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Land,Social Justice and Sustainability
 

The Inaugural Clyde R. Cameron Memorial Lecture
Land, Social Justice and Sustainability
By Professor Frank Stilwell


This is an edited version of a speech delivered at the Australian
National University, University House, 19th November 2011.

Thanks to you all for coming. Congratulations to Ron Johnson and others
associated with the Association for Good Government in the ACT for this
initiative to develop the Clyde Cameron Memorial Lecture and the [New]
Clyde Cameron College, with its distinctive focus on modern applications
of the ideas pioneered by Henry George. This extends the momentum
created by the formation in 2006 of the ACT Association for Good
Government. Certainly, these initiatives are timely right now because in
Australia and around the world there is an enormous array of political
economic challenges that need to be tackled. We need to think carefully,
analytically, critically, constructively and progressively about how we
deal with these challenges.
Three challenges are particularly important – economic crisis, social
inequality and environmental decay.


Economic crisis
In 2007-2008, when the Global Financial Crisis hit, this was probably the
most traumatic shock to the global capitalist economy since 1929 when
the Great Depression began. There are quite clear parallels in terms of the
disarray created in financial markets, the flow on consequences for
workers and, of course, the disarray among the economics profession
about what is the essential cause, nature of this problem and appropriate
policy responses.
The Global Financial Crisis wasn’t just a blip in share markets. It was a
fundamental crisis in the way in which we understand and, even more
fundamentally, the way in which we organise our economic activities to
imperfectly serve our social needs.
Since then the problems have rolled on. Yes, there were some useful
short-term fixes, especially here in Australia where the Federal
Government led by Kevin Rudd was among the best in the world in the
way in which it responded to the initial economic shock. It introduced an
economic stimulus package that was effective in preventing the
immediate financial crisis becoming a prolonged economic recession, as
it did in so many other countries.
But the underlying economic problems have not been resolved. The
short-term remedial policies seemed to work for a time to ameliorate, if
not resolve, the crisis. But now we are seeing a further wave of profound
financial difficulties in Greece, in Italy, in Portugal and Spain, in Ireland
and continuing in the United States. There are severe problems of public
sector debt as well as private household debt which seem extraordinarily
difficult to resolve. So, uncertainty and instability have become the
hallmarks of capitalist market economies around the world.
These difficulties have generated much talk of the need for a new
financial and economic architecture. Incidentally, isn’t it interesting to
observe how that terminology comes to be mobilised - as if we could
construct an ‘architectural’ solution in the same way that we might build
a house on a corner block. The scale of the operation needed to deal with
global financial disarray is enormous. The capacity of current political
leaders and institutions to create the necessary architectural
reconstruction is profoundly in question.
The parallel that comes to my mind is when, following the Second World
War, the major international conference took place at Bretton-Woods in
the United States to set up financial institutions, that for a couple of
decades, helped to ensure fairly sustained and effective economic growth
around the capitalist world economy.
Is it time for a new Bretton-Woods system? What form would that take?
What arrangements could be put in place to ensure that a problem like the
Global Financial Crisis would not occur again?
Frankly, no one quite knows how to grapple with this fundamentally
challenging economic problem. I spend a lot of my time dealing with
professional economists and many of them have got their own hunches,
their own proposed panaceas, but there is no consensus about how to
move forward.

