friends, and mates of mates, whilst depriving the public sector of the means to function efficiently and effectively. Misusing their spending capacity for their own agenda at the expense of serving the public purpose.

The government does not need to examine the state of its finances or whether it can raise taxes or borrow to fund its spending or if it should cut back its expenditure, its role should instead be to look at the bigger picture of resource availability and decide what its priorities should be. What it does need to explore is how can it release the resources it needs to deliver those public priorities by reshaping the balance between private and public sector employment? And as the currency issuer, it certainly does not need to rob Peter’s department to pay Paul’s, or even make savings.

While the Chancellor considers his potentially cost-cutting or tax-raising moves, as a result the Prime Minister’s levelling up and other promised spending plans could be in jeopardy, if indeed they were ever intended to be more than hot air to make him look good.

Restoring fiscal discipline would put paid to those plans. You cannot do both. Government has the tools to improve people’s lives if it chooses to use them. Instead, it prefers to defer to market solutions again and again with damaging consequences.

Successive neoliberal governments have relied on the view that a light-touch regulatory environment is what is needed, and that letting the rich get richer will allow wealth to trickle down. All government has to do, apparently, is wait, and bingo! Poverty will be a thing of the past and public services affordable. And yet the evidence is now, and has been for some time, that doing so has led to the lives of the poorest continuing to deteriorate along with public and social infrastructure.

A paper from the London School of Economics (published in December 2020) which compared 18 developed countries that cut taxes in 1982, (when Ronald Reagan cut taxes on the wealthy) with those that did not, found (surprise, surprise), that instead of wealth trickling down to boost jobs and incomes, such tax cuts only helped one group – the already rich.

Over the last few years, the reality of the consequences of government spending and other policy decisions which have led to rising poverty and inequality, have continued to make media headlines. Along with the decaying public and social infrastructure facilitated by austerity-driven, neoliberally inspired government, we have seen, over the last decade, a continuing deterioration in living standards. Rising homelessness and food bank use, housing unfit for human habitation, compounded by unaffordable rents and insufficient housing stock, inadequate access to health care and good education, not to mention the hardship caused by low incomes and precarious employment.

A study carried out by an All-Party Parliamentary Group (APPG) has found that England’s poorest neighbourhoods have the biggest shortages of social infrastructure such as parks, playgrounds, pubs, shops and sports facilities. It also showed that such neighbourhoods are least likely to get government funding to support their communities and found that they were less than half as likely to have charities and community groups in their local area. These ‘left behind neighbourhoods’ as they have been called were, it noted, overwhelmingly concentrated in the post-industrial towns and cities of the north of England and the Midlands, as well as coastal areas of the south-east.

Whilst Sunak continues to tell the public that he has to be ‘careful with other people’s money’, alluding to the increasingly discredited view of Margaret Thatcher about state money, he is reinforcing in their mind that, at some point, there will be a price to pay in higher taxes or more public sector cuts, however damaging that would be to an economy still struggling to get back on its feet. He is reinforcing the idea that dealing with the key issues of our time is financially unaffordable, whether that is addressing the consequences of the climate crisis or the decades of neoliberally created poverty and inequality.

Neoliberalism is not dead, as some on the left seem to think. It is morphing into something else even less wholesome, and we still have major political parties signed up to the corporate charter of planetary destruction, whilst talking in the misleading language of green growth and the lie that we can continue as we are.

We must keep pushing back on these false ideas, which have already done vast damage to the planet and all life that depends on it being healthy to survive. We must acknowledge our connection to the natural world which sustains us and recognise our interdependence.

There are choices. We just have to decide on which path we prefer to stride. Balancing public budgets and allowing corporate control over the green agenda and the demise of our democratic values, such as they are, or accepting that an understanding of the reality of how money works must be the baseline for what comes next, and that such an understanding offers real opportunities to create the sustainable, steady-state economy that we seek.

 

 

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The post Neither Green Savings Bonds nor your pension money are needed for the government to invest in an environmentally sustainable recovery appeared first on The Gower Initiative for Modern Money Studies.

A Genealogy of Aged Care

Published by Anonymous (not verified) on Fri, 18/06/2021 - 3:38am in

Big business, ‘consumer empowerment’ and the undermining of care for the elderly

Australians are living longer. An Australian woman aged 65 today can expect to live nearly 23 more years, on average—more than two years longer than a woman aged 65 in 2000.  A man of 65 today can expect to live nearly 20 more years—three years longer than a 65 year old man in 2000.1 Across the same two decades, the share of older people (aged 65 and over) in the population increased from around one in eight to one in six.2 By 2050, official population projections put the share of older people at one in five.3 

Half of all older people have a disability of some kind, and four in ten need assistance with everyday activities. One in six has a profound limitation, such that they always need help with communicating, getting up and around, and/or looking after their bodies (bathing, eating, toileting).4 The vast majority of older people live in the community and more than two thirds of people who need assistance get informal help from their family and friends—mostly their partners and daughters. Alongside, or instead of, this informal support, some get formal assistance through the aged care system. Some buy help from commercial providers. Some don’t get any help. Around one in six older people who need assistance with looking after their bodies goes without. Overall, one in three who needs assistance has some level of unmet need for help.5 The one in twenty older people who don’t live in the community live in residential care.6 Almost all of these older people have a profound limitation,7 half live with dementia, and most have multiple other health conditions. Despite their living situation, these people too may not get the care they need, as studies on ‘missed care’8 and the recent Royal Commission on Aged Care Quality and Safety have documented.    

Australia’s formal aged care system is a set of programs funded and regulated by the federal government. During the last quarter of a century, policies of the governments of both major parties have relied increasingly on market instruments—competition, user choice and private provision—to address older people’s needs for support. The language of consumer empowerment has given cover to the unleashing of private providers, and the language of sustainability and fairness has given cover for austerity and user-pays. Not least because of the considerable influence private providers have over it, regulation has struggled to ensure that public spending results in high-quality care in Australia’s aged care system.    

Aged care programs provide care and assistance to older people either at home (through the Commonwealth Home Support Program, and the Home Care Packages program) or in what are called, with rather unpleasant technocratic neutrality, ‘residential aged care facilities’. The federal government spent $18 billion on these services in 2018–19—about twice as much as it spent on unemployment benefits, and less than half the revenue it forwent in tax concessions for superannuation, 9 which skew strongly towards people with the highest incomes.10 Older people contributed over $5 billion in the same year, 11 not counting the $30 billion pool of ‘refundable accommodation deposits’ (commonly called ‘accommodation bonds’) that 95,000 residents had contributed as interest free loans to the owners of the facilities they live in, in lieu of paying a daily rate for their accommodation.12 

So who do the billions spent on aged care go to? It depends on the program, but across all programs the share of for-profit providers is growing, drawn in by the business opportunities opened up through the marketisation of aged care. Older people are now expected to navigate highly complex markets for residential or home care, staffed by a decreasingly professionalised, low paid workforce. 

***

The marketisation of aged care that we live with now started in earnest in residential care. The Howard Coalition government’s Aged Care Act 1997 removed some critical brakes on potential profitability for private providers. Among other deregulations, the Act did away with requirements that providers spend (and prove they had spent) a certain proportion of their funding on care staff and that they employed a certain proportion of skilled staff.13 The government’s plan for ‘structural reform of residential aged care’ included a major expansion of user-pays principles in the system, which it only partly implemented, following what it considered electorally dangerous opposition.  

Despite challenges to aspects of  the government’s plan, anticipatory excitement about the business opportunities in residential aged care was high at the time. A representative of an industry association for private providers told The Australian Financial Review in October 1997: ‘I think you will see the large conglomerates coming in. I wouldn’t be surprised if the Coles Myers and the BHPs of the world started taking an interest in aged care’.14 

This is not quite what happened. Nevertheless, in the years that followed, the for-profit share of residential care places increased from 27 per cent in 200015 to 41 per cent in 2019.16 Across these two decades, the number of places in residential care increased from around 140,000 to nearly 214,000, and more than two thirds of this growth was in for-profit facilities. The share owned by non-profit providers (religious, charitable and community organisations) fell, from 63 to 55 per cent. Public provision collapsed, from 10 to 4 per cent, with nearly two out of every five public residential care places closed or sold. 

