Observations in the Wake of the Rudd Restoration

above: Julia Gillard

A Retrospective on the  Gillard Leadership - and Last Chance Policy Fixes for Rudd Labor

i)                    Much to be treasured from the Gillard Leadership: and Rudd’s motives more complex than recognised by some Feminist critics

Recently I read an article claiming that the core issue behind Julia Gillard’s loss of the Labor leadership was a ‘boy’s club mentality’; that is put simply: patriarchy re-asserting itself…  (See:http://www.telegraph.co.uk/news/worldnews/australiaandthepacific/australia/10148541/The-boys-club-always-wins-in-politics-Julia-Gillard-is-the-latest-victim.html )

I think, though, that things are more complex than the author of that article acknowledges. I agree that Rudd took advantage of the ‘blue tie factor’ in response to the Gillard speech. Responding to male resentment following Gillard’s recent speech on the threat to women’s participation in public life, it was a clever ploy – underscoring impressions Gillard was being divisive, and appealing to a mass male demographic which felt threatened by Gillard’s stand.  I agree this was a form of destabilization – and even if effective, it was the [ethically] wrong ‘symbolic tactic’. And I agree there have been men – powerful right-wing men – who have subjected Gillard to constant mockery in order to weaken her authority and credibility – and sometimes in the most debased and sexist form.   And that sexism still comprises a problem in parts of the broader electorate as well.

But this was also personal vindication for Rudd in a way that goes way beyond gender… If Rudd had been ‘done in’ by another man his bitterness was have been just as palpable. Arguably, there was also bitterness in the 'Rudd camp' because it appears Rudd as PM was removed at the behest of Australia’s powerful mining industry – after he had attempted to introduce a Mining Super Profits Tax to spread the benefits of our mining boom… As I’ve said before – both ‘camps’ in Labor tried to set a precedent.  Each side attempted a ‘political scorched earth’ strategy against the other – and that only escalated the division and crisis. That an accommodation and reconciliation was not achieved earlier led us to this point – with the caucus elevating Rudd as their ‘only hope’ due to his consistent ascendancy in the polls.

Importantly – the monopoly mass media in this country (largely controlled by Rinehart, Murdoch etc) exploited the internal conflict to destabilise the ALP.  But now that Rudd has returned he is enjoying a ‘honeymoon’ courtesy of previous ‘oxygen’ he was provided by that very media establishment… But will the media continue to ‘give Labor a fair go’ now?  Some are talking of Rudd reforming the compromise mining tax we ended up with – But what chance of this with Rinehart dominating the traditionally (and still relatively) liberal Fairfax media assets?

IN the final analysis, though, Gillard deserves credit for pursuing education reform, implementing disability insurance, promoting a better deal for low paid workers (mainly women) in the community services sector and elsewhere, and improving diplomatic relations with China. Though there were bad policies too: Sole Parent Pensions reduced; Disability Pension eligibility narrowed etc… Recognition of all this is part of the answer for future healing in the ALP – for the same reason that the former Labor leaderships’ past attempts to ‘airbrush’ the Rudd governmentt’s prior achievements only escalated and deepened the internal conflict… And in any case Gillard DESERVES recognition for her policy achievements under the most difficult circumstances of minority government…

Here’s hoping Labor now has a chance of fending off the prospect of an Abbott Liberal Government – which could be the most right-wing government we have had in decades should it come to pass…

ii)                  Conclusions: Possible Election-Winning Rudd ‘Policy Fixes’ as the ‘Day of Reckoning’ Draws Nearer

above:  Will Rudd take the Opportunity for Bold Reforms that take the Fight to Abbott?

Superannuation Concessions Reform to pay for ETS reversions: and Tax Breaks to pay for wage cuts flowing from Superannuation Increases

To go early? Or go later and maybe reconvene parliament?

I believe it would just be good for Rudd to "get some reforms under his belt" before the election if possible; including restructuring the tax and spending mix in such a way as to pre-empt Abbott... (For example: if we remove superannuation concessions from the wealthy and the upper middle class to pay for winding back the carbon tax to an ETS...)  If we don't do this and Abbott wins - he can use fiscal pressures as a rationale to wind back social expenditure and welfare. So if possible we should get the reforms in place while taking away the Abbott excuse/rationale for austerity. Getting 'reforms under his belt' could also give Rudd more credibility - a concrete indicator of the direction he intends to take Labor should he win the election.