Social Inequality
The second great challenge - of redressing extreme social inequality -
isn’t new, of course. Since the advent of the capitalist system on a world
scale, some countries and some classes have become spectacularly
prosperous while others have been left behind.
In recent times, however, the character of economic and social inequality
around the world has changed quite significantly. Looking back over the
last half century, one can see an underlying tendency towards increasing
economic inequality. That’s not surprising because capital can be used for
capital accumulation whereas, at the other pole, poverty tends to be self
perpetuating. Those who are poor are often unable to get a good
education, maybe even not enough to eat. So their capacity for higher
productivity is severely constrained. Indeed, a culture of poverty and
dependency may create a cumulative difficulty in breaking out of that
vicious cycle.
So, virtuous cycles of capital accumulation and vicious cycles of poverty
commonly co-exist. Historically, what have kept those unequalising
processes in check are two factors – trade unions and redistributive
governments.
The role of trade unions has been fundamentally important. Unions have
been active and effective in representing organised labour, albeit not
always representing those in poverty who are outside the workforce. For
organised labour as a whole, the trade union movement has been a potent
force for offsetting the underlying tendencies to inequality between those
who derive their incomes from capital and labour.
In recent years, however, the trade union movement has had a much
smaller coverage of the workforce and much less economic and political
clout. Indeed, even the Labor Party which was originally formed in
tandem with the trade union movement, representing the twin thrusts of
labour within the industrial sphere and within the parliamentary sphere,
now seems to have a more fractured relationship with it. There are some
in the Labor Party saying that the influence of trade unionism should be
diminished in terms of the way in which the party’s policies are shaped.
So there is a question mark hanging over the future capacity of the union
movement to prevent growing inequalities between the incomes of bosses
and workers - shaping the distributional shares of capital and labour.
Historically, the other element that has kept inequality in check is
governments concerned with economic reform and social cohesion.
Progressive income taxation has been coupled with welfare state
provision and transfer payments to help those in poverty or otherwise in
need. Unemployment benefits, state pensions, assistance to people with
disabilities, provision of public health and educational opportunities -
these are the fruits of the welfare state.
But here too are tensions. The rich are reluctant to pay tax and there are
strong pressures on governments to cut back on welfare spending. The
influence of neoliberal ideologies – favouring market ‘freedoms’ over
state provision – has been particularly pervasive in the last quarter
century. The Global Financial Crisis showed that the neoliberal
confidence in the efficiency of market processes is not soundly based, but
there is no clearly desirable swing towards a resurgence of social
democratic policies. Within the sphere of government the question about
how to most effectively offset the underlying tendency of the market
economy towards growing inequalities remains unresolved.
Ultimately, it is a political question - are there parties and governments
that have the political will to address these issues through the radical
taxation and expenditure measures that are necessary? Although it is hard
to point to exemplars, from time to time one gets a glimmering of the
potential for governments to really make a difference.
The discussions about the mining tax in Australia are a case in point. In
Australia we have prodigious wealth being generated as the result of the
extraction of mineral resources. Who should benefit from that wealth?
Well, clearly Gina Rinehart – the richest Australian and now listed as the
29th wealthiest person in the world – has benefited from the wealth. She’s
the daughter of mining magnate Lang Hancock. Of course it’s always
important to choose your parents wisely!
The wealth of the mining billionaires, such as Andrew Forrest and Clive
Palmer as well as Ms Rinehart, derives ultimately from the natural wealth
of the nation. But it’s being privately appropriated for prodigious
personal gain. Recognising this, the Australian governments led by Kevin
Rudd and subsequently Julia Gillard have sought to claw some of it back
for public purposes, so that part of that wealth might be used to improve
the infrastructure of the nation, to improve the quality of public services,
health, education and transportation systems that are so obviously in need
of public investment. Therein lays an obvious tension – between public
and private interests. The big mining companies mobilised very
effectively against Kevin Rudd’s initial form of the mining tax and what
is now coming on-stream is a much scaled down version.
The mining tax is an interesting case study because it reveals the
fundamental political challenge of how we, as a society, capture our
collective wealth and the income that’s generated for public purposes
rather than to allow it to be siphoned off for individual purposes.
Redressing inequality and controlling the wealth generated by natural
resources – including land in general as well as mineral deposits – are
inextricably linked.

Environmental Decay
That brings us to the third of the big challenges. Having considered
economic crises and social inequality, we have also to recognise the
environmental crisis. This is the challenge that hangs like a great shadow
over all else in the twenty-first century.
Of course, environmental problems aren’t new either. The challenges of
maintaining good quality air, water and land are of long standing.
Personally, I’m old enough to remember back in the 1970’s when there
was a previous strong surge of concern about environmental issues. The
Club of Rome produced its report on the limits to growth, showing that
we simply couldn’t go on increasing our exploitation of natural resources,
generating more goods and services, creating more pollution and other
environmental hazards, and increasing our population. The physical
carrying capacity of the globe and the atmosphere simply wouldn’t stand
the stress.
There were criticisms of the methodology of the Club of Rome, but the
insights into the fundamental tension between economic and
environmental concerns have stood the test of time. Indeed, with
recognition of global warming and climate change, the concerns have
moved from margin to mainstream. The increasing political appeal and
influence of the Greens is one expression of that concern.
The Gillard government’s recent introduction of a Carbon Tax is aimed at
one of the most fundamental aspects of those environmental concerns –
reducing the carbon emissions that are integral to the problem of climate
change. It is an interesting example of adapting the price mechanism to
deal with environmental problems. More radical critics would say that it
is the price mechanism and the market economy that is actually the
problem, not the solution.
Here too we see a huge debate. How serious is this ecological crisis? How
quickly must we act and what are the appropriate policy mechanisms?
Should they be market mechanisms, like a Carbon Tax or an emissions
trading system, or should we be looking to governments for stricter
regulation of production processes and consumption patterns? Is public
expenditure on development and promotion of more renewable energy
technologies the key? Or public ownership of key industry sectors,
recognising that such structures can be used to re-orient and mobilise
resources in ways that produce a more sustainable economy and society.
A parallel that comes to my mind is preparing for war. This is not in all
respects a comfortable metaphor but, if there is a prospect of war,
governments don’t typically look to the price mechanism as the means of
mobilising an army and reorienting the economy towards military
priorities. More typically, when faced with a threat to a national interest,
there is mobilisation through direct government intervention. This may
involve conscription, for example. It would normally involve major
expenditure by governments on armaments and other forms of war
preparation.
If the emerging scientific consensus is right that climate change is a real
and imminent threat, then one might expect governments to be involved
in a similar process of mobilisation. Direct investment in renewable
energy would be a priority. So would planning a transition from a coalbased
economy to one which can live more comfortably in harmony with
the environment. New coal mines are being opened. The overwhelming
bulk of electricity generation is continuing to proceed in ways that are
incompatible with the objective of ecological sustainability.
So the environmental challenge is not being resolved. As with the
problems of economic crisis and social inequality, environmental
challenges are typically being treated with bandaid solutions rather than
responses that get to the heart of the problems.

