nsw politics

			
3 Mar 2008

			
Treasurer Costa Lot

			
By Ben Eltham

						

																											

						
As Michael Costa prepares for a fight with his union colleagues over energy deregulation, Ben Eltham digs up an illuminating little red book written by the NSW Treasurer in the 1990s

			newmatilda.com readers outside of NSW may not have heard of Michael Costa, the hard-driving and often abrasive NSW Treasurer. 


If you have heard of him lately, it's most likely due to his recent decision to sell off NSW's electricity generation assets, a move that actually contravenes NSW ALP policy and has many of the most powerful unions in NSW spoiling for a fight. 




But did you know Michael Costa was also the author of a little-read textbook on the history of Australian industrial relations? newmatilda.com decided to dig up the book, entitled Labor, Prosperity and the Nineties, to see what it could tell us about the intellectual transition of NSW's controversial Treasurer - and of the right-wing of the ALP. 




Michael Costa is a perfect example of the way the NSW Labor Party, and its unionised power-base, can still elevate working class men to positions of power (we haven't seen too many women of any background in positions of power in NSW). 




Born to Greek Cypriot parents in Newcastle, Costa was active in the far left of politics during his youth. After studying at the University of Wollongong he found work as a rigger at Garden Island naval dockyards in Sydney Harbour, where he got involved in the union movement through the Federated Ironworkers Union, now part of the AWU. By 1983 he started training as a railway engineman and soon became involved in the militant politics of the Rail Tram and Bus Union, where he ran successfully for the leadership in the mid-1980s. By 1989, Costa had been elected as an organiser to the Labor Council of NSW, the State's most powerful trade union body. In 1998 he was elected Secretary. A seat in the Upper House of NSW Parliament and a Ministry in Bob Carr's government followed three years later. 




Costa was ambitious and hard-working, studying economics at the University of Sydney by night and even taking some Harvard courses by correspondence. It was during his first stint as an organiser at the Labor Council that he wrote (with fellow NSW unionist and academic, Mark Duffy) Labor, Prosperity and the Nineties. The book gives us some unique insights into the mindset of this forthright and controversial politician - not least of which that he is a paradoxical unionist. He doesn't seem to like policies to increase wages, unions, or even the union movement itself. In many ways he seems to have bought into the precepts of neoliberal economics.




Labor, Prosperity and the Nineties is not actually about the 1990s at all. It is, first and foremost a history of Australian industrial relations. It tracks Australian labor and its at-times troubled relationship with capital from the boom era of the 1850s right up until the early 1990s, at the height of the "Accord" - at which point Costa and Duffy prognosticate that unions are doomed unless they adopt the "new thinking" of free trade and global market competitiveness. 




Costa and Duffy's thesis is that Australia is a "bonsai economy" - an over-regulated and over-unionised bailiwick that has pruned back too far on innovation and productivity to be internationally competitive in the modern world. Surprisingly, Costa's frame of reference is essentially neo-liberal economics - or "economic rationalism" as the term went in Australia in the 1990s. 




Costa buys into the conventional wisdom that this system grew out of what Paul Kelly called the "Australian Settlement" - the unique Australian combination of high working wages, strong unions and tariff walls against imported manufacturers. In particular, the historic wage-fixing decision by High Court judge Henry Higgins in the McKay Harvester case of 1907 is often held up to be the beginning of the Australian Settlement.


Costa and Duffy's scholarship here has been overtaken by recent developments. As the authority on this field, Humphrey MacQueen has noted the Australian Settlement was never a "settlement" as such; management fought vicious campaigns against organised labour for lower wages and fewer conditions throughout the 1910s and 1920s.


It's not the only place where Costa and Duffy are far too eager to buy into modish neo-liberal analysis. In this and other areas of the book, they draw substantially on competitiveness guru Michael E Porter's theory of competition between nations. The only trouble is, Porter's theory has been heavily attacked from within academic economics for its methodological flaws - for example, from this Fred Hilmer paper. It is in fact easy to find counter-examples to the "diamond" competitive advantages that Porter says characterises successful exporting nations: Australia's key export industries, for example, are resource-based, and always have been. 