Not to mention we should have an interest in distributive justice for low and middle income Australia regardless of pragmatics. In 2012 Dr Richard Denniss of the Australia Institute argued that removing superannuation concessions from the top 5% would save over $10 billion.   (See: http://www.abc.net.au/worldtoday/content/2012/s3568235.htm )

Meanwhile, today that figure would be significantly higher: and targeting the top 10% demographic would presumably bring in much more.  

So not only could this money pay for an early reversion to an ETS. (which is a very regrettable political imperative)  The removal of subsidies/concessions for the wealthy and upper middle class could pay for an expansion of the Clean Energy Fund. And it could also pay for improved welfare - and make room for tax cuts for low income groups to overcome the effect of the increase to 12% superannuation contributions for these already-struggling families.   

To clarify on superannuation: veteran Fairfax journalist Ken Davidson made the point in 2010 that those on low incomes cannot afford to lose disposable income.  And he has pointed out that the extra employer contributions will largely be ‘swallowed up’ as bosses hold back on wage increases.  (see: http://www.theage.com.au/federal-politics/political-opinion/super-rise-no-blessing-for-workers-20100516-v6az.html )

Davidson is right that today the superannuation industry comprises a private pension system – where risk is privatised – and within a highly inegalitarian framework.  While the Aged Pension was once a great leveler – in the future retirement income will be greatly stratified and effectively discriminate against women, and low income, part-time and casual workers.  The Aged Pension itself faces potential future marginalisation as a second-class, residual system. 

And as Davidson notes there is growing pressure for governments to privatise their remaining assets by selling them to the superannuation funds.   This is presented as saving governments from the need to invest in future infrastructure. But what would the ultimate consequence be?

There remain potential problems, here, even where those funds are union-controlled.  There is the potential that they may increasingly comprise ‘corporate interests’ – which pursue their own particular interest rather than the general interest. 

As the important socialist thinker Eduard Bernstein pointed out as far back as the 1890s - as the “mistress of a whole branch of production” even unions theoretically have the potential to  become “a monopolist productive association…antagonistic to socialism and democracy…”  Here,  “Associations against the community are as little socialism as the oligarchic government of the state.” (Bernstein; pp 114-119, pp 138-141)    Of course there is a difference between Bernstein’s example here, and that of Australian unions – but the theme of general versus particular interest is the same. (the answer, of course, is natural public monopolies where appropriate)

Referring to the Superannuation Industry, Ken Davidson wrote for the Sydney Morning Herald in 2012:

“Specifically, the superannuation industry has its eye on existing water, road, rail and port assets, which are largely monopolies with assured income streams. To reveal what is at stake, assume that, as state monopolies, these assets earn 5 per cent on capital for the government and would be expected to earn 10 per cent on capital for private investors… This means that the assets worth $100 billion on the government's books, would only be worth $50 billion to the private operators if the prices for the services remained the same. The government might get $100 billion for the assets if it allowed the new owners to double prices for the services.” (Read more: http://www.smh.com.au/federal-politics/political-opinion/its-about-time-super-funds-stepped-up-20120729-235y4.html#ixzz2YFLdAnnr )


It is too late to substantially alter Labor’s 12% superannuation promise, and too difficult to sell Davidson’s complex message to the electorate on the eve of the election. Especially when Labor has been selling this policy unequivocally for so long, and many of our supporters are convinced it is ‘free money’.

But the government has options in creating a more egalitarian system.

Again this should involve cutting superannuation concessions for the wealthy and the upper middle class – which could bring in well over $10 billion. (I have no modeling beyond Richard Denniss’s figures ** – but extrapolating from that a minimum of $15 billion seems credible for 2014) And using some of those proceeds, in addition to paying for an early reversion to an Emissions Trading Scheme, and an increased Clean Energy fund - it must also mean further restructuring of the tax mix. Further, it should also involve easing of means tests for some partial self-funded retirees. And what is more, this could involve another real increase in the Aged Pension, and improvements in social wage benefits for pensioners of all kinds. This should include improved cost-of-living subsidies (energy, water), and free or discounted access to the NBN and public transport. Finally, here, the funds released by superannuation concession reform could be ploughed into infrastructure and completely bypass pressures for privatisation.