Challenging the Dominant Economic Paradigm
Critical observations like these are currently being made around the
world, by those involved in the Occupy movement. Large groups of
people have been out in the street, strongly voicing their dissatisfaction
with different aspects of modern economy, society and political
processes. They’re focussing on corporate greed. They’re focussing on
inequality. They’re focussing on the way in which current economic
arrangements don’t serve the interests of ninety-nine percent of the
people.
Even at Harvard, the prestigious U.S. University in Cambridge
Massachusetts, the students have been active in voicing similar concerns
– indeed, the students are revolting [audience laughter]. In one of the
economics lectures given by the distinguished Professor Mankiw, former
Chair of the Council of Economic advisors for President George W.
Bush, a substantial number of the students in his class walked out saying:
No thank you Mankiw, we think that the economics that you are teaching
is not helpful to understanding what is going on in the world around us.
This is of some significance because a university like Harvard is where
the elite are reproduced in American society. There is evidently deep
disquiet about whether the current political economic arrangements are
sustainable and whether or not economics education is helpful in
providing useful answers matters.
I dwell on this aspect of economics education in particular because for
some forty years this has been my principal professional concern - to
challenge mainstream economic thinking. Challenging the orthodoxies
requires a sustained assault on “the conventional wisdom”, to use John
Kenneth Galbraith’s phrase. Indeed, as with so many of Galbraith’s
phrases, that one has a wry irony. Conventional wisdom means that the
beliefs are merely conventional and not wise at all: they serve to
legitimise existing arrangements and existing interests rather than helping
to analyse what is going on in the world around us.
If we do want to understand what is really going on we need a different
type of economic analysis – a new paradigm. But what is the appropriate
alternative to the currently prevailing economic orthodoxy? That
orthodoxy has its roots in neoclassical theory which was developed in the
1870’s in Britain and continental Europe by scholars such as Menger,
Jevons, Walras and Marshall. It has continued to be at the core of the
economics curriculum right through for more than a century,
underpinning a benign view of the capitalist market economy as an
engine of efficiency and growth.
The neoclassical economic orthodoxy experienced a challenge from
Keynesian economics in the 1930’s and 1940’s, particularly because the
catastrophic experience of the Great Depression showed the need for a
different paradigm. But the ‘Keynesian revolution’ in economic thought
was only partial. After the second world war a ‘neo-classical synthesis’
imported part of Keynesian economic thinking along with that free
market neo-classical economics, creating a rather awkward hybrid. The
market economy was regarded as structuring the way in which the
economic system works, through the interaction of individual buyers and
sellers establishing equilibrium prices that produce an efficient allocation
of resources - but, as Keynes said, not always guaranteeing full
employment. Therefore, there is a modest role for government coming in
with macro-economic policies - either fiscal policies or monetary policies
- in order to ensure that there is full employment and therefore no
inefficiency associated with the underutilisation of labour and capital.
That Keynesian influence on economics education and practical
economic policy was rolled back over the last three decades by the reascendancy
of a more purist neo-classical economics. In the realm of
public policy it gave rise to the familiar neoliberal agenda - deregulation
of markets, privatisation of public enterprises, trade liberalisation - as the
ostensible means of creating the conditions for markets to expand and
generate more economic prosperity. Neoclassical economics and
neoliberal politics are closely intertwined. But their joint product has
been the intensification of the triple problems on which I have
concentrated in my earlier remarks – greater economic instability,
inequality and environmental decay.
There have always been alternatives to the mainstream orthodoxy within
political economic thought, however. There has always been a Marxist
alternative, for example, that is fundamentally critical of capitalism and
the market economy. There has been an institutional economic
alternative, with its origins in the United States about one hundred years
ago in the writings of Thorstein Veblen, creating a tradition carried on by
John Kenneth Galbraith, by the great Swedish political economist Gunnar
Myrdal, and here in Australia by my former colleague at the University of
Sydney, Ted Wheelwright, a much loved and respected figure whom we
honour in an annual memorial lecture.
There are also important contributions from environmentalists which, in
conjunction with progressive political economic ideas, have given rise to
Green economics. There are significant feminist currents in modern
political economic thought. There are also post-Keynesian economic
schools of various kinds. What we now need to do is to see ways in which
we can draw from those different analytical currents in understanding the
real world today - understanding the causes of economic crises, the
growing economic inequalities and the political economic roots of
environmental stresses. That requires systematic analysis. It also requires
us to engage in the realms of philosophy and ethics and to make political
judgements.

