above: Treasurer, Chris Bowen and Finance Minister, Penny Wong need to decide between 'Labor Values' or Austerity
Tristan
Ewins, July 31st 2013
For anyone who hadn’t noticed – Buried at the end of a news
story on page nine of the Herald-Sun on July 31st was an announcement to the effect that Labor
was pledging “no changes” “to
superannuation for at least five years”, “locked in” via legislation. Deceitful as always, the Herald-Sun
proclaimed this would prevent “tinkering” via “super taxes”. (this is deceptive because the issue is with
existing TAX BREAKS on superannuation rather than the implementation of any new
tax)
And on the same day on page 2 of the Herald-Sun was the
proclamation that “households face thousands of dollars in higher bills for fresh
food, health and education payments” if the GST is increased and/or expanded in
scope – as demanded by the Business Council of Australia. (BCA)
So what’s the connection between these?
As the China boom recedes somewhat – and with the prospect of
an ageing population - the government is facing a reduction in tax revenues,
including revenue from Company Tax and the GST – at the same time as an ageing
population will increase health expenditures in the context of a narrowing tax
base. Then there’s the fiscal impact of winding back the Carbon Tax. And on top of that you can add the fact that
the country is suffering a massive infrastructure deficit – with business
recognising that crisis – and its impact upon productivity – by demanding that
workers, citizens and consumers pay the price.
According to Grattan
Institute chief executive John Daley extending the GST to education,
health and food “would potentially add $3000 a year to average household
costs.” And the BCA is also looking to
attack organised labour in order to firm up their profit margins.
Malcolm Maiden at ‘The Age’ puts it this way: that “The BCA
wants stronger fiscal discipline and a more flexible industrial relations
environment…” Translated that means:
curtail industrial liberties, remove safeguards for wages and conditions; cut
the social wage and welfare… Maiden also
observes that other moves are also apparently ‘on the table’; perhaps including
massive cuts to Company Tax and a “ceiling on tax revenue as a proportion of
GDP.” (The Age, July 31st)
To put it bluntly: Labor needs to decide WHAT and WHO it
stands for. Does it stand for the traditions of social
democracy? Does it stand for the
vulnerable, and for the low and middle income earners of the working class? Does it stand for social security and social
solidarity? Or does it stand for small government, corporate welfare,
regressive taxation, ‘survival of the fittest’, ‘the top end of town’, and a preference for abstract
economic goals, and increased private dividends and profits – instead
of concrete social goals and
needs?.
Richard Denniss of the Australia Institute has pointed out
that changes to Australia’s income tax regime from before the GFC hit (ie:
since 2006) were costing $40 billion for the year 2013 alone.
And crucially he has made the additional observation that
those superannuation concessions the Federal Government seems so eager to
quarantine will cost about $50 billion a
year by 2016. And according to Denniss that’s
with a dominant percentage of superannuation tax concessions of various kinds
(ie: tax breaks) going to the top 5%
income demographic! This at the same time as the Federal Labor
Government continues austerity against pensioners, and considers further cuts
to welfare and services! (see: (See: http://www.abc.net.au/pm/content/2013/s3758128.htm )
Of course the BCA will look after its own interests, and the
profit margins and dividends of its members.
It will try and push the case for effective corporate welfare: for cuts
in the tax business pays at the same time as taxes and user charges go up for
workers, tax payers and consumers to provide the infrastructure and services
its members benefit from. This – and
also assaults on workers’ wages and conditions – is about shoring up
profit-margins and dividends by increasing the intensity and the rate of
exploitation.
There are points of ‘cross-over’ when it comes to the
interests of citizens, workers and business.
Keeping business generally viable means preserving jobs. But the public interest and business interests
should not always be seen as synonymous.