Costa and Duffy end their book with some revealing comments about where they think the ALP should head. "The Hawke Government has had to challenge one Labor shibboleth after another," they write, and so Labor should march confidently into the 1990s as the remover of tariffs and the deregulator of the economy. The ALP needs to rediscover its roots of "free trader" unionism and should ditch the dinosaur-like strategies of centralised wage fixing and amalgamated unions. It should embrace international competitiveness. It should further deregulate the economy. It should abandon the Accord. As Costa and Duffy conclude in pop-psychology tones, "the Labor offspring increasingly needs to explore its world independently of its parent." 




It's a strange old world when powerful unionists, who came to power through union politics and who nominally represent the Labor Party, are calling for policies that will only decrease the power of their own power-base - and hurt the lowest paid and most vulnerable in our society. But that's the allure of neo-classical economics. The stark beauty of the classical model often trumps the messy examination of the data on the ground. It's what the psychologists call a "heuristic". 




On reading Labor, Prosperity and the Nineties, we shouldn't be surprised that Costa is spoiling for a fight with his union colleagues over energy deregulation. He has no truck with environmental concerns and doesn't seem to believe there is much of a case for union restraints on managerial power at all. Costa is a deregulator, a decentraliser, and a self-styled reformer. He is also a visceral climate change skeptic who once called Tim Flannery an "idiot." 




Don't expect Costa to back down over energy deregulation. From the evidence on the public record, this is the fight of his career.





For more Australian politics, check out our blog PollieGraph  


						

	
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					GraemeF 04/03/08 8:29PM

					

						
Reformed carers are always more rabid. sort of like reformed smokers.

					



					ecoeng 04/03/08 9:45PM

					

						
Interesting article.


I would agree with a lot of what Ben says here about Costa’s embrace of neo-liberal theories such as those of Michael E. Porter. Economic rationalism has got a lot to answer for (as well as some things to be proud of - that’s just how it goes).


But poor Ben wades right into the mire himself when he flicks off yet another term of abuse for those who, in all honesty can’t quite buy the whole post-modernist package of climate change apocalypticism i.e. ‘visceral climate change skeptic’. 


Good one, Ben, makes a nice variation on ‘climate change denier’. When in doubt, fling as much mud as you can.


Fact is, Michael Costa is right, Flannery has come out with a lot of shite. Just like the human race itself, with scientists you can get everything from foolishness to genius.


With one hand you rightly reject the narrow absolutism of Senior Costa, with the other you give us the absolutism of those who would have us kissing the cuffs of fat ass Al Gore’s trousers. Gee thanks.

					



					rachelc102 04/03/08 10:12PM

					

						
Not entirely true, there are a few women in positions of power in NSW.


Unfortunately some have not been particularly inspiring with the embattled Reba Meagher (semi) managing the health portfolio.


Carmel Tebbutt, the ‘Countess of Marrickville’ and wife of Anthony ‘Albo’ Albanese dropped out as education minister last year - supposedly when it looked like Rudd would get in and Albo would have a fed portfolio.


There is Verity Firth, first time MP who has more portfolios than days in the week, in part due to Phil Koperberg’s recent retirement and also in part to the pathetic rabble which makes up the Iemma government.  You wouldn’t trust most of them to look after your pets, let alone the state.

					



					ben.eltham 05/03/08 1:39PM

					

						
Ecoeng - I wasn’t using the term "climate change sceptic" as a term of insult, simply as a statement of fact. Costa is on the record, repeatedly, as stating he is a climate change sceptic.


Without endlessly repeating the scientific evidence for anthropogenic climate change, I think its enough to point out that the overwhelming scientific consensus is that climate change is real.


This leads me to ask this question of you: shouldn’t we be concerned that the Treasurer of Australia’s largest state is apparently ignorant of the scientific evidence underlying one of the most important policy areas of his portfolio? I don’t think this is "flinging mud." I think this is a valid issue of public policy. 


