Talking about Aged Care

The following article by Tristan Ewins examines the huge deficit of Aged Care services in Australia; and the need for progressive tax reform to fund a radical improvement in the sector. The author regrets that Aged Care did not seem to have been prioritised by the Greens in a recent survey: but is hoping this will change with a shift of policy by botht the ALP and the Greens.  At its conclusion, the article also includes a response to ALP activist Daniel Pocock on the question of the appropriate funding mechanisms for Aged Care and similar social services.  At the Facebook 'ALP Socialist Left Forum' page Brenton Baldwin has argued that Aged Care will be a priority for the Federal Government in the coming Budget.  Let's hope they get it right!

by Tristan Ewins

The Greens are to be applauded for their recent web-video putting the case for a reformed Mining Tax to fund social welfare and services, and to invest for the future.

See: http://greensmps.org.au/mining-tax

But while the Greens provided a survey asking people which areas they think the money from such reform ($100 billion) should be spent, they did not include Aged Care. I was upset at this for a number of reasons – all related to the urgent need for reform in that area.

Firstly: We have an ageing population. Even to maintain current quality of service will require greatly increased funding.

Secondly: Staff including nurses are underpaid, and there are inadequate ratios. This impacts upon residents’ quality of life – as staff need to turn residents in their beds to avoid bedsores; check to ensure residents are eating their meals; facilitate exchange and communications between residents to ensure they remain socially engaged… Not having enough nurses and staff to check that residents eat their meals can result in starvation and literally a physical 'withering away' so that those concerned cannot even stand up or walk.

Thirdly: The current funding mechanism is grossly unfair: requiring families to sell or take equity out against their homes operates like a regressive tax. Yet levying more proportionately from the wealthy and the upper middle class is considered ‘taboo’ and referred to as ‘class war’.

Finally: There are broader questions of quality of life for these most vulnerable Australians that barely register in our public discourse. Provision of gardens could provide an escape and a diversity of scenery that in its way could radically improve quality of life. Private rooms could help maintain a sense of dignity, private space and connection with past and one’s identity which could also radically improve quality of life. In the future information technology could be crucial in keeping residents socially and intellectually engaged.

Furthermore where possible residents should be taken on outings to create diversity and quality of life. And those aged Australians who would be better suited to lower intensity care – eg: hostels – should not be forced prematurely into high intensity care in order to ‘save a buck’.

By the same principle there must be greater assistance for aged Australians to remain living in their homes – if that is what they choose; and for family/carers’ to provide the necessary support without having to make too great a sacrifice.

When the shortfalls are considered: service quality, the funding mechanism, the wages and conditions of staff – and the ageing population is also taken into account – a figure of an additional $3.5 billion/year to be invested in the system -  is not unreasonable at this point, with 'more in the pipeline' for the future.    Though this should be in the context of a funding mechanism which operates like a progressive tax – and enables investment in the quality of life for vulnerable families, and working class families who deserve better after spending a lifetime paying their taxes. A more robust mining tax could pay for such Aged Care reform.

My hope is that the Greens and the ALP will respond to this issue and run with it as we approach the next election. But the Coalition often takes the votes of many aged Australians for granted. They should also be pressed to ‘put their money where their mouths are’ when it comes to Aged Care. The bottom line is that this is a matter of basic human rights – and of the acute suffering of our most vulnerable spending their final years in circumstances of public neglect, dehumanisation and despair.

If any of you reading this are Greens/ALP members I urge you to take this issue up in your branches and via your parliamentarians. For the Greens especially – their survey should have included reference to this most critical of issues. Here at ALP Socialist Left Forum I think we would all appreciate an official response.

And if by some miracle there are Conservatives reading this – I ask them to look within their hearts – to their basic underlying humanity – To confront the suffering and neglect experienced by our most vulnerable aged – and to DO SOMETHING.

In place of tax cuts instead commit funds for aged Australia.

Tristan Ewins

Around March 16 2012 Daniel Pocock at Facebook argued against using MRRT money this way:

“I definitely think the bias should be on construction of long-lasting public infrastructure. That will create jobs, more taxes, and the taxes on salaries should fund the welfare state. I think it is actually dangerous to use taxes from non-renewable resources (like mining) to fund ongoing expenditures (like welfare).”