And while Coles Myer and BHP have not entered residential care provision, some very large companies have grown up: today the three largest corporate providers of residential care, BUPA, Regis and Opal, together own one in twelve places, up from one in eighteen a decade ago.17 Private equity companies, investment banks and foreign investors have moved in and out of the sector, and several companies are now listed on the stock exchange. Reports by consulting firms about deals done and business opportunities available are revealing—they tout the ‘high level of revenue certainty’, and the opportunities for consolidation and increasing shareholder value through ‘scale benefits’. 

A brief look at the prehistory of the Howard reforms that (re)started growth in the for-profit private sector sheds light on how we got here. In the 1950s and early 1960s, before ‘residential aged care’ existed as an object of social policy, the Menzies government offered capital subsidies to religious and charitable organisations to fund the building of special housing for older people in ‘hostels’, later called ‘low care facilities’. Separately from hostels, a smattering of private convalescent homes and a few public long-term care institutions existed for people who needed more care. In 1963, the government formalised these long-term care homes under a new category of institution, ‘nursing home’, and began offering their operators a nursing home benefit of $2 per patient per day. Very little was regulated by the federal government—not opening up a home, nor where homes were placed, nor fees charged to residents. There was no means test for residents, and no regulation of patient admission. When the benefit was introduced, state governments ran half the ‘beds’. Within five years, the number of beds had increased by around 50 per cent and almost all the new beds were run for-profit. By 1972, 56 per cent of all nursing home beds were run for-profit. The establishment in the 1960s of a large for-profit sector would cast a shadow that has darkened aged care since, as private providers have sought to defend and extend their interests. 

The number of (non-profit) hostels grew at a slower rate during the 1960s, and governments came to see the unbalanced growth of higher-cost, higher-care nursing homes as a policy problem, among others in aged care. Between 1972 and 1996, there was much policy activity as both Coalition and Labor governments tried to get some control over the size and structure of the residential care sector and of its costs both to the public purse and to older people. The two sides of politics went about it in different ways. The Coalition did put in place the first controls on fees nursing home operators charged older people, but in general its policies combined attempts at cost-containment and cost-shifting with defence of private enterprise. The ALP was concerned about the growth of the for-profit sector, but it did not directly confront it. Rather, Labor governments focused on supporting the growth of non-profit providers, especially of hostels, and on controlling the market power of nursing-home providers through regulation. During the 1980s, they introduced new regulations for approving providers, including a planning system that controlled where they could locate and how many beds they could open; new regulations governing how older people came to access residential care; new forms of quality regulation; and a new funding system that specified what was to be spent on care, separately from other costs. Labor also further regulated fees charged by nursing home providers, strictly limiting their opportunities to shift costs to residents. 

Labor’s policies to increase the non-profit share worked, to some extent—between 1972 and 1984, two thirds of all new nursing-home places were in non-profit homes. But public ownership by state and local governments had already begun to fall in the 1980s. And in the faster-growing hostel sector, Labor gave up a long-held principle and made care (but not capital) subsidies available to for-profit providers in 1990, so they began to grow. By 1995, for-profit providers owned a smaller share of nursing-home places (47 per cent), while the ownership profile of nursing homes and hostels taken together was 12 per cent public, 61 per cent non-profit and 28 per cent for profit. 

Private providers resisted Labor’s regulations with great energy, in the courts and in the media. They had the Opposition’s vocal support—their attacks on Labor’s funding and fee control policies in parliament spanned allusions to the Gestapo, ‘socialism gone mad’ and the ‘politics of envy’. The then largest provider, Doug Moran, vigorously lobbied the incoming Howard government in 1996 to deregulate the sector, and claimed to have been successful. As noted above—the new Aged Care Act 1997 removed key regulations that limited profitability.  

***

Since the Howard years, marketisation of aged care has been a bipartisan project. In 2010, the first Rudd Labor government asked the pro-market Productivity Commission to make reform proposals for aged care, and recommendations in its report Caring for Older Australians leant heavily on ideas of competition and consumer choice. Many of the commission’s recommendations were implemented in the Gillard Labor government’s Living Longer Living Better package of 2012. The government’s proposals framed the problems in aged care in terms of demographic pressures, unsustainable reliance on public financing, disempowered consumers and uncompetitive markets. In a brief about the changes to the industry, consultants KordaMentha predicted that the Living Longer Living Better reforms would disproportionately benefit large, metropolitan, for-profit providers.18

Finding ways to make consumers pay more was a central goal of the Living Longer Living Better package. Accommodation bonds, formerly chargeable only in hostel or low care facilities, were extended to all places in residential care, and the distinction between ‘high’ and ‘low’ care was removed. Residential care providers could also now charge for ‘additional services’ for ‘amenities’ such as food choices and entertainment. Consultants Ansell Strategic euphemistically described these charges as a way providers could ‘maximise sustainability’ in the context of constrained public funding. As should have been foreseen by the government, large for-profit providers found multiple creative ways to clip the proverbial ticket at older people’s expense. Regulation of additional service charges has had to evolve, following interventions against providers by the Department of Health and the Australian Competition and Consumer Commission.19 BUPA and Regis both ended up in the Federal Court, which found various of their additional charges on residents illegal. 

When Labor lost power to the Coalition in 2013, the new government unsurprisingly continued these directions. It appointed an Aged Care Sector Committee, whose members included the managing directors of both BUPA and Opal.20 The committee’s ‘road map’ set out ‘what is needed to achieve a sustainable, consumer driven and market based system’. 

***

In residential care, ‘consumer driven’ seems to mean finding ways for providers to charge older people extra for anything other than the bare minimum of accommodation, food and care. In home care, marketisation is ‘individualisation’, which puts primary responsibility on older people to find and negotiate the content and terms of their care. 

Labor had introduced the Home and Community Care (HACC) Scheme in 1985, to address a long and widely held view that premature admission to (expensive) residential care, which often occurred against the wishes of older people, could be avoided if older people had more support to remain in their own homes. Under this block-funded scheme, renamed the Commonwealth Home Support Programme following the Living Longer Living Better reforms, mostly non-profit organisations today provide typically small amounts of care and assistance to around 20 per cent of older people. This is generally considered a successful program that could be even better with more funds.

In 1992, Labor introduced a second home care program, called Community Aged Care Packages, designed as a substitute for low care residential care. In 1995, the Labor government integrated packages into the planning system it had established to control the number and distribution of residential care ‘places’. Under this system, the mostly non-profit providers tendered for a number of packages each year, which they could offer older people assessed as eligible. Over the years, the program has grown, and now offers care to around 4 per cent of older people in a system of four  ‘levels’ of home-care package.21 

Labor’s Living Longer Living Better reforms promised to make all home-care packages ‘consumer directed’ by 2016. This means funding for a specific level of package is allocated to the person assessed as eligible, not to a provider. The older person can spend the funds on a designated range of activities to meet their needs and preferences. What’s not to like? 

For one, a person is likely to wait literally years to be allocated a package after they have been assessed as eligible for one, because the total number of ‘places’ in the program is restricted. The planning procedure for aged care places that Labor introduced in the 1980s makes sense: without some control over the system as a whole, governments could not achieve policy goals such as rebalancing the system away from residential to community care or ensuring some degree of geographical allocation according to need. The planning system is a decidedly non-market policy instrument, and successive market-oriented reform plans have called for its abolition—in effect calling for a return to the bad old days of provider discretion at the public’s and consumers’ expense. But governments have so far resisted, not least because it is also a handy tool of budgetary management: only those places it ‘releases’ are funded, more or less regardless of how many people might be assessed as eligible for one. Most people waiting for a package are eligible for support from the Commonwealth Home Support Scheme in the meantime, although this program is designed to give ‘entry level’ services only. Meanwhile, the gap between places released and people assessed as eligible has remained persistently large, leading to headlines about the hundred thousand people in the queue and the tens of thousands of people who die waiting for a package. 