We should seek BOTH to divide the pie fairly AND to grow it through
technological improvements to productivity, and support for high-wage industry. (ie: NOT by intensifying exploitation through
attacks on wages and conditions)
And we need to retain focus on the social goals that
underscore our economy. That is: not
promoting profit as an abstract end
in itself – but promoting economic activity which adds to the quality of life
of citizens and workers. This
necessarily entails social investment in properly not-for-profit sectors: health care, aged care, public housing,
education for human development – and not just for the labour market. It might also mean reductions in the working
week, and in peoples’ working lives – for concrete human needs that go beyond
abstracted goals of growth.
All sides of politics recognise the infrastructure deficit
and the need “to do something about it”.
It is hurting our productivity – and in so doing hurting both workers
and business. But we have a CHOICE in
the WAY in which we respond to that crisis.
The Labor government can choose a path of austerity –
attacking pensioners, the social wage, the welfare state, and industrial rights
and liberties. Or it can choose to
embrace social democracy more than merely rhetorically – returning to questions
of distributive justice and ‘the social good’.
And Labor can choose to act on those principles of distributive justice
by committing to a gradual expansion of the social wage and welfare state as a
proportion of GDP - instead of embracing
socially damaging ‘ceilings’ on tax and social expenditure. Such ‘ceilings’ would only flow into greater
social disadvantage and injustice - and most likely into infrastructure
privatisation whose inefficiencies hurt both business and consumers.
Notions of the social wage, public infrastructure and welfare
‘crowding out’ the private sector also need to be challenged. A benefit of relative economic abundance is
that consumers can potentially have significant room for discretion in their
spending priorities at the same time as a decent proportion of peoples’ incomes
is diverted into the ‘social infrastructure’ of services, physical infrastructure
(eg; transport, communications, schools, libraries) and welfare – without which
society itself would collapse, or lapse into barbarism. It also means that people can potentially
enjoy earlier retirement ages and shorter working weeks – as technological
improvements to productivity make this possible over time without hurting
absolute material living standards. Though
taxes would need to rise in order to maintain that “social
infrastructure”. (a fair ‘trade off’) The
Nordic countries, and other European countries such as Denmark and the
Netherlands – give us some idea what might be possible.
But in order to pursue such a social democratic vision Labor
cannot and should not ‘hem itself in’ with ill-thought-out five year
commitments on superannuation concessions which do not even have the authority
of a National Conference position behind them!
Also, another hung parliament cannot be completely ruled out,
and the Greens will likely want reform on tax and tax concessions in that
event. ‘Locking itself in’ to such a
position simply leaves Labor open to further accusations of promise-breaking
should reforms and that area become necessary; or are seen as preferable after
a meaningful, inclusive and genuine internal debate.
If removing superannuation concessions, reforming dividend
imputation, and restructuring the broader tax mix can bring in tens of billions
there is simply no need for the kind of austerity Labor is contemplating in
order to return to surplus. What’s more
– Labor can implement such a program WITHOUT harming the low and middle income
demographics which it depends upon for its electoral base. It can aim at a fairer contribution from the
wealthy and the upper middle class. And
through reform of tax, welfare and the social wage – Labor can pursue a
distinctively social-democratic vision of ‘the good society’ which is much
deeper than simply ‘more and more’ private consumption and production –
regardless of the social cost.
But by contrast – allowing social and economic infrastructure
to ‘wither on the vine’ will hurt everyone – workers and business
included. And turning to privatisation of infrastructure
also passes the price of inferior cost-structures on to consumers – including
both citizens and businesses.
Standing for the same agenda of austerity and distributive
injustice as the Liberals – but ‘not quite as much’ isn’t enough to cut it for
Labor; to inspire and mobilise the people we need behind us to win this
election.
ALP activists need to make their voices heard on these
issues: regardless of whether they do so through the decision making forums of
the Right or the Left; and/or through their local branches; and by writing to
their local members. We need to signal
our intention to fight the ‘small government’ template: to stand for social
welfare and social justice; and a distinctively social-democratic vision of
‘The Good Society’.
References: ‘The Age’
and the ‘Herald Sun’, July 31st 2013; and Richard Denniss at: http://www.abc.net.au/pm/content/2013/s3758128.htm
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