Concluding, though, the most industrially strong unions could attempt to hold onto their share (ie: the labour share) of the economic pie – even in the context of increasing superannuation contributions from employers - but also in the hope that this could occur in the context of a squeeze on profits, rather than a squeeze on consumers. Whether or not this happens also depends on how profitable and how competitive the economic sectors in question are. Competitve sectors with lower profit margins would have little room to move.

The election is far from over; and neither are Labor’s policy options exhausted even at this late point in the electoral cycle. Let us hope Rudd Labor governs and reforms in the interest of justice and equity for most of what remains of 2013 – and that the consequence is another reforming Labor government.

References:

Allison Pearson from ‘The Telegraph”

http://www.telegraph.co.uk/news/worldnews/australiaandthepacific/australia/10148541/The-boys-club-always-wins-in-politics-Julia-Gillard-is-the-latest-victim.html

Bernstein, Eduard  “Evolutionary Socialism”, Shocken Books, NewYork, 1961

Ken Davidson at ‘The Age’ and the SMH::

http://www.theage.com.au/federal-politics/political-opinion/super-rise-no-blessing-for-workers-20100516-v6az.html )

http://www.smh.com.au/federal-politics/political-opinion/its-about-time-super-funds-stepped-up-20120729-235y4.html#ixzz2YFLdAnnr )

** Denniss argues removing superannuation concessions from the top 5% income demographic alone could bring in $10 billion in 2012; For my purposes I am assuming the top 10% should be targeted in the reforms I am suggesting.

Rhetoric and Reality - Labor must stand up for Sole Parents

above: A photo of the author, Denise Allen

In this latest 'Left Focus' article former Labor MP Denise Allen takes the Federal Government to task for its Sole Parents decision - but applauds Julia Gillard's stand against Abbott.  Cuts in the Sole Parents Pension will mean much hardship for our most vulnerable families.

Left-leaning people interested in progressive debate are also welcome to take part in our 'Left Focus' Facebook group - where among other things we promote new  posts at the blog, and debate important social themes and issues of the day. See:  http://www.facebook.com/groups/58243419565/



by Denise Allen,  October 2012

Some days the Prime Minister and the Labor Party make you so damn proud you want to shout it from the rooftops.

Last week for example, when our strong and inspiring Prime Minister ripped Tony Abbott a new one and called him out for the sexist bully he is.

It was a day all Australians, regardless of whether you like or support the PM or not – a moment in political history – no one will forget in a hurry.

It makes so many of us Labor supporters proud when the Prime Minister announces new wide sweeping progressive reforms like the NDIS, Carbon Pricing, Aged Care reform and the Gonski Report. Progressive Labor Party reforms akin to the Whitlam Governments Medicare and University reforms.

But on that very same day last week, without very much fanfare, the Labor Party passed – with the help of the Coalition – a continuation of a Howard Governments policy to reduce the income of single parents. 

This Single Parent Pensions Bill is one of the most regressive policy platforms ever introduced by a Labor Government.

This bill, by reverting the Single Parent Payment to Newstart allowance once the youngest child turns 8, reduces the income support of a single parent by up to $100 per week, in some cases more.

That said – it is a slight improvement on the similar policy the Howard Government introduced in 2005 and effective July 1 2006 whereby Supporting Parent payments reduced to Newstart allowance when the youngest child turned 6!

It is designed to coerce single parents back into the workforce.

Now I fully understand that there are many single parents in our society who do not attempt in any way to seek work regardless of the age of their children. But these people – both women and men – are in the minority.

Some are relatively uneducated, have very poor social and employment skills and even if they did have reasonable skills, many live in rural areas where employment vacancies are almost non-existent.

On the other hand, there are many single parents living in the city where rents are exorbitant; transport costs; after-school care costs are an added financial burden.

Taking away up to $100 per week, reduces a single parent’s ability to seek work or re-training and to function as a healthy, happy parent.

The stress that is going to be added to their daily struggle is going to be enormous.

I believe there should be “carrot” not “sticks” to encourage single parents into the work force.

Encouragement should be given to single parents to gain skills by returning to school, through our TAFE system (although now the Bailleau/O’Farrell/Newman Governments have slashed funding to TAFE’s that is going to be so much harder as well) or to enroll in a University.

How a single parent will be able to afford to do that now their income will be reduced by up to $100 per week is questionable – (especially given the funding slashes to TAFE’s).

How will someone without a car manage?

How will someone without extended family support manage?

How will someone who already pays exorbitant rent manage?

What if they can’t get a job for months/years on end no matter how hard they try?

