Rudd under the pump?

IS RUDD’S honeymoon coming to an end? Recent weeks have seen him blunder over fuel prices, his Howardesque moralism over Bill Henson and brewing battles with unions over pay disputes and the rollback of Workchoices.

Is Rudd under the pump?For the first time since its election, the Rudd government is looking on the back foot. Elected on the back of promises to combat the rising cost of living, Rudd has done little to deal with rising fuel prices. In early June they hit a new high of 164.9 cents a litre in Sydney, even as the price of oil dropped.

Leaked cabinet documents showed that the government is pushing ahead with a national FuelWatch scheme, despite opposition from four public service departments and Resources and Energy Minister Martin Ferguson. This came after Brendan Nelson’s call for a five cent per litre cut in petrol excise-no more than a populist stunt. But in his rejection of the scheme, Rudd underestimated just how much high fuel prices are hurting the “working families” he claims to represent.

Rudd claims that his government is hamstrung because oil prices are rising around the globe, and says OPEC must increase production.

Instead of talking about providing motorists with information on fuel prices through FuelWatch, Rudd should be intervening to cap prices and stop petrol stations profiteering by increasing costs at the pump. The debate over Nelson’s pathetic proposal to cut excise by a few cents indicated that both he and Rudd are committed to economic rationalism, and are not prepared to substantially reduce taxes that hit consumption like the GST and fuel excises. On the other hand, they talk about the need to reduce corporate tax even further.

As Rudd bungled his response to rising fuel prices, some sections of the environment movement, including the Greens, championed rising fuel prices. They reason that in the face of government inaction on climate change, rising fuel prices will force a key change needed to combat climate change-shifting people out of cars and onto public transport.

But lack of investment in public transport infrastructure means people are reliant on cars. And as we have seen time and again, state governments have not been prepared to substantially boost funding to public transport to improve access. A higher fuel bill for individuals will not force them onto public transport if there are no services. All it will do is increase profits at the big end of town.

If Rudd does not take serious action to combat cost of living increases, the unions’ battle for above-inflation pay rises takes on added importance (see pages 6-7). All of the public sector disputes of the recent period-teachers around the country, nurses and firefighters in NSW, have seen government ministers arguing for below inflation pay rises-in effect pay cuts.

The willingness of the public sector unions to challenge these pay limits is encouraging. In NSW the state government has been under huge pressure over the privatisation of electricity. A united campaign led by public sector unions against privatisation and the state government’s pay cap could deal a serious blow to Iemma’s economic rationalist agenda. Unfortunately, Unions NSW has been reluctant to escalate the union demonstrations against privatisation. There needs to be as much pressure applied as possible, particularly from public sector union members, for the campaign to continue and for an escalation of protests backed with strike action.

Finally, the scandal over Bill Henson’s artwork (see page 32) has worried those who thought that a Rudd government might undo some of Howard’s bigotry and fear mongering. Rudd’s hard line, despite the legal case against Henson collapsing, reflects his investment in using reactionary values as a tool to reinforce his conservative economic agenda.

These threads have begun to sharpen suspicions about whether Rudd really plans to undo Howard’s legacy. The history of Labor governments in power (see page 24) reveals much about the nature of the party and the way in which we can begin to build a political challenge to Rudd’s conservatism. The task now is to turn these moments of doubt into confident action.


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  1. Shame about the editorial.

    I have a subscription to Solidarity and I would encourage web readers to take one out; there’s nothing quite like holding something in your hands, reading it where ever you like and showing it to friends.

    At a time like this it’s great to see articles on the intervention and an anti-capitalist piece on climate change and poverty. I haven’t read those articles but I look forward to them. But I was disappointed by the statement in the editorial that Rudd should be capping petrol prices, an surprised that was the sentence chosen for the pull-quote (in printed design).

    Oil is traded on a global market, some countries like India and Indonesia subsidise fuel for their citizens, this is certainly not a good direction for Australia to take. As peak oil approaches the global price for oil will continue to increase. Rising petrol prices are a result of the market system; whilst this is forcing people to make more sustainable choices, as always the market fails on the question of equity.

    Rather than arguing for tax money to subsidise fuel users, including those who use the most in luxury launches, Range Rovers and Bentlys and the like; socialists should be making suggestions like:
    * redirecting ALL the $13billion fuel excise to public transport in working class suburbs,
    * spending the government’s lauded “Transport Infrastructure Fund” on rail and cycle ways, whereas currently 80% is earmarked for roads (no doubt as PPP’s).

    There are other means we can propose to intervene in the market to reduce the way ‘price signals’ exacerbate disadvantage, but really we should be talking about building the infrastructure people need to escape the hold big oil has on us – that’s how we can unpack the myth of ‘choice’.

    James Diack

  2. The editorial rightly points out in the absence of real alternatives to cars, petrol prices should be capped (food prices should be as well). Higher fuel prices will force some people on to the existing inadequate public transport services, but many people don’t even have that choice, they will keep driving and their standard of living will be reduced.

    However, the editorial should have made it clearer, that alongside the transitionary measure of capping fuel prices, we support massive investment in public transport, particularly to outer suburbs that often have none. Governments don’t want to cap fuel or invest in public transport and we need to fight for both. Global warming makes the need for investment in public transport doubly urgent.

    One reason for increasing petrol prices is that discoveries of new sources of easily recoverable oil are becoming less common, sometimes referred to as “peak oil”. Higher oil prices also lead to increases in the price of everything from food to plastic, because of the way oil is used in many types of transport and production.

    There are three important reasons rising oil prices should not welcomed by any sections of the environment movement. The editorial implied the first, that what is really needed is investment in public transport not higher fuel prices.

    The second reason is that championing higher prices, invites the hostility of many workers whose living standards are being eroded. These are the very people we need to appeal to, in building a movement for real solutions to global warming.

    The third reason is tar sands (sometimes called oil sands), a dense form of petroleum mixed with sand or clay. They are hard to recover oil from and have mostly been uneconomic to dig up. Rising oil prices makes their extraction viable. The US & China are currently negotiating with Canada to secure bigger supplies from the enormous source in Alberta.

    As an article in the financial times put it:
    When fully developed, Alberta’s oil sands will be the size of New York State. Extracting the full 175bn barrels of reserves will mean destroying large swathes of wildlife habitat, leaving behind mountains of toxic waste. It also will have a devastating impact on global warming. Not only is mining bitumen carbon-intensive, but it does enormous damage to one of the planet’s major carbon-storage banks. The trees, peat and soil in the boreal forest store 186bn tonnes of carbon – equivalent to 27 years of the world’s CO2 emissions from the consumption of fossil fuels. Only 10 per cent of the boreal forest is protected by Canadian law, and the oil companies are competing with other industries to divide the other 90 per cent between them.

    The tar sands mean the world is not about to run out of oil, but it will get more expensive. It will also add substantially to global warming, if we don’t fight for real alternatives like public transport and renewable energy.

    Chris Breen



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