Once an older person has eventually been allocated a package, they enter the market to find a provider. My Aged Care, the portal website for the entire aged care system, lays out the process for them: compare providers, select one, discuss terms and enter into a service contract with the provider, and monitor and review the services you receive annually. The number of providers to choose from has grown considerably, since they no longer have to tender for home-care package places. In the three years to the middle of 2016, when consumer-directed care was rolled out, there were about 500 providers; by the middle of 2019, there were nearly 930—growth of nearly 90 per cent. Of the new entrants, nearly 80 per cent were for-profit, increasing their share from 13 per cent to 36 per cent across three years. International franchise companies have moved in, including the privately held Home Instead (United States) and Nurse Next Door (Canada). Another is the US-based private-equity-owned conglomerate Caring Brands International, which purchased an established, for-profit Australian franchise company, Just Better Care, in 2014.   

Selecting a provider using My Aged Care is almost impossibly complex. It is like choosing an electricity plan, with much higher stakes and many, many more variables. A search for providers of, say, a Level 3 home-care package in Cowra, a town in rural New South Wales, yields more than thirty, some based in Queensland, and several in Sydney or in larger rural towns—how distant providers deliver responsive, well-supervised care is unclear. A search for providers in a middle-ring Sydney suburb yields well over 100, distributed around greater Sydney and Australia at large. The only evidence about service quality presented on My Aged Care is whether or not a provider has been sanctioned by the regulator—a rare occurrence, especially in home care. Providers are free to set their own prices, and charge (sometimes wildly) different amounts for the same services. Some charge administration fees and others do not. Older people’s ‘exit’ option is supposed to drive competition and quality improvement—yet providers can charge them an exit fee if they decide to change. Some providers charge a levy if you want to have a component of your package delivered by a different organisation. You can choose to ‘self-manage’ your package, selecting providers of various services and coordinating all aspects of their delivery yourself. Under this option, you still have to choose a provider to hold and administer the funds, for which you pay a fee. And so on. 

***

Of course ‘providers’ do not actually provide care; care workers do, under poor conditions for very low pay. Nearly nine in ten are women. Job quality is poor; the vast majority work part-time or casually. Nearly a third of residential-care workers and two in five home-care workers want more hours of work.22 The share of migrant workers, especially those from non-English-speaking backgrounds (NESB) has also increased. As Sara Charlesworth and Linda Isherwood’s recent article in Ageing & Society shows, NESB care workers are more likely to be employed casually and to be underemployed, especially if they were employed by a for-profit provider. In other research with John Lowe, Sara Charlesworth found that the already poor pay and working conditions of care workers are weakly enforced by the labour regulator responsible, the Fair Work Ombudsman. 

In residential care, the outworking of the Howard-era changes, uncorrected by governments since, are evident. Without regulation of staffing, providers have substituted cheaper for more expensive categories of worker. Between 2003 and 2016 (the earliest and most recent years for which data are available from the National Aged Care Workforce Census and Survey), the share of more highly trained care workers—such as registered and enrolled nurses and physiotherapists—fell from 43 to 28 per cent, while the share of personal care assistants, for whom no minimum level of training is required, rose from 57 to 72 per cent. Meanwhile, the group of older people living in residential care became much sicker and frailer, requiring more, and more specialised care, not less. There was no compensation for skill loss with more staff time: the ratio of total staff to residents actually fell slightly between 2003 and 2016.23 The consequences are clear: a study undertaken for the Royal Commission into Aged Care Quality and Safety by Kathy Eagar and colleagues found that 58 per cent of older people in residential care lived in facilities with unacceptably low levels of staffing.24 

In home care, which has been expanding, the number of people employed in direct care roles actually fell between 2003 and 2016. In home care, individualised funding of packages destabilises providers’ funding, further undermining already precarious working conditions for their employees. The gig economy has entered the field, via platforms such as Mabel, turning care workers into individual contractors without basic employee protections.  

These changes have put the aged care workforce under enormous strain. A 2019 survey of care workers in both residential and home care found that large majorities report being often or always unable to do key aspects of their work, and seeing older people going without emotional support when distressed. Nearly half reported having seen in the last fortnight older people going without support with hygiene, around mealtimes and with maintaining their mobility.25  

***

By relying on private provision and increasing the use of market instruments to organise aged care, successive governments on both sides of politics have left older Australians vulnerable to poor care and the care workers who help and care for them vulnerable to exploitation. As big businesses have entered the sector, they have threatened quality, working conditions and the normative underpinnings of the care system. Evidence presented in publications from public authorities and the Royal Commission shows that for-profit providers run much larger facilities on average, and both for-profit ownership and larger facility size are correlated with lower average quality of care and jobs, and higher profits. Meanwhile, the rules of the game, through which governments try to contain and shift costs, and providers seek to maintain their margins, have enabled the scandalous but legal behaviour we read about in the business and real estate gossip columns of weekend papers: trophy homes, European sports cars, and million dollar remuneration packages for corporate CEOs.

Non-profit providers are not exempt from scandal. As alleged in the recent investigation by ABC’s Background Briefing, the Greek Orthodox Church has been charging inflated rents at some of the nursing homes it runs to fund the lifestyle of its archbishop.26 One of these homes was St Basil’s, in which forty-five older people died of COVID-19 in Melbourne in July 2021. Many others died in Victorian facilities owned by large corporate chains and other non-profit providers, often because care workers had jobs in multiple facilities to make ends meet. It cannot be a coincidence that in Victoria’s publicly owned nursing homes, where the state government regulates staffing levels, there were very few cases and no deaths from COVID-19. 

At the time of writing, in the wake of the Royal Commission and in the lead-up to the federal budget in which the Morrison government has foreshadowed additional spending on aged care, private providers are circling. According to the Financial Review on 19 April, in anticipation of funding increases and in the hope of further fee deregulation, the share prices of the three largest listed residential care operators have increased by between 68 and 125 per cent during the last six months, recovering their pandemic-related losses of 2020.27 

It is to repeat a truism to say that the COVID-19 pandemic has revealed how essential care work is to our shared life and where the costs of care fall. Many problems in aged care both before and during the pandemic have been caused by marketisation, privatisation and commodification of care. These have always been elite projects. We need to radically democratise social policy design so that aged care workers can offer the kind of care they, and the community, aspire to, and that the humanity of older people demands.

Note: The author would like to acknowledge that this article draws on joint research with Dr Richard Baldwin on residential aged care.  

1 For 2019, see https://www.abs.gov.au/statistics/people/population/life-tables/latest-release; for 2000, see  https://stats.oecd.org/Index.aspx?ThemeTreeId=9 (Health status  Life expectancy)

2 See https://www.abs.gov.au/ausstats/abs@.nsf/0/1CD2B1952AFC5E7ACA257298000F2E76.

3 Calculations on Table B9. Population projections, by age and sex, Australia – medium series; https://www.abs.gov.au/statistics/people/population/population-projections-australia/2017-base-2066#data-download

4 https://www.abs.gov.au/statistics/health/disability/disability-ageing-an...

5 Based on calculation from SDAC Table 27.3 Persons aged 65 years and over, living in households, needing assistance, activity type, by provider type–2018, proportion of persons, in which 17.7 per cent of people who need assistance with self-care are coded as ‘assistance not received’. 

6 https://www.abs.gov.au/statistics/health/disability/disability-ageing-and-carers-australia-summary-findings/latest-release#older-people 

7 https://www.abs.gov.au/statistics/health/disability/disability-ageing-and-carers-australia-summary-findings/latest-release#older-people 

8 J. Henderson et al., ‘Missed care in residential aged care in Australia: an exploratory study’, Collegian, 24(5), pp 411–16, 2017; J. Henderson et al., ‘The impact of facility ownership on nurses’ and care workers’ perceptions of missed care in Australian residential aged care’, Australian Journal of Social Issues, 53(4), 2018, pp 355–71.

