Above: Where to for Labor in July?
Wasted Opportunity on Superannuation Concessions needs to be 'Put Right' at ALP National Conference in July! Australia Institute data shows a stronger line on reform is needed.
Recently Bill Shorten announced projected reform of superannuation
concessions affecting around 180,000 Australians. ‘The Age’ in particular observed that the two
key reforms concerned
retirees lose tax-free status on annual superannuation earnings above $75,000,
and more people paying 30 per cent tax on contributions.”
Certainly Bill Shorten’s announcement is “a step in the right
direction”, bringing in $14 billion over ten years.
But it is a very modest intake when considered in perspective.
The problem is that Shorten
appears to be ruling out further action on top of this on superannuation
concessions AHEAD of the ALP's 2015 July National Conference.
And more alarmingly: arguably $15 billion out of a total of $50 billion will soon be going to 'the top 10 per cent' income demographic.
Former Australian Tax Office
public servant, John Passant has explained that this means “the top ten percent of income earners get
30% of the tax concessions on super.”
(discussion with John Passant, 22/4/15)
To get that in perspective, the
Australia Institute observed in 2014 that: “The [entire] age pension currently costs
[only] $39 billion”.
Is this really the
best possible use of taxpayers’ money? Does it fulfil the ‘distributive
justice’ test? And given the scale of
the gain to only the top 10 per cent income demographic is it even politically
wise when we consider what else might be done with the money?
A more decisive policy here could fund a suite of progressive reforms: National
Aged Care Insurance; NDIS and Gonski; build the National Broadband Network Fiber-To-The-Premises;
Medicare Dental; address life expectancy crisis for indigenous and mentally
ill; expand mental health services; crisis accommodation for cases of domestic
violence; welfare reform; build transport infrastructure publicly; invest in
public housing to put downwards pressure on property prices and rental costs...
Many of these policies have been
suggested in the ‘For an Equal and Democratic Australia’ document which points the way to the kind
of policy a reforming Labor government could potentially introduce.
Labor needs to
think of policies in terms of tens of billions – not just ‘token policies’
which attempt to win over voters on APPEARANCES only. Further reform of
Superannuation Concessions is ESSENTIAL. As is reform of the broader tax mix –
ideally to bring in new revenue in the vicinity of $40-$50 billion. (about
2.5%-3% of GDP) (modest in the context of an economy valued at $1.6 Trillion)
Right now, with
the mining boom over – Labor is 'on track' to capitalize politically from the
Abbott government’s austerity . And yet
Labor is also ‘on track’ to again introduce austerity of its own in government
should it maintain its inflexible commitment in its National Platform to ‘small
government’. (though probably less severe, and less cynically targeted - you
Specifically the problem is Labor’s commitment to holding
down tax as a proportion of GDP.
Labor must ‘think bigger’ (and better!) than this!!!
These issues MUST
be addressed at Labor’s National Conference in July.
From conversations and research I have become aware that
there are some within the Labor Party who are resigned to (or even in favour
of) the National Conference being reduced to a merely token affair. Shadow Treasurer Chris Bowen, for instance, is
in favour of a more robust and inclusive discussion
of policy at Conference; but on condition that Conference (and the Platform itself) have no binding
influence on policy. (Bowen, pp 122-124)
In a conversation with one colleague specifically (and probably there are more), this colleague was resigned to the notion that
Gonski and NDIS are ‘dead’ in their
original form – presumably because they think the money cannot be sourced for
reforms on a large scale. (the assumption seems that ‘small government’ cannot
successfully be refuted; that we should not even try) Even mild redistributive policies are
apparently viewed by some as an ‘ideological anachronism’ – belonging to an
apparently ‘defunct’ tradition of social democracy.
Just how widespread these views are I cannot tell. But there is a now-long history of Labor
governments (dominated by the Party’s Right)
cutting and regressively restructuring tax, capitulating to the ideology
of small government, and pursuing cynical policies such as assaults on the
welfare rights of sole parents. Top
income tax rates, for instance, have been reduced or eliminated. The tax system has become ‘flatter’. Again, Chris Bowen has come out in favour of
a ‘simpler’ tax system which includes lower Company Tax; which probably translates as a less
progressive tax system. (Bowen, pp 60-67) Though there have been some efforts in the
opposite direction from Labor governments as well; for instance raising the tax
More generally an outlook of pragmatism appears to
make policy a matter of tactical
To summarize, this kind of pragmatism is highly questionable. Bill Shorten was elected to reform the Party;
and part of what people wanted was fidelity to Conference decisions. Shorten
also has to offer his supporters on the Left something - after they were
pivotal in his success. If Labor fails
to deliver on progressive tax, new social programs – and end up implementing
only more austerity – just not as severe
as the Libs - that would show a
lack of conviction and principle. For
instance Gonski and NDIS were immensely popular policies! Dropping or otherwise avoiding strong
policies as a matter of tactical expedience could simply
mean Labor continues hemorrhaging support to the Greens. That would not be 'realism'. It would be both ideological and practical
We are yet to see an outcome, here, however. I hope these views I have encountered are not
as widespread within Labor as I fear.
But it is a debate Labor has to have with itself between now on the
National Conference in July this year.
look at the Rudd/Gillard years as involving wasted opportunity. I look at the
Hawke/Keating years also as involving wasted opportunity also. For example, the "Australia Reconstructed" document suggested something 'Nordic' - but we
got very little of the kind. We need a
Labor Party which pursues an agenda of steady, gradual reform - but appreciable
reform nonetheless. Real (steady)
Progress is needed - not 'one step forward,
two steps back'. So If Labor increases
progressive tax and associated social expenditure and investment by 5% of GDP
over three terms (roughly a decade) - that's a legitimate medium term agenda.
Another thing that really struck me in one
discussion with a Labor colleague was his notion of the rise of a 'wants not needs generation'. In contrast I would hold that the masses are
still concerned with issues of non-negotiable need. That is,
cost of living; housing
affordability; costs and quality of education; threat of illness or need of
aged care for family members. I think my
Labor colleague overstates peoples disengagement from 'non-negotiable-needs'. A
lot of people really are still 'doing it tough'. And they are inclined to vote on that basis! This needs to find reflection in the ALP’s
None of this is likely to change unless progressives in
the ALP begin organizing and agitating now – ahead of July’s National
Conference. Superannuation Concessions
are ‘the elephant in the room’ – and a lack of decisive reform here will
severely limit Labor’s options following the next Federal Election. Labor doesn’t have to ‘lock itself in’. But it is better for Labor to ‘keep its
options open’ rather than lock into minimalist policies which offer very little
real progress. A POLICY of ‘tactical expediency’ is
self-destructive; but tactical decisions
do need to be made during election campaigns.
And for Labor to ‘keep its options open’ there needs to be a Platform which does not irretrievably commit
Labor to small government; a platform which does not ‘lock Labor in’ to merely
token reform of superannuation concessions.
Bowen, Chris, ‘Hearts and Minds’, Melbourne University
Press, Melbourne 2013