above: Labor activists need to mobilise for this year's National Conference to ensure the ALP Platform is altered to allow a modest increase in overall taxation to provide real improvement to social services for the Aged, for the Disabled, and Cost-of-Living Assistance for ordinary families.
Tristan Ewins
15/10/11
Former NSW Labor Premier Kristina Keneally has argued recently that Labor needs to ‘get back to basics’. This doesn’t have to mean dropping a price on carbon or forgetting the rights of minorities. But to actually deliver on cost-of-living pressures before the 2013 federal election, as well as desperately-needed programs for the vulnerable, would require a significant ongoing public investment. The next two years offer the Labor Party the opportunity of delivering real reform, thus reviving Labor’s electoral and organisational fortunes.
The recent tax summit had all manner of people arguing that the wealthy ought pay more tax. Through tax reform, restructuring and the closing of loopholes (including unfair superannuation concessions for the rich) Labor should aim to expand annual social expenditure by at least 1.5 per cent of GDP over the next two years - a little short of $20 billion in today’s terms (in the context of an economy valued at approximately $1.2 t rillion). But this would require a change in the ALP Platform at the Party’s next National Conference, due in December 2011.
Already Labor Senator Penny Wong has warned that with rising pension, health care and aged care demands the Australian government could be “tens of billions of dollars short by 2050”. Meanwhile the National Disability Insurance Scheme (NDIS), if implemented in the near future, in today’s terms would come at an annual $6.5 billion price tag. And yet legitimate demands for cost-of-living relief, for fairer pensions, higher quality aged care and improved disability support and services loom immediately ‘in the here and now’.
Speaking recently to Paul Versteege from the Combined Pensioners and Superannuants Association (CPSA) I was told that “nursing homes are like warehouses for old people.” Now I was already under this impression but I felt it to be a very powerful and accurate metaphor. Usually there is little to do for residents in nursing homes. Even in ‘common rooms’ residents are simply sat down to stare at walls hour after hour, day after day. There is no variety in life, no change of scenery. Usually these facilties are stark, there are no gardens in which to find peace and comfort.
Many of our aged citizens spend years in these facilities, years of acute suffering admist death and awaiting death. Often there is a lack of qualified staff, especially nurses. This means residents can acquire bed sores if not turned at the necessary intervals, and sometimes residents can be left in soiled beds. Food is often of poor quality, and low staff-resident ratios mean that aged care workers do not always check to ensure residents have actually eaten their meals. Malnutrition and weight-loss can compound each other in a ‘downward spiral’. In the past lack of dental care has led to infections and even death. In the future access to information technology will be crucial.
The indignity and suffering of the aged deserves much more attention than it is receiving. An ageing population will demand an increse in funding. But we also need to improve services now, not just ‘tread water’. Crucially, many of us that live to old age will one day need aged care. And so will our families and loved ones.
It is essential that we move away from user pays models in aged care. Despite claims to the contrary the Gillard Labor governemnt is still effectively demanding that aged Australians sell their homes in return for sub-standard care. The mechanism operates like a massive regressive tax. We need to ensure that all aged Australians receive the same very high quality of care on the basis of need and regardless of wealth. And such high-quality universal aged care must be funded progressively, not through what the Combined Pensioners and Superannuant’s Association calls a “pre-death death tax”.
Meanwhile there is some hope on the disability support and services front with Julia Gillard’s annoucement earlier this year of the government’s intent to implement the NDIS. Crikey reports that the scheme will offer “financial cover for services including for respite care, vehicle modification, accommodation support, therapies and prosthetics,” It is “expected to cost the government an extra $6.5 billion a year.”
And yet while the Productivity Commission suggested a 2014 implementation it is not certain that the government will meet this time-frame, with some suggesting a delay of seven to eight years. This simply is not good enough. Properly a NDIS should also involve construction of dedicated care facilities for the disabled who require intensive care so they are not left in aged care facilities in which they are isolated and do not ‘feel at home’.
But importantly the needs of the aged are just as desperate as those of the disabled and their carers. If there is $6.5 billion in additional funds that will be devoted to a NDIS then surely a similar amount must be devoted to improving the quality of Aged Care, supporting carers and removing user-pays mechanisms for poor and working class families. The government could begin with an annual $5 billion injection with more ‘in the works’ for the future.
Then, of course, there is the question: Where is the money coming from?