9 https://www.aihw.gov.au/reports/australias-welfare/welfare-expenditure. The Australian government spent $10.2 billion on unemployment benefits in 2017–18, and gave $38 billion in tax concessions for superannuation. 

10 https://treasury.gov.au/sites/default/files/2021-02/p2020-100554-ud03_equity.pdf. Retirement Income Review Final Report, chart 3A-11. 

11 Aged Care Financing Authority, Annual Report on the Funding and Financing of the Aged Care Industry 2020, Table 2.2. 

12 Aged Care Financing Authority, Annual Report on the Funding and Financing of the Aged Care Industry 2020, p. 89 and Chart 7.1: Total pool of accommodation deposits held, 2012–13 to 2018–19. 

13 https://www.thesaturdaypaper.com.au/news/politics/2020/09/12/the-collapse-aged-care-part-one/159983280010409#mtr

14 S. Bagwell, ‘How Doug Moran looks after himself’, The Australian Financial Review, 18 October 1997. 

15 Department of Health and Ageing, Report on the Operations of the Aged Care Act 1997: 1 July 1999-30 June 2000, Canberra: Department of Health and Ageing, 2000.

16 Aged Care Financing Authority, Annual Report on the Funding and Financing of the Aged Care Industry 2020, Chart 6.3. 

17 A. Richardson, Aged Care Residential Services in Australia, Au Industry (ANZSIC) Report Q8601, Melbourne: IbisWorld, 2021.

18 https://kordamentha.com/getmedia/ddea1dbd-741e-4583-bd32-f3ae25d69c28/14-07-aged-care-industry.pdf.aspx?ext=.pdf 

19 https://www.minterellison.com/articles/aged-care-extra-services-under-accc-spotlight; https://www.gadens.com/legal-insights/federal-court-determines-asset-replacement-charges-capital-refurbishment-fees-prohibited-aged-care-act-1997/ 

20 https://formerministers.dss.gov.au/15521/david-tune-to-chair-abbott-governments-aged-care-sector-committee/

21 RoGS 2021, chapter 14, appendix table 14A.2, cell reference 026. (Home Care Packages levels 1-4 per 1000 population over 65 = 40.4)

22 K. Mavromaras et al.,  The Aged Care Workforce 2016, 2017, https://agedcare.health.gov.au/sites/g/files/net1426/f/documents/03_2017/nacwcs_final_report_290317.pdf

23 G. Meagher et al., Meeting the Social and Emotional Support Needs of Older People Using Aged Care Services, Macquarie University, University of New South Wales and RMIT University, 2019, https://researchers.mq.edu.au/files/108106140/AgedCareReport_MeagherCort....

24 K. Eagar et al., How Australian Residential Aged Care Staffing Levels Compare with International and National Benchmarks, Centre for Health Service Development, Australian Health Services Research Institute, University of Wollongong, 2019.

25 Meagher et al., Meeting the Social and Emotional Support Needs of Older People Using Aged Care Services

26 A. McGhee, ‘Greek Orthodox Church took tens of millions in rent from aged care home at centre of deadliest COVID outbreak’, Background Briefing, 2021, https://www.abc.net.au/news/2021-04-16/st-basils-greek-church-taxpayer-funding/100068128.  

27 https://www.afr.com/politics/federal/aged-care-daily-payment-should-be-uncapped-industry-20210419-p57kgs 

Modern Money Consensus

by Carlos García Hernández (originally published in Spanish in El Común)

 

Caution tape in front of the Capitol building in Washington DCPhoto by Andy Feliciotti on Unsplash

I was prompted to write this article by yet another sad fatality, the death of British economist John Williamson at the age of 83. As Max Planck used to say, sometimes science seems to advance one funeral at a time.

Williamson became famous for coining the term Washington consensus in 1989, a compendium of 10 points in which he set out the common position defended by the US government, the International Monetary Fund and the World Bank on economic policy. Over time, these 10 points became fundamental pillars of neoliberalism and mainstream economics.

Below, I confront the ten points of the Washington consensus with what I call the Modern Money Consensus. In my view, these alternatives are the most advanced refutation that economics offers to the Washington Consensus.

 

Washington Consensus
Modern Money Consensus

1
Any fiscal deficit is counterproductive
The right fiscal deficit is the one that allows full employment of resources and price stability

2
Reduction of public spending and the tax burden
If there is unemployment or idle resources, public spending should not be reduced. Increasing the tax burden is justified if there are inflationary pressures

3
Broadening of tax bases and moderation of marginal tax rates
Reduction of taxes on productive activities and on labour income. The tax burden should fall mainly on speculative activities

4
Substitution of public deficits by positive interest rate policies
Permanent 0% interest rates

5
Exchange rate policies aimed at controlling inflation and increasing exports
Floating exchange rates

6
Opening of domestic markets to imports
Ability of states to pursue import substitution policies if they deem it necessary

7
Foreign capital intervention in strategic economic sectors through foreign direct investment
The maintenance of strategic economic sectors should not depend on investment by foreign companies

8
Privatisation of public enterprises
The size of the public sector should be decided by the government as a means to achieve its social objectives

9
Deregulation of markets
Strong public regulation of the labour market, essential services, the financial sector, and banking

10
Protection of property rights
Ability of governments to regain public control of any national resource

 

A fundamental point on which there is consensus within modern monetary theory is that states should only get into debt in their own currency. In this way, public debt is always sustainable and states avoid involuntary insolvency. In this context, as the Australian economist Steve Keen says, and contrary to the Washington consensus, it is not public debt but private debt that threatens the prosperity and sustainability of nations. Thus, the backbone of the modern money consensus is the fact that countries that are monetarily sovereign choose their level of unemployment, since thanks to their monetary sovereignty, they can always spend enough to hire the entire unemployed labour force through a job guarantee based on an employment buffer stock. This scheme allows full employment to be achieved without inflation. Therefore, the correct level of government deficit according to modern monetary theory is the one that allows for full employment without inflation.

In this way, modern monetary theory redefines the role of taxes and public debt. Modern monetary theory argues that taxes do not finance public spending, but have a triple function: they give value to money, they modulate inflationary pressures and they stimulate economic activities.

On one hand, the Washington consensus connects public spending to tax collection and debt issuance, and on the other it connects the reduction of public deficits to lower public spending rather than higher taxes. This resulted in the abandonment of a practice that until the implementation of the Washington consensus had been in common use, namely overt monetary financing. Through this financing, governments spent without issuing any debt securities, but through transfers from the central bank to the Treasury and to the bank accounts of individuals. The Washington consensus put an end to this, and since then governments spend by buying debt securities from private banks subject to interest, because this supposedly induces governments to spend responsibly. What modern monetary theory proposes is to recover the use of overt monetary financing.

The fiscal policy proposal of modern monetary theory is not aimed at reducing public deficits, but at modulating inflationary pressures. This means that tax collection could be done through a single property tax on land and real estate as proposed by Warren Mosler in his book “Soft Currency Economics”. Taxes would thus fulfil the three tasks outlined above, they would not interfere with productive processes, indirect taxes would be largely eliminated and property speculation would be prevented.

This means that the consensus within the field of modern monetary theory is that public policy should emphasise fiscal policy because it is much more effective than the monetary policy advocated by the Washington consensus. Modern monetary theory poses economic policy as a trilemma, since, in the words of Randall Wray in his work “Modern Money Theory”, “a country can choose only two of three policies: maintain an exchange rate peg, maintain an interest rate peg, and allow capital mobility”. The consensus among the ranks of modern monetary theory is that governments should not opt for fixed exchange rates, but rather let them fluctuate, and at the same time maintain a fixed interest rate of 0% and impose capital controls if foreign currency speculation and capital flight become destabilising factors.

Contrary to the Washington consensus, interest rates are decided by the Central Bank. As we have already said, as states do not need to issue any debt to finance public spending, interest rates should be set at 0% on a permanent basis. Attempts to control inflation by means of high interest rates have proved to be an inefficient and counterproductive method that only benefits the rentier classes.