Were these questions even considered when this legislation was being considered?

Whose idea was this to crucify struggling single parents even further?

If the Government is so desperate to find an extra $700m per four years why then didn’t they have the courage to finally attack the rort that is negative gearing, a wealth creation system for wealthy people?

It is true that some people only understand money as a motivation to do anything.

But instead of taking money away from single parents that they use for their everyday living costs, why not offer incentives akin to the baby bonus?  If Governments can offer a baby bonus handout and provide extremely wealthy private schools with huge publicly funded handouts, why can’t they come up with a policy that is more “carrot” and less “stick”; where single parents are encouraged to succeed, not threatened and deprived of vital dollars with which to raise their children on a daily basis.

Those who will scream the loudest about “lazy single parents” are the very same people who will still put their hand out for every subsidy at every opportunity. I have never seen or heard of anyone saying “No thanks, I don’t need the baby bonus” or a wealthy private school say “No thanks, we don’t need taxpayers money to build new a rowing course or swimming pool”…. “let the Government keep it for other more worthy causes.”

I expect this sort of policy from Conservative Governments as it is par for the course for them but not from a Labor Government.

A very wise person once told me that “Governments, in the race to be the ‘best economic manager’ make decisions from a economic rationalist point of view, and in doing so loose all humanity and compassion.  Saying they are “good economic managers” is rhetoric Governments of both persuasions bang on about all the time. The real challenge in being a good economic manager is implementing socially responsible policy that is passionate and well managed.”

This is not socially responsible policy.

It is cruel, heartless, regressive policy that will put many single parents further under the poverty line.

I want to see policy that will assist and inspire single parents to aspire to better opportunities.

This does not do that.

I would expect it of Conservatives but not the ALP.

(As an aside – I am yet to hear Tony Abbott give a commitment in blood to wind back this policy. Seems as far as Mr. Abbott is concerned, it is an outrage to tax multi-billion dollar mining oligarchs and put a price on big polluters spewing filthy toxic waste into our atmosphere, but its ok to reduce the income of some of the poorest, most struggling people in our society.)

Denise Allen 

Political/Social Commentator

Political Strategist

Disability Advocate

Former Vic State MP for Benalla

http://denniallen.wordpress.com

Carbon Tax Package finally Unveiled

above:  Julia Gillard announcing the government's Carbon Tax package

Julia Gillard's Carbon Tax package has suffered a very critical reception despite extensive compensation for trade-exposed industry and low-middle income households.  So how will the tax work to reduce emissions?  And what are we to make of charges of 'redistribution' made by Abbott and others?  In any case - is 'redistribution' such a bad thing?

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Tristan Ewins

12/7/2011

In the face of an almost all-pervasive fear campaign, what is the truth concerning Gillard Labor’s carbon tax?  How will it really be implemented? Who will it affect – and how?  Can it succeed in its object of restructuring the economy?  Does it involve elements of economic redistribution; and if it does, is that necessarily a bad thing?

According to ‘The Age’ (11/7) The Gillard government’s carbon tax will provide “tax cuts for those on incomes under $80,000” leaving “6 million households better off or fully compensated.”

Peter Martin has noted how “for more modest earners, the benefits are large: $626 a year for a single earner on $20,000; $1226 for a dual-income couple with two children on $75,000.”

(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)   

The most intensely affected areas of the economy will be energy generation and distribution. 

 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.”

But:

“The price of food is expected scarcely to move, advancing less than one-half of 1 per cent.”

(Read more: http://www.theage.com.au/environment/climate-change/cuts-for-everyone-but-some-worse-off-20110710-1h8zv.html#ixzz1Rmkguly2 ) 

The response from the Conservative side of politics was predictable.  Tony Abbott argued:

“[This is] socialism masquerading as environmentalism… This is redistribution pretending to be compensation.  It’s a tax increase pretending to be an environmental policy.”  (‘The Age’, 11/7/11, p 1)

And in the Herald-Sun in Melbourne reporter Steve Lewis seemed to be echoing Abbott by referring to tax cuts for struggling lower-income workers as a “classic ‘soak the rich’ Labor program.” (11/7, p 7)

In assessing the government’s policy it is best to respond to the claims of critics directly.

But to begin we should first return to basics: and that is recognising the virtual consensus in the global scientific community that global warming is real, and that carbon emissions by human beings contributes to this.   