To which I respond here:

I appreciate that the MRRT money isn’t going to last at current levels forever. Hence I can understand Daniel’s concern about being ‘structurally locked in’ to funding Aged Care or other social wage measures via the MRRT.

On the other hand BOTH investment in infastructure AND welfare measures are necessary - and using the MRRT money could be part of that picture - using MRRT money to 'free up' *other* money for Aged Care.

MRRT money could also be put in a Sovereign Wealth Fund with the profits from that being directed - sustainably - into Aged Care and other services as well. The point, here, is that Sovereign Wealth Fund investments could provide a source for social wage expenditure for decades into the future. But since then that fund would be slow to build up it begs the question where the money would come from for Aged Care now.

That means there would have to be tax reform elsewhere. I support such an agenda 100% - raising in the vincinity of $20 billion new money a year for programs like Gonski, the National Disability Insurance Scheme, Aged Care and welfare reform. The question is whether Labor and the government can be convinced of the need for such a far reaching agenda.

Arguably Labor is now in the position where only a radical policy shift – only a radical ‘delivering of the goods’ – can shift voters’ perceptions and voting intentions. Radical reform of Aged Care could be part of this ‘big picture’ policy agenda which could turn the tide for Labor again by re-engaging with working class Australia.

Labor and the Greens on the Carbon Tax debate

above: Less tumultuous times for PM Julia Gillard and Greens leader Bob Brown

The following article evaluates the debate on Carbon Tax reform in Australia, but also divisons between the Greens and ALP government on Company Tax and with the Minerals Resource Rent Tax (MRRT).  Starting with a preference for distributive justice and social wage expansion, the author - Tristan Ewins - tries to chart some kind of way forward for the Gillard government and its allies.
..

Debate on Company Tax cuts is beginning to gain momentum in Canberra with Gillard Labor, independents and the Greens at odds over what comprises the best policy. That debate is more broadly framed in the context of the Minerals Resource Rent Tax (MRRT), and a declared intent by Labor to direct new revenue into corporate tax cuts and infrastructure (especially in the ‘mining states’ of WA and Queensland), and in the process to provide room for an increase in superannuation contributions by business.

Therefore it’s probably best to explain the background of the MRRT before going into the debates that hinge on the treatment of revenue thus gained - and how all this relates to the other crucial debate on Carbon Tax reform.

During the 2010 debate David Richardson – writing for On Line Opinion – explained that the real effective rate paid by the miners in 2010 was 19 per cent, as opposed to 24 per cent for the corporate sector more broadly. To correct this the originally-proposed tax on ‘super profits’ aimed to affect profits above the government bond rate – then at 5.8 per cent. http://www.onlineopinion.com.au/view.asp?article=10469

The aim was to garner a fair share of profits from the sector for ordinary Australians who collectively own the non-renewable resources which the mining companies profit from.

But elements of the mining industry spent an estimated $22 million on advertisements undermining Rudd Labor in an effort that effectively brought down a Prime Minister. Mining concerns would have remained viable and profitable. But the scare campaign: threatening disinvestment and job losses – found its mark.

While the original tax was to be levied at 40 per cent, the heavily diluted version negotiated by Gillard will apply at 30 per cent on profits over the long-term government bond rate plus 7 per cent. http://www.abc.net.au/news/stories/2011/03/29/3176405.htm

Allowances and concessions will see an “effective statutory tax rate [of] 22.5%.” http://en.wikipedia.org/wiki/Mineral_Resource_Rent_Tax

And the newer version will also only apply to coal and iron ore, excluding other minerals including gold, nickel and uranium.

The original Resource Super Profits Tax would have raised approximately $12 billion over its first two years. http://www.theaustralian.com.au/national-affairs/greens-join-mining-tax-deal-revolt/story-fn59niix-1226027728392

But the revised Minerals Resource Rent Tax will see a significant reduction in revenue compared to the original proposal.