The Washington consensus also advocates export-led growth strategies. In doing so, it confuses the national interest with the interests of export elites. The truth is that for national economies, exports are a drain of resources and imports are an income of resources. Therefore, the only reason why exports are desirable is because they allow an increase in imports, but they should not become the growth strategy of countries. The aim of governments should be that domestic production is consumed as much as possible at home, not that foreign countries enjoy domestic production. This also means that import substitution policies such as those advocated by Mexican economist Arturo Huerta are a perfectly legitimate tool to avoid dependence on foreign investment and to reinforce national sovereignty.

This is compatible with the existence of large public sectors made up of organisations that can guarantee their efficiency and proper functioning through external efficiency and quality controls if so desired. There is no justification that privatisation of public enterprises is an end in itself, nor that deregulation of markets implies greater social welfare. On the contrary, the consensus of modern monetary theory holds that the labour market should be regulated by public job guarantees based on employment buffer stocks, that it is the responsibility of governments to guarantee essential services, and that financial sectors should be very small in size and subject to strong regulation to prevent speculative practices.

The last point of the Washington consensus, according to which public sectors should not be protected and private sectors should, is therefore also unjustified. According to the Washington consensus, public bodies, once privatised, should become untouchable. Nothing justifies this position, and according to the modern money consensus, it is perfectly reasonable to opt for the renationalisation of companies if this is required for the better defence of national interests.

 

Tweet by Stuart Medina MiltimTweet by Stuart Medina Miltim which translates as: “The European Union has advanced to the extreme right of the USA: extreme right congressmen of the Tea Party want a constitutional amendment that forces the budget balance. The EU Treaties and the Spanish Constitution have already achieved this.”

 

After more than 30 years of the prevalence of the Washington consensus, the world has seen how its prescriptions have progressively undermined the living and working standards of workers around the world. This impoverishment of the majority has been accompanied by major economic crises and unprecedented enrichment of the financial elites. Despite this, the most extreme interpretation of the Washington consensus is more alive than ever in the EU treaties. They contain policies that only the American extreme right defends and has not yet been able to impose in its own country. Therefore, reactionary organisms governed by the Washington consensus such as the European Union must be abandoned.

Euro delendus est

 

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School Meals: The Perfect 10

Published by Anonymous (not verified) on Fri, 21/05/2021 - 3:01pm in

Host Ross Ashcroft, met up with School Food Matters founder, Stephanie Slater, and Campaign Officer at We Own It, Johnbosco Nwogbo, to discuss how the privatisation of food is putting profit over the well-being of our children.

The post School Meals: The Perfect 10 appeared first on Renegade Inc.

School Meals: The Perfect 10

Published by Anonymous (not verified) on Fri, 21/05/2021 - 3:01pm in

Host Ross Ashcroft, met up with School Food Matters founder, Stephanie Slater, and Campaign Officer at We Own It, Johnbosco Nwogbo, to discuss how the privatisation of food is putting profit over the well-being of our children.

The post School Meals: The Perfect 10 appeared first on Renegade Inc.

Is the forecast growth in consumer spending actually good news?

Shop"EWe're Open" sign with shopper wearing face mask in bagroundPhoto by Tim Mossholder on Unsplash

You cannot carry out fundamental change without a certain amount of madness. In this case, it comes from nonconformity, the courage to turn your back on the old formulas, the courage to invent the future.

Thomas Sankara

Quote from ‘The Divide: A Brief Guide to Global Inequality and its Solutions’ by Jason Hickel

 

 

Read all about it! It’s the feel-good factor! According to experts, Britain’s economy is forecast to grow at its fastest rate since the second world war, as retail sales jump in response to the partial opening up of the economy. Ian Stuart, the Chief Economist at Deloitte, suggested that the UK was on track for a significant recovery in consumer spending, as the huge savings put aside by wealthy households during the lockdowns enabled higher private consumption.

Reading the media headlines recently you could be forgiven for thinking that we are returning to some sort of normality, even though huge uncertainty and risk remain both domestically and globally. Unemployment may have fallen but many millions remain on furlough, with no certainty as to the future if, as expected, the scheme starts to wind down starting in July. Furthermore, we are not immune from the global economic consequences of the pandemic, which are far from over.

Without wishing to be the spoiler of what might be seen as good news, and goodness knows we need some, welcoming a potential return to growth in the form of consumer spending masks the fact that we are facing some of the greatest environmental challenges ever. It should be a moment to take stock and think about where we are going. Is our behaviour sustainable, and if not, how can we change things for the better?

Growth that serves the sole purpose of profit realisation must be challenged as an objective, given both its real human and planetary cost. There are serious questions we must start asking, even as the UK hosts the COP26:

  • Whether such excessive consumption designed to keep the economy going is ecologically sustainable?
  • On whose backs has the wealth of developed countries been built?
  • What are the consequences of that exploitation? Consequences such as the enormous global inequalities that have created such huge differentials in living standards between the Global North and South, the tremendous damage our reliance on fossil burning fuels is continuing to cause globally, and the devastation both in human and land terms of resource extraction to fuel our way of life.

Domestic considerations can no longer be viewed as distinct from global ones. They are interconnected by two issues; from a negative perspective, a toxic economic system which drives public policy globally and is directed by economists in major institutions such as the IMF and the World Bank; and from a more positive one, the clear interconnected nature of our ecosystems upon which the health of the planet depends, showing, if nothing else, our global interdependency, and of which we must take account when deciding the next course of action.

At the same time as the media lauds the return to growth and consumer spending (after all, good news is better than bad, regardless of whether uncertainty still reigns and whether it might be a short-lived phenomenon) it publishes, in seeming contradiction, headlines which equally clearly show the consequences of hitherto unchecked consumption on the planet, as if somehow the two are distinct from one another.

Week in, week out, there are always yet more indications of the effects of human behaviour on the environment, or evidence-based studies detailing the consequences of our overconsumption and reliance on carbon-based energy sources.

This week, California declared yet another drought following hot on the heels of the last one (2011-2017) which destroyed millions of trees and fuelled extensive wildfires. As the drought has intensified, officials have made moves to stop the global corporation Nestlé from extracting millions of litres of water from California’s San Bernardino Forest. The company bottles and sells its branded water products disregarding, as usual, the environmental damage it causes in resource-stricken areas, and not just in the US.

In the same week, a comprehensive new study by French scientists assessing the behaviour of planetary ice streams has shown that the planet would still lose 10% of glacier ice, even if we sought now to aggressively cut emissions to hit our climate targets. As a result, we face multiple consequences in the next few decades as sea levels rise along coasts, with risk of flooding and inundation as well as a decrease in the stability of river systems which could cause water shortages.

The study backs up one published by Leeds University at the beginning of the year. Andy Shepherd, a professor at Leeds, said that ‘Glacier melting accounts for a quarter of Earth’s ice loss over the satellite era, and the changes taking place are disrupting water supplies for billions of people downstream – especially in years of drought when meltwater becomes a critical source. […] Although the rate of glacier melting has increased steadily, the pace has been dwarfed by the accelerating ice losses from Antarctica and Greenland, and they remain our primary concern for future sea-level rise.”

Also, this week, whilst much concern has been expressed about overfishing, according to experts insufficient attention has been paid to the plastic and chemical pollution which is threatening disaster in our seas and oceans. We will pay an eventual heavy price for our poor planetary stewardship, if David Attenborough’s salutary warnings along with a huge body of scientific evidence backing up the realities of climate change and over-exploitation of resources, are ignored for much longer.

The bottom line is that what we decide to do now will determine what the world will look like in two or three generations’ time. And yet every indication is that politicians hooked on consumer growth and the GDP measure are going to fail to address the challenges we face in terms of reducing carbon emissions, managing vital resources more equably and addressing global inequality. Any proposals, regardless of grand promises, are likely to be watered down if they affect corporate profitability or will be limited by the imaginary boundaries of financial cost.