So to what extent will the carbon tax and associated programs add up to a reduction in emissions?

The carbon tax will give a strong market signal for both investors and consumers to reduce emissions however practicably possible.   Indeed, Prime Minister Gillard has stated that this will result in:

“a reduction in carbon pollution of 160 million tonnes by 2020. [That’s] the equivalent of taking 45 million cars off the road.'” (See: http://www.skynews.com.au/topstories/article.aspx?id=636042&vId= )

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

“some carbon tax revenue will also be spent buying out and shutting down about 2000 megawatts of coal power, most likely either the Hazelwood or Yallourn power plant in the Latrobe Valley, plus the smaller Playford station in South Australia.”  (See: http://www.theage.com.au/opinion/politics/gillard-makes-tentative-steps-towards-a-greener-cleaner-future-20110710-1h8zu.html#ixzz1Rmn33ELS )

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.

So before we even begin to address accusations of “socialist redistribution” we need to observe that price signals and direct intervention will make significant inroads into Australia’s carbon emissions, and as such is well-justified on environmental grounds alone.

That said, however, Abbott and right-populist elements of the media are raising alarm at the prospect of even mild redistribution via the chosen structures for compensation via direct payments and restructure of the tax system.

 In Melbourne on July 11th the Herald-Sun alone ran the headline ‘Kick in the Teeth for Hard Workers’ referring to a family on a combined annual income of around $130,000.  Another article in the same Herald-Sun supplement concerned ‘Sparkie’ (ie: electrician), Luke Peterson, who earns $150,000 - with his partner remaining at home to raise their children.  In this instance the headline ran: “ ‘Punished’ for wife staying at home with kids’.”

 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.

This raises the question that if action must be taken on climate change, how should we balance the burden?  The principle concerned could also be extended to other necessities: for instance, provision of health care, education, aged care, social housing, welfare and infrastructure.

Many Australians work hard for comparatively little return compared to the Herald-Sun’s chosen examples.  There are some dual-income households – with members employed in cleaning, retail, childcare, hospitality, textiles, and manufacturing – who bring in barely $50,000 before tax.  To speak of ‘punishment for effort’ for higher income households, and yet to prefer putting a disproportionate burden upon these families - would be revealing of the priorities and values of those concerned. 

In the labour market scarce skills usually bring in greater return, but many of these lower income individuals and households work under unpleasant and alienating circumstances – and with sometimes inconvenient or onerous hours.  In Australia, also, there is a recent history of falling minimum wages being compounded by housing market stress, past regressive restructure of tax, and increased energy costs as a consequence of privatisation.  It is not at all radical – or necessarily ‘socialist’ – to support a degree of redistribution to compensate those Australian workers and pensioners affected by these trends.

 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. 

Finally there are the truly vulnerable: those who are unable to work as a consequence of illness or disability. Or those who have worked all their lives and deserve a peaceful and fulfilling retirement.  And to this we could add the unemployed: those who overwhelmingly are searching for work – and are subject to harsh active labour market provisions – but who need our assistance to ‘keep their heads above water’ and avoid social disengagement and isolation during the interim.  (such isolation can provide a ‘self-fulfilling prophecy’ of long-term unemployment)

 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.

All this said, there are dangers for Labor. In regions such as the LaTrobe Valley in Victoria there are well-grounded fears that the shift to renewable energy will ultimately cost jobs in coal-fired energy, and as a consequent will destroy many ‘flow on’ jobs which use that industry as their economic base.  Hazelwood power station is very likely to find its operations scaled back.

According to ‘The Age’ Greg Combet has announced that the LaTrobe Valley alone will receive “a $200 million package over seven years for ''strongly affected'' regions, with help in training and diversifying.”   But in the same article Electrical Trades Union state secretary Dean Mighell is quoted as arguing more needs to be done to create local jobs. This begs the question of whether government ought ‘get its hands dirty’ with more direct industry policies – reforging the ‘economic base’ in the LaTrobe valley and other affected regions – which would ‘flow on’ in maintaining thousands of other ‘peripheral’ jobs. 

(See: http://www.theage.com.au/environment/climate-change/brown-coal-cloud-of-doubt-hangs-over-latrobe-valley-20110710-1h8zg.html#ixzz1RnEZ7q9D)

And in another concern, the Financial Review has reported an impending $4 billion ‘budget toll’ over the next four years in order to pay for industry and household compensation.  Labor is flagging its intent to make ‘savings’ in order to reach its projected surplus for 2013, but had already been struggling to find savings for 2011-12 without impacting on crucial programs and initiatives.