Henry George and Clyde Cameron
One of the analytical currents on which we can draw particularly usefully
is that which derives from the pioneering analysis undertaken by Henry
George. Henry George was a significant figure in the development of
political economic ideas, albeit subject to persistent marginalisation by
the proponents of the mainstream neoclassical orthodoxy. I interpret his
analysis as building to some extent on the classical political economist
David Ricardo, but with a radical twist. George also had the capacity to
link his economic analysis with a particular philosophy, with a particular
stance in ethics. Unlike the Marxist critique of capitalism which focuses
on the capital-labour relationship, the Georgist perspective directs our
attention to the relationships that derive from land and how land is treated
in the economy and public policy.
The connections are many and varied, but I hope in the remarks that I am
now going to develop to illustrate some ways in which the land question
is fundamental to the broad array of political economic challenges that I
have introduced in the first part of my presentation.
However, before doing so, it behoves me to say some words about Clyde
Cameron himself, after whom this inaugural lecture is named. Clyde was
much influenced in his thinking by the ideas of Henry George. As a
prominent Australian politician he sought to blend that theoretical
understanding with a lifetime of practical political commitment to the
labour movement.
Indeed, Henry George himself famously said that the increase in land
values is always at the expense of the value of labour. Yes, the increase
in land values is always at the expense of the value of labour. To my
mind that statement really encapsulates the relationship between a
Georgist analysis and a labour politics.
Cameron himself was deeply concerned with these issues. In his life and
work I perceive the triple themes of labour, land and love.
Cameron’s commitment to the labour movement is unquestioned. Born
in 1913, he left school at the age of fourteen, started work as a
rouseabout, and then became a young shearer. He quickly became active
in the Australian Workers Union that covered the shearers working in
rural South Australia. As a union representative, among his tasks was
inspecting the quality of the pit toilets for the shearers, to make sure the
toilets had the appropriate fly wire protection. This gained him the
somewhat dubious nickname of ‘Shithouse Cameron’.
Yes, he was a down to earth bloke. He would ‘roll up his sleeves’ at
every opportunity. He served as the State Secretary of the Australian
Workers Union and then became a Member of Parliament. After a long
period in opposition, in 1972, when the Whitlam government was elected,
he became the Minister for Labour and Immigration. Clearly, for Clyde,
the magic moment had come. The long apprenticeship that he’d served
now promised to bear fruit in terms of actually being in office, being in
power, and having the capacity to make the changes that would create a
fairer and better society in Australia. Clyde rolled up his sleeves and got
on with the job.
He was instrumental in raising the wages of public servants. He saw the
public sector as a pacesetter for improving the wages of Australian
workers more generally. It was, with the benefit of hindsight, a
problematic initiative because it fed into the problem of inflation that was
emerging in the Australian economy at that time. The benefits of the
surge in public sector wages were offset by the rising prices. The
problem of simultaneous inflation and unemployment was starting to
emerge, a problem that would bedevil economic conditions and policies
in Australia and throughout the capitalist economies for the next decade.
Clyde was also instrumental in establishing new legislation for equal pay
for women. Though this was a magnificent political achievement, there
were contradictions and some disappointments here too, as it turned out.
The impact on the actual outcomes of pay for men and women was
somewhat modest - a pronounced gender wage gap persisted and has
continued to this day. In other words, legislative change doesn’t seem to
resolve the problem of gendered economic inequality in all respects. No
doubt, however, Clyde’s initiative was a significant turning point and he
deserves full credit for driving it.
Clyde’s commitment to a Georgist approach in his political ideas and
practice was also strong. He helped to open the Victorian Headquarters of
the Henry George League in 1972. He opened the South Australian
Headquarters of the Henry George League in 1984 and he did likewise in
Western Australia with the new premises of the Georgist Education
Association of Western Australia in 1989. His fundamentally association
with the Georgist movement was also reflected in a letter advocating land
tax reform that he wrote to Frank Crean, who was the first Treasurer in
the Whitlam Government.
Cameron was effectively saying to Crean: come on Frank, you’ve got to
embrace Georgist principles in the economic policies of the newly elected
Labor Government. He wrote about that experience himself as follows:
“At one of the early Cabinet Meetings held by the Whitlam Government
in 1973, I proposed that the newly-elected Labor Government reintroduce
the Commonwealth Land Tax abolished by the Menzies
conservative Government in 1953. My colleagues were impressed with
what I had to say about using that tax to reduce other taxes that weigh so
heavily upon the poor. They were impressed also by my argument that the
collection of the economic rent of land would reduce the price of land for
home builders.
Frank Crean promised to have my proposal studied by Treasury. But I
knew then that nothing more would come of it!
Then on 27 June 1974, I wrote to Mr. Crean again urging him to reintroduce
a Federal tax on unimproved land values. ‘As well as yielding
several hundreds of millions of dollars in revenue,’ my letter continued,
‘this tax would have the even greater advantage of easing pressures on
resources caused by the rapacity of land speculators.’ My letter
continued:
‘It would reduce land values by taxing vacant building allotments and
would be much more equitable than seeking to reduce demand inflation
by such measures as, say, indirect taxation upon consumer goods and
household appliances.”
Clyde was not inclined to support policies like higher taxes on goods and
services. To be efficient and equitable, he thought it would he better to
use the tax system to restrain the rising costs of land. In his own words:
‘Rising land prices have made a much greater inroad into the incomes of
the ordinary wage and salary earner than any other single factor. It not
only directly affects the wage and salary earner who is seeking to build a
new home, but it indirectly affects the price of homes already built. It is
useless talking about allowing the States to control land prices. They will
never do it; and we should accept that as a fact. You may recall that when
the Menzies’ Government abolished Federal Land Tax, the Labor
Opposition then stated quite categorically that a Labor Government
would re-introduce the tax.
‘As a matter of historical record, it should not be forgotten that in 1910,
the Fisher Labor Government was actually elected to office on the sole
issue of the taxation of unimproved land values. As well as being a more
just method of receiving revenue than the imposition of indirect tax upon
the necessities of life, it is the one kind of tax that has to be paid by those
best able to pay it…’
I had not asked for a pure unadulterated application of land values
taxation without ant exemption; that would have been too much honey in
one serve! My letter went on to remind Mr Crean that I had raised the
matter during the 1973 pre-Budget discussions and that there had been
tacit agreement among the majority of Ministers that the Federal Land
Tax should be introduced. My letter went on:
‘I raised this matter, you will remember, with Sir Frederick Wheeler
when he and his team of advisers appeared before a Cabinet Meeting
some months ago. Sir Frederick’s excuse for not having included this
proposal in last year’s Budget was that Treasury did not have enough
time to study the proposition. Actually, Treasury did not need much time
because the land tax apparatus is already established by virtue of the fact
that all of the States use it for revenue raising purposes. Treasury has
now had almost a year to think about the matter and I would hope that
lack of time would not again be used as a reason for further delay.’
‘Needless to say, nothing happened! Mr Crean, like most adherents of
orthodox economics, had never understood the economic rudiments of
rent, wages and interest. What’s more, nothing has changed! We continue
to embrace the false economic theories that are dragging us towards
economic and social damnation.”
Thank you, Clyde Cameron. Your linking of the interest of labour with
proposals to reform policies towards land was an exemplary instance of
practical Georgism – albeit with frustrating lack of political traction.
Moving on from labour and land to love is perhaps a surprising element
to complete the Clyde Cameron trilogy. As you may gather from the
often rather dogmatic, even intemperate, remarks to which Clyde was
inclined, he was a good hater - in the Labor Party tradition.
Indeed, he came eventually to hate even Gough Whitlam, after Whitlam
had relieved him of his position as the Minister for Labour and
Immigration. This position in the government was what Clyde wanted to
retain. It was the means by which he could pursue his lifetime mission to
help the cause of the labour movement. Whitlam gave it in 1972 but
eventually took it away in 1975, giving him instead the portfolio for
Science and Consumer Affairs. Clyde had no natural inclination for these
policy fields. Whitlam allegedly said at the time- “oh, Clyde you’ll like
it”. Indeed he did, finding it rather interesting and engaging. But he
could never admit it publicly because he had to maintain his stance of
disappointment and dismay at his inappropriate sacking, by Whitlam,
from the portfolio that was his life-long mission to serve.
So why, for a manifestly good hater like Clyde Cameron, would one refer
to love? I do so for the reasons to which I’ve already alluded - his
commitment to the labour movement, his belief in a fairer society,
reflecting a deep concern on behalf of humankind more generally to make
for social betterment.
In this context it is appropriate to quote the sentence with which Tim
Flannery, the great Australian environmental scientist, finishes one of his
recent books. From memory, it goes like this: If we cannot learn to love
each other and nature more deeply then it will be the worse for the planet
and the future of humankind. Flannery is saying it’s in the nature of our
relationships to each other and to nature that the fundamental changes
must be brought about.
That involves caring, sharing and nurturing, not simply optimising
efficient market relations. It involves a transformation in our relationships
to each other and to nature. I believe that is what Clyde Cameron, was
fundamentally committed to achieving, beneath the pragmatism of Labor
politics.
The creation of the Clyde Cameron College (or the TUTA College that
eventually came to be re-named as the Clyde Cameron College) was one
of the avenues through which he hoped that education, particularly of
trade union delegates, would help to achieve that goal. I went to the
Clyde Cameron College a couple of times when it was at Albury-
Wodonga to talk to delegates from trade unions. Though the dominant
practical concerns were about wages industrial relations and disputes,
underlying them, I think, was a broader philosophy about how the
interests of the labour movement could be pursued in harmony with
broader concerns about social justice and sustainability. It is a pity that
the College was wound up for lack of political support. By the same
token, it is great that a new Clyde Cameron College is now being
developed through the initiative of the Association for Good Government
in the ACT. The Clyde Cameron lecture series should have a similar
mission.