To be more specific: In 2010 Gillard Labor estimated the compromise would cost $1.5 billion less over the first two years than under the original package. http://www.news.com.au/business/the-great-mining-tax-battle-at-a-glance/story-e6frfm1i-1225888848317

But Treasury estimates suppose a gap in the vicinity of $60 billion over ten years; with some others projecting that the shortfall could be closer to $100 billion. http://www.perthnow.com.au/business/minerals-resource-rent-tax-to-regain-spotlight/story-e6frg2r3-1226025450249

It is in this context that Labor has downgraded its original promises to cut Company Tax. Instead of cutting the rate from 30% to 28%, now the government is proposing a cut of only one per cent. (ie: to a rate of 29%)

However Greens leader Bob Brown has argued that even a cut of one per cent would return half of new revenue taken back to the miners. Instead Brown is proposing a ‘two-tiered’ approach to Company Tax which would see only companies enjoying profits of less than $250 million enjoying the tax discount. This would hit ‘the big end of town’: including the major banks and mining giants – while sparing small business. For Brown the money thus saved would be better spent improving wages and conditions for aged care workers, funding national dental health care, or increasing Newstart, the youth allowance, Austudy and Abstudy," http://www.abc.net.au/news/stories/2011/03/29/3176405.htm

As against claims lower Company Tax is needed to allow for greater competitiveness, research commissioned by the Greens shows that the current rate of 30 per cent is still very significantly below the OECD “weighted average” of 36 per cent. The same research estimates a 1 per cent cut would cost $18 billion by 2021. http://au.news.yahoo.com/thewest/business/a/-/national/9091822/greens-want-to-restrict-company-tax-cut-to-small-business/

Such a pool of money could also be critical for infrastructure, education, and mental health and aged care services. http://www.businessday.com.au/business/mining-tax-tax-cuts-are-linked--swan-20110329-1ce3v.html

But there are potential issues for Labor in drifting away further from the platform it took on these issues to the 2010 Federal election.

To begin: it is important for Labor to honour any agreements in order to retain credibility as a partner for negotiation into the future. This means that if Labor has any kind of ‘agreement’ it is a practical necessity at least that the government ought enter into fresh negotiations if seeking to change its position on resource taxation during the current term. Either that or take such action as to make the consequences ‘neutral’ for those concerned. This could boil down to a choice between either increases in corporate superannuation contributions for low income workers, or abandoning the Company Tax cut, diverting the proceeds to other crucial priorities as Brown suggests.

Further: if the government goes down the path of increasing superannuation contributions for low income earners it would be best to also ease Aged Pension means tests for such groups to enhance any real effective gain.

It is equally compelling as a matter of public interest, however, that the electorate be made aware of the scope of any agreement Gillard made with the big miners, including BHP and Rio Tinto, and corporate Australia more broadly, in the run up to the 2010 poll. Negotiations with the most powerful corporate interests ‘behind closed doors’ is anathema to democracy.

Unfortunately, the political power of the miners, and the corporate sector more broadly, is not going to disappear any time soon, no matter how it skews democratic processes, overshadowing the voices of ordinary citizens. So maintaining credibility in negotiations with those interests is crucial no matter how problematic their power may be.

However it is also most definitely legitimate for Labor to seek a fresh mandate at the next Federal election to effectively increase and widen the scope of the Minerals Resource Rent Tax; and to start canvassing support for any such move now. Given the past defeat, though, Labor would need to adopt a cautious approach.

Yet there could be a difficulty with such a move as well if not handled properly. Labor might not want to ‘muddy the waters’ by pursuing too many distinct major debates on tax reform at once for fear of leaving some voters overwhelmed.

Climate Minister Greg Combet is anticipating a “long debate” suggesting any Carbon Tax will not be implemented until July 2012. http://au.news.yahoo.com/a/-/latest/9001318/carbon-tax-will-be-a-long-debate-combet/

In that context a ‘tax summit’ (Wayne Swan prefers the word ‘forum’) is planned for October this year. http://www.theage.com.au/national/key-tax-plans-before-summit-20110320-1c2bm.html

But without putting public fears to rest – as early implementation could achieve – the debate may become a ‘running sore’ distracting from any further reform agenda.