(See:http://www.financialreview.com.au/p/national/gillard_carbon_blueprint_gfV7V7WexwrES8lrl47yaI )

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 GDP.

 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 Australia way short of Company Tax rates in the United States.  Another option could be a modest reduction in dividend imputation to 75%.

 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.

But by putting implementation off until mid-next year Labor is giving time for fear and anger to fester. All those political, environmental, industrial and social movements which support the policy therefore need to begin a mobilisation immediately if the situation is to be saved.  An information campaign involving all these movements needs to begin, even including advertisements and letter-boxing – as surely as if the election were this year.

Double Standards when its comes to talk of ‘Class War’

above: Prime Minister Julia Gillard

Increasingly - in the Murdoch press especially - there has been talk of 'class war' in response to even modest proposals for progressive economic redistribution.  But redistribution against the interests of the disadvantaged and ordinary struggling workers has been going on for decades; intensifying under Liberal governments.  In this article Tristan Ewins works to illustrate that point, showing such examples as the increasingly regressive tax mix, and falling minimum wages.  Ewins argues for Gillard Labor to be brave in pursuing distributive justice for the disadvantaged, and orindary struggling Australian workers.

Tristan Ewins

June 26th 2011

In a column appearing in both the Herald-Sun and The Daily Telegraph recently Miranda Devine has had another go at Julia Gillard and the carbon tax.

Condemning Gillard and the proposed tax, she characterises it as:

“Wealth redistribution, pure and simple. A year on, there’s no secret what Gillard stands for. It’s just no one can believe it.”   http://blogs.news.com.au/dailytelegraph/mirandadevine/index.php 

And this isn’t the first time Miranda Devine has used such language either.

For instance in the Herald-Sun on May 12^th 2011 she beats up the spectre of “class war taxes” in response to Labor’s Budget. ( see: http://www.heraldsun.com.au/news/special-reports/federal-budget-2011/story-fn8melax-1226054252544   )

 In response:

Briefly, the main aim of the carbon tax is to create market signals to drive changes in investor and consumer behaviour: to do our part (as all nations must) in reducing emissions .

But that established: it is possible that modest distributive goals could be pursued as a by-product of overcompensation. And why not?

This brief article will consider inequality, redistribution and the double-standards at play with language of ‘class war’ which has been so common recently.

It’s interesting, isn’t it, how attempts to tax the wealthy and relatively wealthy – to give a fair go for ordinary workers and the poor; or improve the wages and conditions of the most disadvantaged workers – is labelled “class war” in the right-populist monopoly media. And yet all these years that Australia has been drifting towards greater polarisation of wealth and income, and greater disadvantage for the poor: this has not aroused the same kind of ‘outrage’.

The wage share of the economy has been falling for decades; with an accompanying intensification of the rate of exploitation. 

Larvatus Prodeo reported this year that the wages share of national income was at its lowest level since 1964; slightly over 52%.  And to be fair the wage-share of the Australian economy had been contracting for decades under both Labor and Liberal governments; as the leadership of both parties accepted the notion that wages need be depressed to restore profitability.

See: http://larvatusprodeo.net/2011/01/06/labour-market-myth-busting/]  ;  And: http://mattcowgill.wordpress.com/2011/01/03/the-state-of-the-labour-market/

Yet if structural forces in the capitalist economic system were driving these changes; why then were workers not at least duly and properly compensated with collective capital share? 

 Even under Hawke in the 1980s, celebrated increases in the ‘social wage’ came in the form of tax cuts; and so necessarily led to a smaller pool of funds for welfare and services. A veritable ‘double-edged sword’.

But there is more. 

Under both Labor and Liberal governments – but especially under the Conservatives - the ‘tax mix’ has been restructured as to be less progressive. Income tax had been gradually ‘flattened’. Dividend imputation has reduced the proportionate tax burden of the wealthy; and the GST in taxing consumption has affected the poor disproportionately. Accompanying compensation for lower-income demographics, here, was largely neutralised by regressive restructuring of the tax and welfare mix elsewhere.

Meanwhile, concessions and incentives in superannuation for the relatively wealthy and the outright wealthy have come at the cost of potential social programs in health, education, aged care, infrastructure and welfare.  