The Fundamental Importance of Land
In introducing this session, Ron Johnson referred, as has become
customary at public meetings in recent times, to the role of indigenous
people and their relationship to the land. As I move towards the latter
parts of my remarks, I also want to pick up on that theme. It reminds us
that there are many different types of relationship we can have to nature -
and to land in particular.
Some of us enjoy having our own exclusive access to particular places
and spaces. The archetypal ‘Aussie backyard’, where you might share
family pursuits or have your barbecue and invite your mates around, is an
obvious example. On the other hand, some of us also enjoy roaming
freely through wilderness areas, feeling uplifted by the contact with the
vastness, the diversity and ecological integrity of it all. My partner Ann
and I have in recent years spent much time doing that in national parks in
and around the Sydney basin, enjoying the physical and the spiritual
contact with nature.
So how are we to relate to land? By capturing individual parcels for
personal use? By sharing it more collectively in the ways that I have just
described? Or by some hybrid or combination of those arrangements?
Indeed, our relationship to land can take an array of different forms.
There can be common land, there can be national parks, Crown land,
leasehold land, freehold land, land that is zoned for particular uses with
other uses proscribed, land that is subject to particular types of taxation
regimes which might create imperatives for particular types of land use
and disincentives for others.
Land is a gift of Nature, but the ways in which we relate to it can take so
many diverse forms according to our ingenuity, our political
arrangements and our aspirations. What pertains at any particular point of
time is not necessarily for the best. Indeed, looking at the current situation
from the viewpoint of Indigenous Australians, our arrangements must
seem frankly horrifying.
For Aboriginal people the relationship to the land is not fundamentally
economic - it is a cultural and spiritual relationship. One can no more
own land than that the land owns you. The relationship is a symbiotic one
in which market arrangements have no central place. Now, I’m not
suggesting we can readily recapture that more wholesome historical
relationship with the land. But we do have to think carefully about the
arrangements for ownership, regulation and land use that might help to
restore a more sustainable balance.
That is where the Georgist political economic philosophy is so important.
George’s ideas were very influential in Australia as well as in America in
the late Nineteenth Century, although they have been ignored by most
economists in the Twentieth Century. They warrant greater prominence
and influence in the Twenty-first, because of their enduring relevance to
understanding the way in which land is used, particularly in the urban
context.
As George stressed, the capacity of land owners, particularly in major
metropolitan areas, to capture unearned income is a major source of
socio-economic inequality. The failure to adequately tax that surplus is an
element in the impoverishment of the public sector and creates a tendency
towards speculation rather than productive economic activity in society as
a whole. If you have the capacity to buy land as a basis for capital
accumulation, you are much more likely to get rich than simply by
working for wages.
Here again, one can see the connection between Georgist ideas and
Cameron’s politics - reflecting a recognition that honest labour typically
is not the normal source of great personal wealth. The most prodigious
wealth is more likely to come through speculation, for example in land
and other forms of property, than through directly productive personal
efforts.
However therein lies a zero sum game. Buying and selling land doesn’t
actually create value. It may enable individuals to get rich, but it does not
increase the total wealth available to the society. It doesn’t create any
new assets. It doesn’t create any new productive capacity. Rather, it
redistributes how individuals and classes share in the wealth endowment
that results from the use of land for economic and social purposes.
The effects are strikingly evident in Australian cities. As they have
grown, land values have relentlessly increased. In Sydney, for example,
land near the Harbour has experienced prodigious increases in value
during the last few decades, with major surges periodically interspersed
by periods of comparative stability. The real estate interests are
persistently ‘talking the market up’ and the major political parties see
their interest in encouraging steadily inflating values of owner-occupied
housing.
The media invariably refers to the trends in terms of housing prices. But
the lion’s share of housing prices comprises land values. And so if, as a
society, we want to control housing prices in order to keep housing
affordable for the majority of Australians, that has to be addressed with
policies affecting land values. But that’s difficult to do around Sydney
Harbour, for example. There are only a limited number of land parcels on
which people can live, although, with high rise development, the intensity
in the use of that land can increase.
Land is a positional good. It is relatively limited in supply and, as its price
goes up, that benefits the holders of the existing land but does not create
any mechanism for the re-distribution of those increased land values more
generally throughout the society. This gives rise to the all-too-familiar
problems of Australian cities - problems of housing affordability,
problems of growing inequality between the rich areas and the poorer
areas and problems of urban sprawl and transportation stresses. The
problems have been documented in an enormous number of books over
many years. Leonie Sandercock’s ‘The Land Racket’, written over thirty
years ago, comes quickly to mind. There is a whole library, in effect, of
books which document the nature of the urban problems.
In principle, public ownership of land could provide a solution. Of
course, that would not create the opportunity for everyone to live by the
edge of Sydney Harbour - far from it – and the problems of access and
positional goods would still remain. But it would provide a mechanism
whereby increases in land values went directly for public purposes rather
than for private individual gain. The prospect of achieving public
ownership is very limited, however. Once the land has been parcelled up
for private freehold arrangements, the resistance to public acquisition and
the problems of financing compensation payments are well-nigh
insuperable in a democratic society.
Taxation of the revenues generated by land is the alternative mechanism.
Of course, that does already occur to some extent. We’ve got State Land
Taxes, but owner-occupied properties are exempt. So, the State Land
Taxes actually don’t generate anything like the revenue that they could.
That leaves State governments dependent upon an array of other taxes,
such as Payroll Tax which is, in effect, an inefficient impost upon the
employment of labour. Reliance on gambling taxes is equally problematic
because it means that States continue to be addicted to gambling,