There could be progressive levies for the proposed NDIS and for aged care – or maybe some kind of single shared levy. And perhaps some of the funding gap could also be met with progressive reform and restructure of income tax. Venture capitalist Mark Carnegie thinks the wealthy (including himself) need to pay their ‘fair share’. Specifically he has suggested at the recent tax forum that 15 per cent extra in tax ought be levied from the wealthy top 15 per cent. Yet Assistant Treasurer Bill Shorten has dampened expectations claiming such measures would be unlikely to be implemented.
Shorten has been an eager proponent of the NDIS, but he needs to start thinking of progressive ways to actually fund and implement the program. And hopefully he will apply the same standards of decency and compassion by popularising a similar program for aged care as well. John Passant has suggested other measures: an inheritance tax, minimum company tax, end capital gains tax concessions, tax trusts as companies, implement land tax for properties valued over $1 million, apply stronger economic rent taxes on mining, banking, and supermarket oligopolies.
Some of these proposals could form part of a more long-term agenda of reform, with Labor aiming to expand the social wage proportionately by 1.5 per cent of GDP per term of government, levelling out after several terms.
Nonetheless, funds levied over the next two years could then be deployed to provide stop-gap services and support in anticipation of a broader NDIS by 2014, with a similar scheme for aged care. Such ‘stop-gap’ measures could be crucial in that the government would be seen to be ‘delivering the goods’. This is always more valuable than promises only ‘for the distant future’.
By locking such investments in and implementing the necessary funding mechanisms pressure would also be applied upon Opposition leader Tony Abbott to maintain bipartisan support. Abbott would appear callous were he to sabotage or obstruct such programs, and in contravention of self-professed Catholic/Christian convictions of compassion towards the vulnerable.
After reform of Aged Care and Disability Support and Services, much of the remaining funds (from an $18 billion pool) could then be dedicated to a major cost of living package aimed at mainstream working Australia as well as the most vulnerable. Tax reform measures as alluded to earlier could be deployed to provide robust subsidies for energy and water in the case of low-middle income households, and for new public housing (increasing supply, and hence enhancing affordability). Broader tax restructure could also benefit these households, and comprise part of the package.
Over the long term, meanwhile, Labor could move to gradually resocialise energy and water, perhaps on a national basis, while moving away from user-pays mechanisms for roads and other essential infrastructure. Lower public sector borrowing costs could be passed on to consumers, while small consumers (individuals, families) would no longer be discriminated against because of lack of market power. Finally, productivity agreements with unions - including retraining and active industry policies - could deliver the best value for the public over the long term while providing justice and security for workers. Such initiatives would thus negate the core arguments for privatisation. Tighter regulation of energy/water over the trasnsitional period necessary for resocialisation could also be an essential part of a cost-of-living package.
Some of this money could also go towards funding the realisation of the Australian Service Union’s (ASU) community sector wage claim, which would make a massive difference mainly for women but also for men, working in that field. This could also lead to an influx of skilled labour and a big increase of morale in aged care.
Finally, the dire need to improve poverty-level Newstart benefits (even in the midst of harsh active labour market policies) demands action. And stricter conditions for the Disability Support Pension need to be reconsidered in light of the reduced job prospects and capacity of those genuinely disabled nonetheless judged able to work in someform.
Some funds could flow to the public coffers by cutting Dividend Imputation from 100 per cent to 75 per cent. Dividend Imputation involves ‘credits’ applied so that dividends are not taxed ‘a second time’ after Company Tax. But the measure – not applied widely outside of Australia – overwhelmingly favours the wealthy and in any case Company Tax rates have been steadily eroded in recent decades.
Partial withdrawal of Dividend Imputation could be crucial in reaching the $18 billion target. John Quiggin has argued for half dividend imputation in the past (which would yield over $10 billion). But getting ‘a foot in the door’ for tax reform (with 75 per cent imputation) could be a precursor for further reform in the future.
Targeting Dividend Imputation like this is a good strategy because, as opposed to raising Company Tax, the costs are less likely to be passed on to workers and consumers through reduced wages and increased prices. As a strategy it would target the ‘rentier’ capitalist class and thus would be a fair and egalitarian measure.
Assuming the implementation of such a reform agenda, even were Labor to lose in 2013, there would be a valuable and lasting legacy of which Gillard, Swan, Shorten, Wong and the federal Cabinet could be proud. Indeed, such programs would comprise a veritable ‘rallying cry’ for Labor’s eroding membership and core support base.
But by actually deliving such a big $18 billion/year package and making a real difference for mainstream working Australia as well as the most vulnerable Labor can still hold hope of victory in 2013.
Ammending Labor’s National Platform this coming December 2011 to enable an expansion of social expenditure by 1.5 per cent of GDP would provide hope for Labor and for Labor’s constituency.
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