Privatisation of retirement pensions may well lead in the future to the marginalisation of the public aged pension, with impoverishment for many women, and those disadvantaged whose labour market participation has been sporadic, or who have been trapped in ‘low-end’ jobs. 

It begs the question of whether the government should rather be pursuing a more progressive and democratic model of collective capital formation.

Furthermore for decades there has been increasing labour market deregulation, and an end to the old style of progressive cross subsidies for essential utilities as a consequence of privatisation – or of corporatisation in-anticipation of future privatisation.

Privatisation has also resulted in falling government revenues for vital social programs, and increased costs for everything from power and water, to the use of private toll roads.

‘User pays’ ends up having the same effect as regressive-flat taxation.  And demand for increased profit margins with privatisation have seen structural increases in the cost of basic necessities; while the added cost of borrowing for the private sector in order to modernise infrastructure has also been passed on to consumers.  And in these new markets – eg: for power – ‘small consumers’ are disadvantaged due to their limited purchasing power.

With regard to minimum wages, recently the ACTU has noted:

“While the average Australian income has jumped 21 per cent in real terms since 2000 and company profits have increased by 50% in the past five years alone, the real value of the minimum wage has increased just 7.1 per cent.” 

And also importantly during the Howard years:

“Average award wages dropped by around $30 a week and some award workers had their real wages cut by almost $100 a week.”

The ACTU has observed that falling minimum wages have affected over 1.4 million workers in recent years.  (See: http://www.actu.org.au/Issues/MinimumWagesCase.aspx )

And in addition to all this -  there are many workers – including on low incomes – who have faced reduced wages and/or conditions under the government’s ‘Award modernisation’ process – despite promises to the contrary.

Importantly: There are many who have no sympathy for the unemployed as a result of constant campaigns of vilification on the pretext that ‘dole-bludging’ is rife. And yet Australia has stringent active labour market policies, pursued under both Labor and Liberal governments, with provisions that could reasonably be described as ‘punitive’.

Under recent changes long-term unemployed will be compelled to work two days a week ‘for the dole’, and yet no corresponding increase in payments for these people has been announced.  http://thecourierpigeon.com.au/government-gets-tough-on-the-unemployed/851664/

The OECD has seen fit to criticise Newstart as woefully inadequate compared to unemployment pensions elsewhere.  Writing in late 2010 for ‘Inside Story’, Peter Whiteford reported how under Newstart “unemployed adults receive about $470 per fortnight”, and how  

“Since 1996 the level of Newstart for a single person has fallen from around 54 per cent to 45 per cent of the after-tax minimum wage.”  (despite the fact minimum wages themselves have fallen)

(see:  http://inside.org.au/why-unemployment-benefits-need-to-be-increased/ )

Finally, during the Howard years a number of programs sprung up that were lambasted as ‘middle class welfare’. Included, here, were Family Tax Benefits ‘A’ and ‘B’ – introduced to assist in the costs of child-rearing- and provided even to those on high incomes. http://en.wikipedia.org/wiki/Child_benefit

There has been confusion, here, on the Left, with some arguing in favour of ‘universalism’.  But while many of us (this author included) support in-principle Swedish-style social-democratic universalism, the facts ‘on the ground’ in Australia are those of a relatively tight social wage and tax regime.  With a limited scope to expand progressive taxation, and hence expand welfare and social programs - a higher degree of targeting and means testing is necessary in the Australian context.    

Interestingly, though, Bernard Keane notes at ‘Crikey’ how Labor has failed to markedly reform the Family Tax Benefits regime.  He concludes how:

“In [Labor’s recent]…budget…[Family Tax Benefit payments are] forecast to cost $18 billion in 2011-12.”

And thus

“…FTBs are now Labor’s as much as they are Howard’s, which makes the “war on the middle class” rhetoric from News Limited and its journalists even more risible.” http://www.crikey.com.au/2011/05/12/why-labor-now-owns-middle-class-welfare/

All these years ‘redistribution’ has been going on.

Redistribution from low and middle income earners to the wealthy, and to the upper middle class. 

Redistribution from workers to the ‘corporate bottom line’ as a consequence of eroding real wage share, labour market deregulation, privatisation (including ‘Public Private Partnerships) and user pays. 

And more redistribution from workers to big corporations with effective ‘corporate welfare’, as corporations no longer contribute adequately or proportionately towards the costs of education and infrastructure from which they benefit.