notwithstanding the ongoing concerns about problem gambling and the
social need to rein it in. So, if we could shift the balance away from those
forms of taxation onto land taxation that would certainly help many of the
stresses associated with current tax arrangements. It would require a
more broadly based land tax.
That is what, to his credit, Federal Treasurer Wayne Swan said to the
representatives at the national Tax Forum held here in Canberra a few
weeks ago. There was much talk at the Forum about land taxes - which is
rather interesting from a Georgist perspective. Indeed, I cannot recall any
public meeting convened by an Australian Government where Land Tax
got such a good hearing.
One of the drivers of that national Tax Forum was the report of Ken
Henry, the former head of the Treasury. The Henry review said some
quite strongly positive things about the role that a more broadly based
Land Tax should play in comprehensive reform arrangements for
Australia. That was picked up by a number of the public finance experts
at the Forum. Often this was in a pragmatic way - as a means of
generating more revenue so that the State Governments needn’t be
looking for increases in the GST or for more revenue from Payroll Taxes
or Gambling Taxes. But others at the Forum were arguing that it is, in
principle, a better form of taxation than many of the existing tax
arrangements that have grown ‘like topsy’ over the years.
Yet Wayne Swan finished the Tax Forum proceedings by saying, in
effect: you State Premiers had better act on this because I’m not going to.
It was his way of saying – if you State Premiers want more tax revenue to
finance your transport systems, your schools, and your hospitals, you’ve
got the potential revenue base already, if you are only willing to use it.
And that revenue base is a broadly based Land Tax.
But as Clyde Cameron knew, if you rely on the State Governments to
take the initiative, it is unlikely to happen, because no one State is going
to take the lead. It’s only when there is a uniform set of arrangements
across all States that there would be any prospect of a more broadly-based
land tax being introduced. Indeed, progress at the local government level
is the more likely prospect. Local government rates are already, in effect,
land taxes where unimproved land values are the basis of the property
value assessment.
Indeed, my own thinking at the moment is that we are more likely to get
progress at the local government level than at the State Government level,
because at local government there are already comprehensive land taxes.
Local government rating is based typically on unimproved land values,
although not consistently so across all parts of Australia. So the principle
is well established. Unfortunately, however, in the case of local
government, the rates are generally seen only as a payment for servicesfor
the provision of guttering and refuse collection, street lighting and the
like. So the expectation that this can be a mechanism for capture of an
economic surplus and for redistribution to create a more equitable society
sits rather uncomfortably with the current local government application of
the Georgist land tax principle.

