Once upon a time there was a first-term Labor government that stilled a wage-price spiral by convincing powerful economic players to moderate their short-term interests in pursuit of a greater collective good.
The Prices and Incomes Accord was a negotiated agreement between the Hawke government and the union movement to moderate wage increases and industrial action in return for economic stability at a time of global flux.
The dividend on that act of altruistic self-denial was a decade of economic growth, significant increases in average living standards and the enduring social windfalls of Medicare and, later, a world-standard retirement savings scheme.
I’ve been thinking about the Accord while watching the Albanese government attempt to ride the cost-of-living rodeo as if its sole objective was to stay on the horse without eating dirt.
There’s no gilding the numbers here: according to this week’s Guardian Essential Report the PM’s approval rating is net negative for the first time since the election, with a majority now believing the nation is heading in the wrong reaction.
And all roads lead to cost of living, where just 11% rate the government above average, with the numbers bearing a direct relationship to the deteriorating economic circumstances of respondents.
So where does a political agreement from 40 years ago come into the story? First, as I wrote a few months back, framing “cost of living” as a self-imposed test of government is a fool’s errand that reduces politics to a crude consumer price tag.
Following the lead of the Accord and honing the challenge down to its component parts – prices and incomes – allows the government and the broader public to better focus on what can be done to deal with the current drivers of inflation.
On incomes, Labor has a clear brand advantage, with previous polling showing broad appeal for the closing loopholes legislation currently before the parliament.
But it is on the agreed key driver of 2020s global inflation, rising prices fuelling a widening wage to profit ratio, that there is a real opportunity for the government to differentiate itself.
Right now banks, major retailers and energy companies are all pocketing substantial windfalls, to the extent that some have begun cashing in their chips and buying back shares – an act that smacks of profiteering from public misery.
A second question in this week’s report shows there is genuine, cross-partisan enthusiasm for reining in some of these excesses, with support for price caps, rental limits, super-profit taxes and one-off levies on the mega-rich.
Undoubtedly, business would cry blue murder if the government intervened to reflect the public’s will. The current $24m campaign against work rights would seem like love tap in comparison to the forces that would be unleashed to protect their privilege.
But this is where there might be more to learn from the Prices and Incomes Accord of the 80s.
The alternative to a fully fledged war with capital might be an agreement to voluntarily moderate price increases, even at the cost of super-profits, in order to stabilise the economy and set the nation up for the next cycle of long-term prosperity.
This new accord could also extend to those individuals who are winning from late-stage capitalism: having secured their place on the high-wage prosperity escalator, those earning more than $200,000 could be asked to forgo (or at least defer) their upcoming $9,000 windfall from the stage-three tax cuts.
The experts tell us these cuts will turbocharge inflation. The persistent spending of higher-income earners is actively undermining the strategy of the Reserve Bank to slow economic activity by consistently raising interest rates.
And like the wage restraint of the 1980s this act of accumulative restraint would deliver even stronger long-term returns, with the well-off protecting the value of their accumulated assets from being devalued and benefiting from the windfall of a more cohesive society.
This week’s poll shows a deferral or remodelling of the stage-three tax cuts has the support of 80% of the electorate, including many of the post-material voters for whom economic security is a key driver of more progressive voting mindsets.
This is a complex issue and we have been careful to frame it as clearly as possible: here is what we asked:
In 2019 the Coalition government legislated changes, with Labor’s support, to the tax rates people pay that are due to take effect from July 2024. The changes remove the 37% tax bracket and lower the 32.5% tax bracket to 30%. It also raises the threshold for the 45% tax bracket from $180,001 to $200,001. This means that all income earned between $45,001 and $200,000 will be taxed at 30%. Under the changes, those earning $200,000 a year will receive a tax reduction of $9,075 a year, whereas those earning $60,000 will only receive a tax reduction of $375 a year.
Granted, people who self-identify as comfortable are more likely to want to see the taxes flow through to them, but there are still a sizable majority who would accept a rethink.
It has become political orthodoxy that these wealthier “post-material voters” are the nation’s conscience, more likely to support climate action, First Nations justice and identity issues.
Would enough of these wealthy voters put their money where their heart is to minimise the political risk for the government to do what the economics demand and repurpose stage-three? If so, they could really remake Australia for the better.
The original Accord was not without its critics who argued the union movement gave too much away, that unions lost their purpose as membership more than halved, that the Accord helped build neoliberalism.
But as a model of nation-building it remains a rare blueprint of a vested interest changing the game by choosing not to pursue short-term advantage in the service of the greater good. At the very least, putting the proposition to big business and the well-heeled would allow us to clarify where they really stand when it comes to Team Australia.
Peter Lewis is an executive director of Essential, a progressive strategic communications and research company
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