One final point: I don’t want to see the New Matilda comments pages descend into funereal politeness, and you’re probably right that Al Gore has a large posterior, but I don’t think sarcastic comments like yours really move the debate forward. Let’s have a conversation about the facts and the policy, not the "shite."

					



					ecoeng 05/03/08 7:08PM

					

						
I personally accept that climate change per se is real as you would know if you’d done me the courtesy of reading my previous reply to your previous post regarding your previous article. You don’t need to repeat anything - indeed the suggestion itself is pointlessly patronising. Your logic in a denigrating Costa for his climate change scepticism is equally shallow. For the record:


Hansard

The Hon. MICHAEL COSTA: "No, my position on climate change has not changed. I am one of those who believe more work must be done on the issue. Global temperatures have increased by 0.6 of a degree but there is a lot of debate about what might be driving that increase. A lot of credible scientific opinion points to factors other than human beings being the cause. The issue should be debated. But I will not engage in the environmental McCarthyism of the Greens, whereby who is sceptical about climate change is called a denier—a very loaded term that should not be used—or, alternatively, is drowned out. Al Gore is wrong: the science is not in. Many people are sceptical about climate change, and they should be heard. But in the meantime, the Government, as the representative of the people, is seeking to implement policies to do what it can in our small part of the globe to deal with the issue. We are doing innovative work on emissions trading regimes."


Costa has stated his position, and honestly. He is clearly not obstructive of the NSW State Government’s ‘….innovative work on emissions trading regimes’ and I don’t think you can find any concrete instance on the record of where he has obstructed progress towards combating climate change. 


Not only Flannery is guilty of climate hyperbole. Al Gore talks rubbish when he says sea level will rise by 2100 by ‘20 feet’ (=6096 cm).  IPCC(2007) estimate the sea level rise by 2100 might be around 38 cm - one one hundred and sixtieth of what Al Gore says. That doesn’t make IPCC a bunch of visceral climate sceptics. 


Science identified climate change. Science is a way of thinking in which opinion and consensus continually evolve - hopefully towards an even higher truth. Climate change is not a religion. There are no heretics - the Enlightenment was several centuries ago.

					



					ecoeng 05/03/08 7:17PM

					

						
Correction:

Al Gore talks rubbish when he says sea level will rise by 2100 by ‘20 feet’ (=609.6 cm). IPCC(2007) estimate the sea level rise by 2100 might be around 38 cm - one sixteenth of what Al Gore says.

					



					ben.eltham 05/03/08 7:21PM

					

						
Ecoeng - thanks for replying to my post. 


First, some clarifications. I never suggested climate change was a religion. You did. Nor did I cite Al Gore. You did. I have read your previous posts. I am not trying to patronise you. 


To return to topic, even in this Hansard extract, we have Michael Costa maintaining that the science is not in. He’s wrong - it is in, and it’s firming all the time.


In fact, there is some obvious instances we can cite where Costa obstructing progress towards combating climate change: his steadfast support of the Hunter Valley coal industry, and his decision to sell off the coal-fired power stations.

					



					ecoeng 07/03/08 5:18PM

					

						
Personally I don’t have a problem with Costa’s support of the Hunter Valley coal industry.


I do have a problem with them leaving public ownership, largely because I fear this might retard the retrofitting of those stations with pilot carbon sequestration technology by CSIRO etc. This is linked to the problems created by Garnaut’s narrow views on carbon trading and credits.


Apparently unlike you, but like most of the rest of the world, I know the use of coal is here to stay for very long time. Any presumption that ‘coal use is bad’ and must be opposed and done away (like nuclear power) with is technically and economically naive.


Your views of Costa etc are obviously underpinned by your oft repeated position about the science being ‘in’ and the type of consensus that you believe exists . 


Putting aside actual climatic developments of the last decade and scientific developments of recent years FYI (and that for other readers) here is what, in my view, is a very fair-minded and well referenced assessment of the nature of this consensus.


http://mclean.ch/climate/What_consensus_col.pdf