(see: http://www.theage.com.au/environment/climate-change/cuts-for-everyone-but-some-worse-off-20110710-1h8zv.html#ixzz1RmjetGLR )
Some of this compensation will be provided for by a restructuring of the tax system.
For instance; the tax-free threshold will be “more than trebled to $18,200”. And individual pensioners will receive compensation of up to $338 a year; with up to $510 for couples.
Furthermore: $9.2 billion will be provided in the form of business compensation over a three year period – aimed largely at trade-exposed industries
But “more than three million households” – those on the highest incomes - will lose out to some degree. Some will only be partly compensated. Around “one in ten” – the wealthiest of all - will receive nothing. (‘The Age’, 11/7, p 1)
Again, Peter Martin has noted how:
“From mid-next year, the price of electricity will rise a further 10 per cent as a result of the carbon tax and the price of gas a further 9 per cent.”
(Read more: http://www.theage.com.au/environment/climate-change/cuts-for-everyone-but-some-worse-off-20110710-1h8zv.html#ixzz1Rmkguly2 )
Businesses will seek energy-saving measures, while households will do likewise – and also consider investment in renewable energy. Indeed, there could well be a boom in the micro-renewable energy sector. Overwhelmingly this will occur without financial pain for middle and low income households - as with compensation the main aim is to provide the market with a ‘price signal’ and not to raise revenue.
Meanwhile a “$2 billion-a-year Clean Energy Finance Corporation” will drive investment for research and development of clean energy technologies. In this field Australia stands to become a genuine ‘world leader’. ( see: http://www.theage.com.au/opinion/politics/gillard-makes-tentative-steps-towards-a-greener-cleaner-future-20110710-1h8zu.html )
Finally, Adam Morton from ‘The Age’ has noted how
Morton has also observed how:: “the money to shut the plants will be from tax revenue paid by ''big polluters'', not budget cuts that reduce services.” (See: http://www.theage.com.au/opinion/politics/gillard-makes-tentative-steps-towards-a-greener-cleaner-future-20110710-1h8zu.html#ixzz1Rmn33ELS )
This is absolutely crucial because Tony Abbott has committed to expensive forms of “direct action” on climate change running into billions and billions - which would be paid for through savings elsewhere in the Budget. Refusing to submit his proposals to Treasury for costing, Abbott must nonetheless be aware that his proposed initiatives could not be funded simply through “efficiencies”. They would inevitably involve austerity measures. Perhaps these would apply in health and education; or perhaps through further privatisation of roads and imposition of flat ‘user-pays’ tolls - for which working class Australians would pay.
Like several previous articles in the ‘Herald-Sun’ accusing Gillard Labor of ‘Class War’, these articles attempted at the same time to portray higher income groups as ‘average working Australians’ being ‘punished’ for effort. Indeed the term ‘Sparkie’ could be interpreted as a colloquialism inferring working class status.
But both the households considered in the Herald-Sun articles concerned would occupy a position in at least the top 20% of household incomes. A single-income household with one income-earner bringing in a $150,000/year income would not be considered by most as ‘working class’ – colloquialisms aside. Indeed, in this day and age few households servicing a mortgage and raising a family can afford for one partner to remain at home.
And while there has to be reward to give incentive for workers to acquire skills, other ‘middle income’, ‘average’ individuals and households also deserve a ‘fair go’. A worker on a wage of, say, $50,000/year should not be paying the same kind of tax as a worker on $150,000/year. Under circumstances where both workers were applying themselves with comparable levels of effort and effective sacrifice, skill differentials alone do not justify massive discrepancies in income.
A progressive taxation system is therefore well justified in moderating discrepancies of income which are unjust, and ensuring universal access to social necessities . And the tax system more broadly is justified in providing best-value ‘collective consumption’ of essential social services from which most Australians benefit. Again: whether we speak of health, education, aged care, social security, social housing or other infrastructure – often these are provided more fairly and more efficiently via the ‘social wage’ than would be the case if ‘left to the market’.
Such principles have historically been acceptable to a variety of ideological perspectives – whether we speak, here, of liberalism, or of social democracy, or indeed of socialism. It is only at the extremes propagated by the likes of Hayek and Rand – that the principles of progressive taxation, the welfare state and the social wage – have been rejected sweepingly. But such is the ideology which ‘has a grip’ on some parts of the Liberal Party of Australia today. It is an ideology which threatens the ‘Americanisation’ of Australian society, with greater extremes of poverty, and a lack of basic social solidarity. And it is an ideology that needs to be criticised explicitly by Labor.
According to ‘The Age’ Greg Combet has announced that the
Between now and the next Federal Budget, therefore, progressive forces across the factional divide in Labor need to build momentum behind an alternative response for the government to this shortfall. Importantly, Labor has the choice of revising its party platform in December to open the way for a moderately increased tax take as a proportion of
Such a decision could be followed with modest tax reform to the extent necessary to avoid austerity, or to the extent necessary to fund a bold package of initiatives addressing what is seen in this country as a ‘cost of living crisis.’ This would also attract the charge of ‘redistribution’, but there is the potential that by improving the circumstances of average Australian families this is a debate Labor could well win. Indeed, that could properly be the object of an article in of itself.
A ‘National Disability Insurance Scheme’ is another potential choice for Labor in seizing the initiative and delivering on a reform agenda – but would also need to be backed by tax reform and increased revenue. That would be another reform Abbott would find very difficult to undo.
One option in this context could be a 1 per cent increase in Company Tax – which would still leave
In conclusion, Labor has a long way to go in convincing voters of the merits of this carbon tax package. What is interesting is that Gillard’s carbon tax package is very similar in its dimensions to the earlier proposed Emissions Trading Scheme. But what is notably different is the word ‘tax’.
The fear campaign spread in the right-populist monopoly media has found its mark. And many Australians are angry that Gillard is exceeding her mandate in this way – despite the fact she has had no choice in the context of minority government.
This will only change once the package is implemented and most people see for themselves they are no worse off. Most Australians will only pay with the costs of structural adjustment being passed on over the very long term. We talk here of large-scale future investment in renewable energy. But the same could be said with Abbott’s ‘direct action’ – where the costs of industry adjustment could be paid for with direct subsidies from tax-payers: paid for via sweeping austerity.
And yet we all should be willing to make small sacrifices in fighting climate change – for the sake of our planet, and for the sake of our children. If all comparable nations also refused to take action the effect would be to cripple the global movement to address this crisis.