Conclusions
In moving towards the conclusion of my remarks, I hope to have
suggested some ways in which we can make progress. There are
enormous challenges to be faced – continuing economic crises, deepening
social inequalities and intensifying environmental threats. But we can
use political economic analysis to identify the roots of these problems and
develop useful responses. For example, following Henry George, the
case for land taxation is well established as a means of pursuing both
efficiency and equity. There are applications of that principle, however
piecemeal, which constitute building blocks on which more
comprehensive reform could be based, if there is the political will so to
do.
In my more optimistic moments I even see some glimmerings of that
political will. That’s why I was talking earlier about the mining tax because
there is a similar principle of developing taxation arrangements
to capture an economic surplus for public purposes rather than for private
wealth accumulation.
If that principle of surplus-capture can be established through a Minerals
Resource Rent Tax, then it starts to become part of our expectations of
the taxation system more generally. It can become part of our
expectations about the way in which governments should serve the public
interest.
Henry George noted a century ago that the contrast between wealth and
poverty was most striking in the great cities where the ownership of a
little patch of land is a fortune. The sheer scale of Australian economic
development today, in the metropolitan areas in particular, should redirect
our attention on to the question of land, its ownership and how incomes
from the ownership of land are distributed. That is a way into
considering how to deal with the widening gulf between the rich and
poor, between the cities and the non-urban areas, and the growing socioeconomic
inequalities, as well as the great environmental challenge.
Unfortunately, governments have left the issue of how to deal with the
privately appropriated surplus from land in the too hard basket. This is
because they evidently fear an electoral backlash from policies that tax
site rents or collect site revenues more extensively. However, unless we
can as a society develop appropriate policies to capture a larger part of
that surplus and use it for social purposes, we are likely to experience
greater social division, deterioration in the quality of the public sector,
and increased inequality between urban and rural areas in terms of their
standards of living .
Reforms involving land taxation have a potentially significant role to play
in these circumstances, notwithstanding significant tensions in
implementing these reforms in an era of increased capital mobility.
Paradoxically, it is that very mobility that makes more necessary the refocussing
of economic policy and tax policy in particular, on a relatively
fixed factor - land.
Congratulations to the ACT branch of the Association for Good
Government on launching the Clyde Cameron Memorial Lecture.
Congratulations on the initiative to form a new Clyde Cameron College
for the study of some of these issues and more. I have brought along
some books today, including some of my own books that I’d like to
contribute to the development of a library for the Clyde Cameron
College. I look forward to all the good things that I’m sure to the CCC
will go on to do in the future and thank you for your attendance and
attention today.

[Long applause from audience]
Chair: Thank you very much Professor Stilwell for a superb lecture.
Thank you very much for those books too. We’ll certainly add those to
our library and I’m sure many people will enjoy those over the years. One
comment that I’ll make before opening to the audience for questions is
that I really appreciated your analysis- “labour, land and love”. That was
certainly the impression that I gained when I met with Clyde Cameron –
that he was motivated by love. I think that economic theories are only as
good as the love that they are mixed in with, as you said Professor
Stilwell. Now to our first question from Ken.


Ken: Thanks very much for a very stimulating lecture. In your last five or
ten minutes you touched on something that I’ve been nursing all through
your talk and hoping that you would come out with it. That is, it isn’t just
land- it’s natural resources- it’s land water, minerals, - heaven only
knows what else. But this surely is a time when you have to think about
taxing mining. There is gold, there is iron ore, there is coal, there is
uranium. All these things are natural resources which are in exactly the
same position as land.


Professor Stilwell: Thank you for that observation. I’ve wrestled with
this because I agree with you in principle that this is the big picture that
we need to keep our focus on- natural resources in general. Certainly, if
we are talking about establishing harmony between the economy and the
environment, we need to take all natural resources into account.
A tension arises I think in that context because, historically, Georgist
political economy focuses on land. Personally, I believe there is a lot of
merit in extending those principles to consider all environmental
resources. But it is (and I’m catching Richard Giles’ eye and perhaps
Faye’s here too) a little contentious among Georgists to argue in that
more general way.
I think it’s one of those big open debates that I would hope to hear more
of within the Association for Good Government and the Clyde Cameron
College. Should I take sides? Yes I will… I’m on your side on this one. I
think there is a lot to be said for not just the reproduction of Georgist
ideas, but their creative extension into natural resources more generally.