If the Gillard government could resolve the shape of Carbon Tax reform and see the tax implemented late this year (2011), though, fear and scepticism could be put to rest well before the next election. Crucially: this could provide the necessary time and ‘breathing room’ to pursue a debate on further significant progressive tax reform.

Taking that into consideration, the tax ‘summit’ or ‘forum’ could do to be brought forward somewhat – perhaps by a couple of months.

Openness to future reform is also crucial given the scenario of profit levels in the industry waning somewhat - to the point where the government will need to consider additional changes simply to maintain revenue, and fair returns on the natural resources that belong properly to all Australians.

All this considered, what is the best move for Labor in pursuing social justice objectives, while fostering co-operation with its independent and Green partners?

The key could be in the implementation of any Carbon Tax.

In 2010 the Greens were proposing a Carbon Tax of $24/Tonne, including assistance to ‘trade exposed’ industries. http://www.greenleft.org.au/node/43138

Without some form of assistance exports and import-competing jobs might simply be lost overseas without any real reduction in emissions.

Professor Ross Garnaut, meanwhile (responsible for the Rudd Labor ‘Climate Change Review’), has argued for a tax somewhere in the range of $20-$30 a tonne. http://www.smh.com.au/opinion/politics/garnauts-carbon-tax-plan-can-kill-two-big-reforms-in-one-hit-20110317-1by5o.html?comments=148

Garnaut has furthermore estimated that a carbon tax at a rate of $26/tonne would bring in $11.5 billion in the first year alone. http://au.news.yahoo.com/thewest/a/-/breaking/9032850/garnaut-ties-income-tax-cuts-to-carbon-tax/

Assuming these levels of revenue, it is the structure of compensation that is crucial: and which provides opportunities for fairer wealth distribution.

Firstly, compensation should take the form of direct payments for low and middle income groups, and increases in welfare – including the Aged Pension, Disability Support Pension, Austudy and Newstart. Income tax cuts, by comparison, are a clumsy instrument which would compensate high income groups who do not need the assistance.

Secondly: Compensation should exclude the top 30%-35% income demographic to provide sufficient scope to increase welfare and significantly improve the final financial position of low and middle income groups and individuals.

Thirdly: In this context - by returning all such revenue gained via a carbon tax taxpayers in the form of cash payments to low and middle income groups, including welfare recipients, Labor could actually expand and consolidate its electoral support base. This could very effectively undercut Abbott’s appeal to ‘battlers’ on ‘cost-of-living’ issues.

Fourth: A carbon tax rate at what Labor considers ‘the upper end’ of the scale (including the Garnaut proposal) could actually provide greater scope to assist low and middle income groups via compensation and effective redistribution. Hence it makes electoral sense in shoring up Labor’s support base.

Finally:  The only real problem in this scheme of things is that of what happens when the transition to a lower-emissions economy is actually achieved.  The problem being that at this point carbon tax or ETS revenue may 'dry up'.  For the long term, therefore, an alternative funding mechanism will be necessary to compensate low and middle income groups.  Hopefully, though, innovation in the renewable energy sector will also drive down cost structures.  Solar Paint, developed in Australia, looks particularly promising. See: http://www.abc.net.au/tv/newinventors/txt/s3008638.htm   and also: http://www.greenlivingpedia.org/Solar_paint

As for right-wing commentators such as Miranda Devine who seem to think distributive justice measures via tax comprise some malign ‘social engineering’: do they suppose the same is true in the case of most tax 'reforms' – including the gradual ‘flattening’ of income tax – which historically have redistributed wealth from low and middle income groups to the wealthy? The double-standards are palpable.

This leaves us with the concerns of Bob Brown and the Greens more broadly that emphasis on Company Tax cuts will leave crucial areas of the welfare state and social wage under-funded and exposed. While Labor cannot be seen to be simply ‘dancing to the Greens’ tune’, minority government necessarily involves compromise. And indeed, given their significant electoral support base, the positions of the Greens ought be considered seriously regardless.

As already alluded to – early implementation of a carbon tax could provide ‘breathing room’ for further debate and further reform before the next election.