As the media repeated the IFS’s warning last week that public borrowing had soared to a ‘peacetime record’, an article in the Telegraph suggested that instead of increasing corporation tax (which apparently would only raise £14bn, described as a ‘drop in the ocean’ in terms of paying down the huge public debt) or implementing a wealth tax to raise revenue, all the Chancellor really has to do is ‘sit on his hands and let the growing signs of a surging economy do the hard work as consumers unleash £150bn of lockdown savings’.

Once again, we have the suggestion that private sector spending, rather than public, can get us out of the economic hole we are in, with complete disregard to the effects of such excessive consumption.

Reliance on private spending would, however, only give a short-term economic respite, should government fail to continue to spend sufficiently into the economy, not only to oil its wheels but drive the move towards sustainability and a more equable division of real resources and wealth. The real question should now revolve, not around private consumption to sustain an ailing economy, but around investment in public goods such as healthcare, education and training, research and development and sustainable transport systems, along with a vision for a kinder more sustainable future.

Whether it is President Biden’s idea to raise income and capital taxes to pay for the pandemic and fund his huge spending plans, the prospect of ‘hard choices’ having to be made by the UK Chancellor in the form of more austerity and cuts to public spending to balance the books, or The Telegraph’s solution of getting back to work to get the economy going again and thus increase tax revenues to pay down public debt, wherever you look, the recipe for public and global well-being is always founded on a false analogy of how governments spend. The public perception that public debt is bad and will have to be paid for in the future through higher taxes or that spending will have to be cut on essential public goods to balance the books, is a narrative that does not match reality and yet daily it features in the public discourse.

Indeed, this week, once again the cuts to the foreign aid budget figured heavily in the media as the government announced where the cuts would fall. The former Conservative Foreign Office Minister Liz Sugg described them as ‘difficult to comprehend’ given the global pandemic emergency and the impact of climate change on some of the world’s poorest countries. Experts and NGOs opposing the severe cuts which will affect women and girls’ education, polio eradication, clean water, and sanitation as well as vital research have described them as ‘savage’ and ‘a national shame.’ And so they are.

On the one hand, as hosts of this year’s COP 26, the government claims commitment to addressing climate issues and inequality, but then on the other, removes the very building blocks for change both domestically and internationally. The state of the public finances is never very far away from the discussion and will surely be used as a justification for future cuts to domestic public spending, as they have been already for those planned for International Aid.

The Foreign Commonwealth and Development Office defended its actions saying the ‘tough but necessary decisions’ had to be made because of the fiscal impact of Covid-19. And Conservative MP Andrew Mitchell, whilst opposing the cuts saying that they were ‘balancing the books on the backs of the poorest and most vulnerable people in the world’, was still content to uphold the notion that the state finances resembled a household budget.

Whilst one might have some reservations about the notion of ‘building back better’ in terms of who is likely to benefit in this so-called ‘brave new world’, it might seem to have hit a brick wall if the government continues to fall back on the ingrained perception that its spending policies are constrained by monetary scarcity and that at some point in time tough decisions will have to be taken to rein in expenditure.

Indeed, shockingly some politicians have already expressed concerns about the affordability of saving the planet from environmental chaos and addressing wealth distribution. “Where will the money come from” they opine? If we allow such discourse to continue, we will find ourselves stuck between a rock and a hard place and the concept of steady finances will become an obstacle for change.

This week, MPs from the Public Accounts Committee expressed concerns that the Treasury had yet to explain how the tax system would help the UK to meet its emissions targets and still were to clarify how it would manage the reductions in tax revenues worth £37bn from fossil fuels as the UK shifts towards a clean economy. Whilst of course the tax system can play a vital role in behavioural change, once again we have the false ‘household budget’ analogy taking precedence by asking how the government would fund its spending if its tax revenues declined.

Meg Hillier MP, the Chair of the Public Accounts Committee, emphasising the scale of the challenge said:

“The economic revolution required to abandon fossil fuels and reach net zero must be the greatest co-ordinated ask, of governments around the globe, in history. But the UK government has been blithely issuing ever more ambitious climate targets for years now, with no sign of a roadmap to reach any of them. The departments in charge seem stuck in a bygone era, with little sign of the innovative thinking needed to achieve all this.

 

Every week brings reports of some climate record disturbingly broken – the hottest year, the hottest decade, warming seas rising faster than we feared, carbon emissions raging back even as the economy takes more faltering steps. Now we are six months from hosting the next major global climate summit and the climate storm is breaking all around us. HMRC and HMT need to catch up fast.”

Her critical words reflect the endless rhetoric emanating from government ministers, who have yet to commit to a strategy for reaching net-zero, and yet they still reiterate the story that government spending is always constrained by tax revenues or market confidence in terms of financing the deficit. It does not bode well.

Whilst of course the realities we face are extraordinarily complex, and the solutions not always clear, there is no financial excuse for not acting. The key surely to effecting change is to start by acknowledging how the government really spends. We have seen the proof over the last year in shovelfuls! But what perhaps until now has gone unnoticed and scarcely recognised on the public radar is that over the last few decades public money has been leaching into private corporations, reaching vast sums over the last year with little transparency or accountability. The NHS, social care and the education system as examples have been sublet to the private sector on the back of public money.

The anathema of state intervention indicated by neoliberal dogma has been more about shifting public funds into corporations and driving privatisation, outsourcing and deregulation to serve corporate interests and the revolving door, rather than the public interest.

Only this week, Professor Eileen Munro, Emeritus Professor at the London School of Economics, commenting on the review of children’s services in England, has stated that the government seemed to be ignoring the role of poverty, poor housing and job insecurity in children’s well-being and development suggesting that it was ‘limiting responsibility to parents instead of how we function as a society.’ She is concerned, along with many others, that it will be used to cap the escalating costs of tackling children’s care (caused by government austerity policies) whilst at the same time will be yet a further step in introducing market-style structures and privatisation to what is a seriously underfunded but still a local authority run system.

Ray Jones, Emeritus Professor of Social Work at Kingston University has commented; ‘After more than 10 years of austerity creating poverty for children and families, it is crucial that this review rises to the challenge of confronting the impact of government policies which have caused so much harm’.

We can see thus how the government has used the idea of monetary scarcity to shift monetary resources from public sector goods into privately run, profit-motivated companies in a sleight of hand way and using the excuse that the private sector is more efficient.

If we care for the future, then we should be shouting from the rooftops that it will not be defined by a budget or monetary affordability, but by the political decisions taken by governments to deliver public purpose objectives, environmental sustainability and wealth and resource equity, or not as the case may be. The only thing that will necessarily check government spending will relate to inflationary pressures resulting from real resource constraints.

Hitherto, the game has been played to the advantage of global, profit-oriented corporations. But there is an alternative, and it starts with rejecting the economic orthodoxy which prevails and gaining an understanding of how government really spends and what possibilities that could offer for a better world.

 

 

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Have we had enough of market-led dogma yet?

“OK…SO WHERE DOES THE FUNDING COME FROM?”

It depends on what we are talking about. If we are talking about universal health care, a Job Guarantee, infrastructure work, etc., the funding comes from the national government.

If, on the other hand, we are talking about national government spending itself, – as in, “how does the government ‘fund’ its spending?”, the answer is the national government does not “fund” its spending because it is an impossible condition.

The national government alone is the source of funding in terms of its own currency for the private sector and the foreign sector combined. That is what being the monopoly currency issuer is all about: Providing the funds.

The currency-issuing national government is not an intermediary that collects “money” from private entities in the form of taxation or borrowing to fill its empty coffers, and then redistributes those “funds”.

Treasury has no coffers to fill. Rather, treasury fills the coffers of everyone else.