Chair: I might just add that Henry George in his books defines land as all
natural resources…


Joffre: My question is regarding the interesting events in Occupy Wall
Street. It’s also become a global movement. We have Occupy Sydney and
Melbourne. How would you recommend that the Georgist movement
could participate in this interesting global phenomenon called Occupy
Wall Street? Because it’s actually about getting the economy back from
the elites that have kept it for themselves.


Professor Stilwell: The Occupy Wall Street Movement, or more
generally the Global Occupy Movement, is a very interesting
phenomenon. There is no obviously unifying principle other than disquiet
about current economic and political arrangements. The Occupy
Movement echoes and develops from the anti-corporate globalisation
movement that began in Seattle about twelve years ago and has erupted in
every other global economic meeting of world leaders since. It spawned
the World Social Forum that began its annual meetings in Porto Allegro
in South America and has now become part of the dissident political
scene world-wide. There are Marxists, there are Greens, there are
anarchists, and there are all kinds of dissidents feeding their ideas and
prescriptions into that world-wide movement. Occupy is building on
those foundations.
Although I see little evidence that Georgist ideas are strongly influential
in this movement, they don’t seem to me to be fundamentally at odds
with some of those other concerns. Certainly, Greens have a natural
harmony with Georgist concerns, because of a common concern with the
management of our resources, the relationship between our economy, our
economic interests and Nature. So I think there is the scope for Georgism
to build closer connections into the Green element in this antiglobalisation
and occupy movement.
But the style of politics is also important. Some people are comfortable
working through parliamentary processes. Others are more comfortable
taking direct action in the streets. Georgists are not generally comfortable
in the latter context: look around yourselves- are we going to go out and
squat somewhere in a public place and have a confrontation with the
cops? I don’t think so. Georgists have usually sought to feed ideas into
the understandings of the world through pamphlets, letters to the press
and educational processes, rather than through taking direct action. When
it comes to political choices we all do what we’re comfortable with- and
so be it.


Chair: Thanks very much Frank. I was in the protest in 1996 up at
Parliament House when the doors got broken in, though I wasn’t actually
in the front line. Frank- I forgot to mention to you what we are doing this
afternoon, now that you’ve come from Sydney, it’s just a short stroll up
the hill…


Michelle: You mentioned towards the end of your talk the fear of
electoral backlash. I’m just wondering if you see that as a continuing
insurmountable problem and what you might do to address it?


Professor Stilwell: The question of the political acceptability of Georgist
ideas has always been very difficult to determine. On one level, if one
accepts Georgist principles the public benefit is obvious, we would have
an economy that would be more stable, that would have more affordable
housing that would live more in harmony with Nature. Yet as soon as you
start to talk about more extensive land taxation it’s not just Tony Abbott
who stands up saying “Big new tax on everything”. There are some more
middle of the road politicians, including Labor politicians, who are very
fearful about anything that can be represented as a tax on the family
home.
The conventional wisdom is that proposing a more broadly-based land tax
is political suicide, that any politician advocating it is dead- perhaps not
physically dead, but certainly out of parliament. The challenge is how to
deal with this conundrum – a policy that ultimately would benefit all,
including homeowners, but facing a short run obstacle because it is so
easy to represent these policies as hurtful to the seventy percent of
Australian householders who are owner-occupiers. Approximately half of
these actually own their property and the other half have the bank owning
their property while there are trying to pay it off with mortgage finance. It
is very difficult to reassure such people that a more extensive land tax is
in their interests.
I don’t have the answer to this conundrum - other than continuing to
emphasise the societal benefit of getting over that political road hump.
But there is no question in my mind that that is one of the reasons why
the Georgist ideas, though logically impressive, have proved difficult to
implement as a political programme. Once you have developed a system
of private land ownership, with people believing that they have got a
stake in increasing land values that grow their own personal wealth, any
attempt to redistribute that wealth more equitably throughout the society
is seen as politically untenable. I think it’s a huge challenge. Here I’m
catching Terry Dwyer’s eye: I don’t know if you are going to refer to this
in your later remarks, but please come up the front, Terry, and give us a
foretaste of how you respond to this challenge.


Dr. Terry Dwyer: It is a very interesting question that Frank has raised.
How do you persuade people to do what is in their interests? Because
time and again you see people act in their short-run interests and against
their long-run interests. But one thought that has occurred to me is that
you could always give homeowners a credit or a deduction against their
income tax. They would see it straight away with their fortnightly PAYG
statements. A credit would say that if you have paid your rent to the
government, to that extent you have discharged your social
responsibilities.
Now at first you’d think what is the point of introducing a tax where you
are immediately giving it back? But a lot of landholders are foreigners
and not resident Australian taxpayers. People do not realise that
Melbourne has become a bolthole for corrupt Chinese communist
millionaires trying to get their money out against the inevitable day when
the party will catch them up for corruption.
There’s a lot of foreign investment in Australian urban real estate and a
lot of it is allegedly owner-occupied. So you would still end up with net
revenue and of course you would give deductions to business people. So I
think you can ease the crunch and get people educated to it.


Chair: Thanks Terry and thank you very much again Professor Stillwell.
If you ever happen to pick up a copy of the Sydney Morning Herald or
the Australian Financial Review and notice that some of the articles are
occasionally in favour of Land Value Taxation, there is a good chance
that those journalists are amongst a very large group of Australians who
have now been through Professor Stilwell’s courses on political economy
at Sydney University. So keep up the great work and thank you very
much again Frank.
[long applause]

Frank Stilwell

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