In 2009 ‘Lateral Economics’ informed the Henry Tax review that ‘axing’ dividend imputation could save the Federal government $20 billion a year. http://www.businessday.com.au/business/dividend-imputation-wont-be-cut-says-henry-20090821-etwn.html

Dividend imputation is meant to stop so-called ‘double taxation’ of profits: providing credits to shareholders to compenstate for Company Tax already paid.  This was supposed to provide an incentive for investment. But the reform – first implemented under Keating Labor – provided a windfall for the most wealthy Australians, with a massive cost to the budget bottom line, and less money for crucial social programs and infrastructure.

Without fully removing the measure, shifting to half dividend imputation – as once suggested by progressive economist John Quiggin - would be a substantial equity measure, and provide over $10 billion/year much of which could be directed to crucial social programs in aged care, mental health and education, and for social housing and infrastructure.

Such reform would mainly hit millionaires who own so much invested wealth in this country: but small investors may resent the change as well. The benefit from social investment would need to be clear before the next Federal election. And while a means test could provide fairness to small investors, using some of the money to further improve the Aged Pension could be a smart move in the context of ‘winning over' such people as well.

Furthermore: to maintain investment in the Australian economy in that context, some of the money could be diverted to a public pension fund. (to be invested locally) Not only could this support ongoing job creation: it could also sustain the Aged Pension in the context of an ageing population.

A compromise between the Greens, independents and Labor – with early implementation of a Carbon Tax, and a trade-off for half-dividend imputation in return for agreement on Company Tax – could be in the interests of Labor’s core constituency. Appealing to the material interests of most voters, it would also consolidate Labor’s electoral support base, while being well in keeping with Labor ideals.

Tristan Ewins is a freelance writer and grassroots Labor activist based in Melbourne, Australia. He maintains and publishes the 'Left Focus' blog

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The Crisis Down-Under - Joseph Stiglitz

Above: Renowned Economist, Joseph Stiglitz

In this article Joseph Stiglitz praises the efforts of the Australian Labor government in warding away recession as a consequence of the Global Financial Crisis. (GFC)   Stiglitz is one of the most respected economists in the world; and his endorsement ought mean a lot for Australian voters considering economic management as a key issue in deciding their vote.

With permission I am linking to this article.  After an introductoruy excerpt I am providing a link to the full version at pre-eminent opinion website 'Project Syndicate'.  'Project Syndicate' owns copyright rights to the article.  For permission in reproducing this article write to:  distribution@project-syndicate.org.

Although not given permission to reproduce the article in full, I believe is it critical to 'get the message out': the Liberals' fear campaign on debt and spending is deceptive to the core.  Their policies would have seen Australia into recession.  I encourage readers to follow the link at the bottom of this excerpt to have access to the full version.


CANBERRA – The Great Recession of 2008 reached the farthest corners of the earth. Here in Australia, they refer to it as the GFC – the global financial crisis.

Kevin Rudd, who was prime minister when the crisis struck, put in place one of the best-designed Keynesian stimulus packages of any country in the world. He realized that it was important to act early, with money that would be spent quickly, but that there was a risk that the crisis would not be over soon. So the first part of the stimulus was cash grants, followed by investments, which would take longer to put into place.

Rudd’s stimulus worked: Australia had the shortest and shallowest of recessions of the advanced industrial countries. But, ironically, attention has focused on the fact that some of the investment money was not spent as well as it might have been, and on the fiscal deficit that the downturn and the government’s response created...
 
For the rest of this article follow the URL below!
 
http://www.project-syndicate.org/commentary/stiglitz128/English
 
nb: Joseph E. Stiglitz is University Professor at Columbia University and a Nobel laureate in Economics. His latest book, Freefall: Free Markets and the Sinking of the Global Economy, is now available in French, German, Japanese, and Spanish.

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The Mining Super-Profits Tax Debate – an analysis

The Australian Labor government has proposed a landmark mining ‘super profits’ tax, but resistance from a cashed-up mining industry is revealing the fragility of Australian democracy.  This article considers the arguments around this tax debate in detail.


By Tristan Ewins

For the most part since its election in 2007, the Rudd Labor Australian government appeared to enjoy a position which could almost have been said to have been unassailable. Kevin Rudd himself was riding high in the polls as one of the most popular Prime Ministers ever.