Ellis Winningham

Placard with the slogan "When is enough enough, when does hte greed stop?", Wisconsin State Capitol protest 2014Photo by Joe Brusky/Flickr Creative Commons License 2.0

Have we had enough yet? This week Boris Johnson, in a Zoom meeting of the 1922 Committee, warmly saluted the vaccine rollout with these words: ‘The reason we have the vaccine success is because of capitalism, because of greed my friends’. Whilst he has tried to backpedal from these ill-advised remarks, the words reflect a widely held view by politicians, institutions and the excessively rich that the market is the only mechanism for delivering well-being, and that the State should take a step back and let the market do its job, greed and all. We have paid a heavy price for that sort of thinking, in terms of environmental destruction, poverty, inequality, human degradation and exploitation.

The cumulative effect of five decades and more of market-led dogma and a toxic ideology that has been embraced by successive governments, of either political stripe, has given monetary succour to the corporations at the expense of public purpose, which has over the past year been revealed for exactly what it is. Greed for power, greed for profit. Not a very wholesome or edifying advert for capitalism, and one which is increasingly in the public eye, as media attention focuses on who has benefited from government policies and spending decisions, and those who have lost out.

The appalling management of the Covid-19 crisis, which has led to the deaths of well in excess of 126,000 people so far, combined with those who have suffered or died as a result of cuts to government spending on vital public infrastructure and the pernicious reforms of the social security system, have revealed in all their hideous outcomes what happens when government spending is reduced to household budgeting narratives. The phoney notion that delivering public purpose is either monetarily unaffordable and/or dependent on the economic climate.

The remark reveals something rather distasteful about a Prime Minister who not long back was standing on the steps of Number 10 encouraging us to clap for key workers. Those who have been responsible for caring for the sick, elderly, and vulnerable as well as keeping the economy functioning during the crisis whether in the public or private sector.

A letter written by the authors of The Spirit Level (Kate Pickett and Richard Wilkinson) which was published in the Guardian this week took the Prime Minister to task for his comments saying:

“You report (23 March) that Boris Johnson told backbench Conservative MPs that the UK’s successful vaccine rollout was thanks to capitalism and greed. Really? Greedy academics and research scientists? Greedy World Health Organization staff and civil servants? Greedy nurses who give us our jabs? Is that also why contracts given to Tory cronies for test and trace were so startlingly successful? This is not a trivial misunderstanding: it is a fundamental failure to comprehend how modern societies work. Prof Mariana Mazzucato has shown how discovery and innovation flow from the public sector, and there are now studies showing that more equal societies are more innovative, with more patents per head than those where capitalism is rampant.”

Whilst the financial markets have produced nothing of value, focused as they are on speculation and amassing huge monetary wealth, the real wealth makers, not the monetary sort, are those on whom society depends. The past year has highlighted their contributions on every level of society. It has also highlighted the role that government can play, if it chooses, in delivering public purpose aims. Whether that is spending to keep the economy from tanking or vital public service and welfare provision, research and development and education and training; all of which make the difference between a good society and a bad one.

However, we live in a world where ‘money’ wealth trumps the real wealth we enjoy, and which is sustained and underpinned by nature which provides the many services on which we depend. Deregulation (or rather accommodation) by neoliberal governments has created a rampant market-dominated model which is threatening democracy and the future of humanity and planetary health.

This toxic market ideology is at the same time underpinned by incorrect ideas of how governments spend. Ideas which suggest that taxing and borrowing are at the heart of their spending capacity, and which, if not reversed, will continue to constrain government actions on the key issues of our day.

The art of the possible is not financially oriented. The art of the possible is about political choices, but those political choices hitherto have left our society in a state of crisis and will continue to do so unless we challenge the status quo.

Currently, the rules for government spending are laid out clearly. Stuff the pockets of the private sector corporations and those of your friends, whilst telling the public sector that there is no money and keeping private-sector workers on low wages and in insecure employment. The evidence is piling up daily.

This week Test and Trace is hiring a ‘Lessons Learnt Analyst’ with a salary of £45,000. You couldn’t make it up! Management consultants being paid to advise what went wrong with a programme designed by management consultants. As GIMMS’ board advisor Deborah Harrington so rightly asked ‘do you ever get the impression we have all somehow been trapped inside a never-ending episode of ‘You’ve been framed’?

Also, this week ministers have opened the public purse yet again to the private sector; shelling out almost £1 million to a private recruitment firm to find temporary staff for the new, but controversial, National Institute for Health Protection, which is to replace Public Health England, in what has been termed a ‘shifting deckchairs’ exercise. In reality an attempt to transfer the blame elsewhere than at the government’s feet.

Whilst refusing to pay nurses a decent pay rise, giving workers a scarcely generous increase in the minimum wage and at the same time suggesting that more cuts to public services may be in the offing, the claim that the government needs to restore its finances smells of purposeful deceit of the public. As GIMMS pointed out last week, the contradictions are increasingly evident, and it is for the public to challenge those false flags which serve ideology and not necessity.

In March 2019, the IMF warned that the world had ‘run out of firepower to fight the next recession’. It erroneously suggested that the ‘money printing’ programmes known as Quantitative Easing, which had supposedly pumped trillions into economies after the Global Financial Crash in 2008, had left the economies so weak in the decade since that the balance sheets of the central banks had ‘swollen to a level that leaves little room left for manoeuvre’. Its conclusion was that the large piles of debt would reduce the ‘fiscal firepower’, available to counteract recessions’.

The public has been led astray by terms such as money printing, public debt and borrowing, and if your suspicions have been aroused that something is not quite right then it’s time to get with monetary realities. Governments around the world have as necessity dictated created the funds necessary to deal with the fallout of Covid-19 at the stroke of a computer key. It may have been dressed up in the smoke and mirrors of QE and borrowing, but it has shown without doubt that, just as in 2008, the money is there at central level to deal not just with the consequences of the pandemic, but also to address the issues which have arisen from insufficient government spending by political decree. From hunger and homelessness to infrastructure decay and environmental degradation.

But government action so far seems to be one of half-hearted plans dressed up in overblown rhetoric, from promises to level up our communities, invest in infrastructure, education and training and deliver an effective green transition. Lots of hot air but little in the way of concrete proposals, or worse, failure to deliver on already proposed programmes.

If the UK government’s flagship home insulation scheme is anything to go by, then one should ask whether that public funding has been properly administered or is even delivering its green objectives. Indeed, in hot news over the weekend the government has decided to scrap the green homes grant which was administered by a US company. Promising a kickstart for a green recovery along with green jobs, it descended unsurprisingly into a dogs’ dinner that was, according to the Environmental Audit Committee of MPs, ‘rushed in conception and poorly administrated’, indeed ‘nothing short of disastrous. As a reader’s letter published this week in the Guardian suggested:

‘This government’s approach to the climate crisis […] is the same as it is to all other iniquities its ideology exacerbates such as poverty, inequality and homelessness. They announce a relatively small injection of cash and a couple of initiatives, careful not to disturb the underlying practices causing the problems. If [the government were] serious and really followed the science, they would end all subsidies to, and investment in, fossil fuel industries. They would also implement curbs to reduce energy and resource consumption, direct and indirect, by the UK population. That would be global leadership and would set a course for a just transition.

 

The government’s proposals are nothing more than a smokescreen to suggest we tried, while baking in failure for our generation and horror for those that follow.”

The problems of lack of commitment by the government are also compounded by financial institutions and businesses who, whilst greenwashing their way to profits, don’t walk the talk. This week, it was reported that the world’s biggest banks have provided $3.8tn of financing for fossil fuel companies since the Paris climate deal in 2015, despite the fact that it has been known for some time that a large proportion of oil and gas reserves must remain in the ground in order to meet the Paris targets. This is exactly the opposite of what is required to tackle the climate crisis effectively and requires urgent government action and spending on a vast scale.

Also this week, Andrea Leadsom announced a new package for parents, ‘Start for Life’, which will provide a hub network to give families access to vital support. This is the same MP who praised Labour’s Sure Start initiative and had to be reminded that government cuts had closed more than 1000 Sure Start Centres.