 There has been impoverishment of pensioners – and especially the unemployed. (again I reiterate: despite stringent and indeed punitive active labour market policies)

 And there has been vilification of trade unions and stigmatisation/criminalisation of industrial action even where only used as a last resort.  This has resulted in a greatly reduced capacity for workers to fight back in the face of these changes.

So amidst all these changes over the past thirty years or so: how often have we heard terms like ‘class war’ thrown around in the mass media as a response?  

The answer: Not often. Not often at all. 

And yet if there is the prospect of  even a mild degree of redistribution in the context of overcompensation for the proposed carbon tax, the ‘class war bogey’ is brought out just as it always is when it comes to the interests of the privileged, and the relatively privileged. 

If those on lower and middle incomes are to receive a ‘fairer slice of the pie’ in terms of the tax mix, provision of social services, and welfare for those in need, it is only reasonable that those in the top 20% of incomes demographic pay their fair share one way or another.  If those on low to middle incomes are to enjoy a ‘fair go’ it can be no other way.

That said, Prime Minister Julia Gillard has recently announced that families on incomes above $150,000/year will miss out on carbon tax compensation. That’s roughly 10% of Australian families. (‘The Age’ 25/6/11)  

 Unfortunately – as far as redistribution via overcompensation goes, the kind of strategy it seems Gillard is suggesting would provide a far shallower pool of funds to work with than would be the case were the top 20% incomes demographic excluded. 

Perhaps given this context pensioners will miss out on overcompensation even under Labor; and those on low to middle incomes won’t receive the more robust degree of overcompensation they deserve.  This could prove a missed opportunity for Labor – in maximising the reconsolidation of its ‘class base’.  Although doubtless Gillard sees it as a strategic choice to keep more voters ‘on side’.

Nonetheless, perhaps it’s not too late for compromise. Perhaps if pressured by the Greens and Labor’s Left Prime Minister Gillard could strike an agreement to withhold compensation for the top 15% of households, to be redistributed to those genuinely ‘doing it tough’.  A higher carbon tax rate in this context could be another option - an alternative to lower compensation 'cut-off thresholds' - to increase the total pool of funds available for redistribution from the top 15% to those in genuine need.

Regardless of the very cautious and modest nature of Gillard’s proposal, doubtless it still will not please critics such as Miranda Devine, and other Murdoch writers.  Devine seems to have an aversion for the very concept of progressive redistribution – no matter how mild.  But as far as this author can tell she has barely considered the situation of those who have been left disadvantaged by decades of “neo-liberal reform”; and the very real process of redistribution which has occurred to the detriment of workers and the poor.   Indeed: After all these years of redistribution from low and middle income groups TO the wealthy and the upper middle class, the modest forms of progressive redistribution suggested here should simply be seen as a tentative move towards some kind of 'correction'.

Yes Labor is struggling in the polls. Elements of Labor’s core class support base have been drifting away gradually for a long time under the perception that Labor no longer represents their interests.   But the prospect of progressive redistribution to the advantage of the vast majority of Australians who are on low to middle incomes is what the conservatives are scared of.  They’re afraid of a Labor Party which takes action to re-consolidate its class base.

By contrast when the Conservatives speak of cutting taxes to reward ‘hard work’, they’re usually talking of ‘relief’ for those on higher incomes. The underlying assumption is that ‘the market is just’: that those on higher incomes deserve increased benefits for their effort.  The implication is that they work harder than others. 

 But in an Abbott ‘tax reform’ package, you can be certain that it is those on low incomes – including some very hard working people – who would miss out in outright terms compared with upper-middle class and wealthy taxpayers. 

We speak here of people on minimum wage and thereabouts: cleaners, child care workers, retail and hospitality workers, textiles workers, and many manufacturing workers.  These are the same people who would suffer from a winding back of the social wage, or the effective introduction of ‘flat taxes’ with user-pays mechanisms in the context of Public Private Partnerships.  And Abbott’s proposed tax cuts must draw from the Budget bottom-line somewhere.

Too many people have been disadvantaged and suffered injustice in recent decades. And it is a process which always accelerates under Conservative governments.

Increasingly, though, there are those who once felt they could depend on Labor to defend their rights and interests – who no longer believe this to be true.  This is even undermining Labor’s membership base; its mobilisation as a social movement.   

Now, though,  is Labor’s opportunity to re-establish its credentials as a party with values; a friend of the disadvantaged, and true to its class base.