It seems ironic that we have a Minister who in 2012 envisaged ‘there being absolutely no regulation whatsoever… no minimum wage, no maternity or paternity rights, no unfair dismissal rights, no pension rights…’ for employees working in small businesses and who also voted to reduce the household benefit cap, to freeze the rate of many working-age benefits and for many other changes to the benefits system which have seriously impacted on the lives of those same families, now purporting to want to address the failure caused by a political decision to cut spending on benefits and other services. You couldn’t make it up.

According to reports, Leadsom still has to get the Treasury on board with her plans. Despite the fact that such funding is available at a keystroke on a computer should the government choose; it is constrained only by the availability of real resources. The question of paying for it is an irrelevant one.

Instead of worrying about costs, the government, if it really wants to level up, should have the humility to examine the consequences of its previous spending and policy decisions, and the impact they have had on families across the nation. Would it not be better to start at the roots of poverty by addressing its fundamental causes, through wage and employment policies to help families manage their lives with less financial stress and worry, and in turn create more stable home environments?

The positive knock-on effects of more government spending on public purpose which then fan out into the wider economy are indisputable and make for a healthier and more productive society. Furthermore, people with more money in their pockets are better placed to provide for themselves and will spend any extra into the economy. Simple macroeconomics. And yet the government still sees public provision as a monetary cost rather than a societal gain.

A report on ITV this week covered the appalling conditions in which many families are forced to live in council housing (although this is not confined to social housing, the private sector’s reputation is just as blemished). It was truly shocking. The Chief Executive of Shelter, the biggest housing charity, described it as ‘the worst housing conditions they have ever seen’.

If the government is determined to address poverty and inequality, then it has to put its money where its mouth is. Yes, let us invest in public service provision to support families with better and more joined-up services, but it will not help unless the government focuses as well on eliminating one of the causes of family stress. Poverty. People do not choose poverty, and unemployment, governments impose it through the ideological dogma they espouse and the policies they enact.

At the other end of the scale, Kwasi Kwarteng, the Secretary of State for Business, defending his department’s slow progress on funding for the organisation UK Research and Innovation, which has so far failed to provide any sort of certainty for the science community, blamed it on the pressure on budgets. This is not just short-sighted, as the Covid-19 pandemic has shown, society will increasingly depend on science to address key issues like climate change, but is actually nothing short of a lie in monetary terms. Furthermore, this is the role of the State. Planning for the future, not abandoning citizens to the vagaries of a market-led disaster which is sure to follow without government action.

The government is not short of a penny. It is the currency issuer. Therefore, the only constraints it faces to deliver its agenda are real resource ones. Whilst the government continues to embrace false funding models which claim monetary constraints, any plans for a just green transition that will also address poverty and inequality at the same time will fall by the wayside.

The unvarnished truth is that the phrases ‘bolstering the treasury’s coffers,’ ‘closing the tax gap’ and ‘protecting the finances’ – terms which appear regularly in the press – are illusory descriptions of how the state money system works. Vocabulary designed to make us think that the government spends in the same way households, local government and businesses do.

The illusion acts to keep us in our place, so as we do not demand too much in the way of public services or any other useful expenditure which provides social value and serves the economy.

The real questions for citizens regarding the future are about what real resources we have and how we want them to be distributed. Do we want a return to the old normal of unnecessary and wasteful private consumption, environmental destruction and the reinforcement of the vast inequalities that accompany it? Or do we want our governments to act in the public interest by commanding the resources that are available to deliver public purpose? The second option will require a shift in how we think about creating a fairer society.

Why aren’t we looking at a Job Guarantee as a mechanism to help in addressing both inequity and climate change? Why wouldn’t governments choose a macroeconomically sound proposal, which focuses on creating economic stability in times of crisis and smoothing out the inevitable cyclical economic downturns which destroy lives?  Why not give working people useful, socially oriented employment instead of leaving them to rot on the unemployment scrap heap?

For too long, governments have acted in the interests of big business and global corporations, which in turn through the implementation of short-sighted employment and wage policies serving business, not citizens, have then impacted on their economies adversely.

Haven’t we had enough? Time for change!

 

 

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The post Have we had enough of market-led dogma yet? appeared first on The Gower Initiative for Modern Money Studies.

Royal Commission: Funding cuts, lack of staff cause aged care horrors

Published by Anonymous (not verified) on Thu, 25/03/2021 - 4:42pm in

Tags 

privatisation

Fully three-quarters of the 909 deaths caused by COVID-19 in Australia so far have been among aged care residents, a total of 685 people. The virus tore through aged care homes, particularly in Victoria’s second wave last year.

But the pandemic has only exposed the ongoing dysfunction in Australia’s aged care system that already existed due to government neglect.

The recently released findings of the three-year Royal Commission into Aged Care show that the sector is permeated by a severe level of neglect and suffers from chronic shortages of funding.

“At times in this inquiry,” co-commissioner Lynelle Briggs wrote, “it has felt like the Government’s main consideration was what was the minimum commitment it could get away with, rather than what should be done to sustain the aged care system so that it is enabled to deliver high quality and safe care.”

Although the commissioners failed to estimate how much extra funding was needed, they documented an accumulated $9.8 billion in cuts in annual funding by 2018-19 as a result of the actions of successive governments.

The Royal Commission estimated Australia spends just 1.2 per cent of total GDP on aged care, compared to an average of 2.5 per cent for similar nations.

A major injection of funding is also needed into at-home care, with the report criticising the failure to fund packages for 100,000 people wanting to stay in their own homes and already on the waiting list.

The report recommended a system where the elderly have the right to the standard of care they need, instead of the current approach that rations limited resources.

It also found chronic problems with inadequately trained workers and inadequate numbers of staff in aged care homes.

The proportion of registered nurses in the workforce fell from 21 per cent in 2003 to 14.6 per cent in 2016. More than half of residents are in homes with levels of staff it described as “unacceptable”.

The COVID crisis exposed how reliant aged care homes are on a casualised, underpaid workforce.

Workers are not given the time and resources to properly care for each person.

Residential aged care homes are notorious for abuse and neglect, with a survey showing 39 per cent of residents have experienced some form of abuse, including emotional and physical abuse.

An estimated 30 per cent of people have received substandard care and as many as 68 per cent in residential care homes were malnourished or at risk of malnutrition.

Free market model

These problems are also the product of a largely profit-driven system and high levels of privatisation.

The 1997 Aged Care Act, introduced under John Howard’s Coalition government, produced many of these problems, removing the requirement to have a registered nurse on duty at all times and cutting $1 billion in funding. It also allowed private companies to increase their share of the sector to around 40 per cent of aged care beds.

This means the rich are able to purchase a higher quality of services, with some eastern suburbs aged care homes in Sydney offering spas and allowing residents to order from restaurants each day, given that they fork out $2.2 million to secure a room.

The Royal Commission found that just 1.4 per cent of residents lived in aged care homes with “best practice care” levels of staff.

Its report found that, “staffing ratios should be introduced to ensure that there are sufficient nursing and other care staff present at all times in residential aged care”.

This echoes what the Australian Nursing and Midwifery Federation has long argued.

As its federal secretary, Annie Butler, put it, “Our politicians must come together and act now on the Royal Commission’s recommendation that providers meet a minimum staff time quality and safety standard which guarantees all health and care needs of older Australians are met.”

But there is no indication that Scott Morrison’s Coalition is about to provide the funding needed. It refused to release the report until minutes before a press conference announcing the government’s response.

Its aim was to prevent media outlets having time to digest the full scandal of neglect and abuse outlined in the Royal Commission’s report, ensuring coverage instead of a government announcement of a paltry $452 million funding boost.

There needs to be an end to private companies creaming off profits from aged care in a sector where 75 per cent of overall funding is provided by government.

Aged care needs to be nationalised, with adequate government funding to provide proper care.

Anything less will see the appalling levels of abuse of the elderly exposed in the Royal Commission simply continue.

By Tooba Anwar

The post Royal Commission: Funding cuts, lack of staff cause aged care horrors appeared first on Solidarity Online.

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