Importantly: Labor steered Australia successfully from the threat of recession, engaged in the practical and necessary business of counter-cyclical expenditure and investment in the face of dogmatic and opportunist resistance from the Conservative Opposition. Rudd’s apology to Australia’s ‘stolen generation’ of indigenous peoples removed from their families was also crucial and ground-breaking. And more recently, the wages of Australia’s lowest paid were to a significant degree restored.

But in recent months these achievements have been obscured behind scandal over the implementation of Labor’s home insulation scheme; and almost entirely overshadowed by a co-ordinated campaign to derail Labor’s proposed ‘mining super profits tax’. We will deal here mainly with the struggle over tax reform.

Labor Party parliamentary candidate, Andrew Leigh has put the case for the ‘super profits tax’ at the ALP website itself. Leigh points out that twenty leading Australian economists support the proposed tax: including himself, John Quiggin, Fred Argy, Allan Fels and many others. And the revenue gained from the proposed tax is projected to pay for a 2% reduction in Company Tax more broadly; and this is to provide the scope for a rise in employer superannuation contributions from 9% to 12%. http://www.alp.org.au/20-economists-support-resource-rent-tax

In Australia, superannuation is a system of private retirement savings, sponsored by government, with contributions by both employers and workers. While there are serious flaws with regard to equity in the broader scheme of superannuation, obviously the proposed reform could make a big difference to the retirement incomes of Australian workers over the long term.

At the Australian Labor Party website, David Bradbury has also put the case for the proposed tax.
Bradbury argues:

“The existing royalties system is inefficient and out-dated and hasn’t kept pace with the increasing profitability of the resources sector through the mining boom. Before the last mining boom, the Australian people received $1 out of every $3 of profits in royalties and charges, but at the end of that boom, that rate was down to $1 out of every $7.” http://www.alp.org.au/giving-australians-decent-retirement-income

Labor Minister Craig Emerson also puts a case in favour of the proposed tax.

Writing at Australian political website ‘The Punch’ Emerson explains how the ‘super profits tax’, a form of ‘resource rent’ taxation, would replace the current system of royalties. He argues that the proposed tax regime would be fairer in that it taxes profits specifically, instead of “on the [basis of] the amount of minerals extracted.” This, Emerson insists would actually remove disincentives for new investment. http://www.thepunch.com.au/articles/going-boom-the-economic-case-for-the-mining-tax/

Australian economist John Quiggin has also put many arguments in favour of the proposed tax reform.

He explains that in cases where mining companies make “super-normal” profits regardless of tax, the proposed tax reform will not comprise an obstacle to investment.

Specifically, Quiggin entreats us to take mining industry threats of capital flight ‘with a grain of salt’, listing occasions on which the mining giants have made threats in the past:

“…when they were upset about tax policy, about environmental restrictions, about Aboriginal land rights, about union wage demands and work practices…” http://johnquiggin.com/index.php/archives/2010/05/10/some-thoughts-on-resource-rent-tax/

Finally, Quiggin believes such a tax would be equitable, falling mainly upon wealthy investors “many of whom are foreigners.”

Veteran Fairfax journalist Tim Colebatch has also made a number of interesting points in a recent opinion piece.

The title of this piece is perhaps misleading: “Resource Tax amounts to 50% nationalisation of the mines”. The tax no more represents nationalisation than does Company Tax considered more broadly. And even though Colebatch is dubious of Treasury claims that: “the community's share of mining profits has shrunk from 55 per cent over the five years to 2003-04 to 27 per cent in 2008-09”, he nevertheless recognises that the government has a genuine case for reform. http://www.watoday.com.au/opinion/politics/resource-tax-amounts-to-40-nationalisation-of-the-mines-20100607-xqn0.html

A crucial point, as Colebatch recognises it that:

“The Bureau of Statistics' recent round-up of industry data for 2008-09 estimates the profit margin in mining that year was 37.1 per cent. That's three times the industry average of 11.2 per cent… They're doing well.” http://www.watoday.com.au/opinion/politics/resource-tax-amounts-to-40-nationalisation-of-the-mines-20100607-xqn0.html

In fact mining profits are sometimes even higher than this.

Colebatch also observes that:

“Analysts believe the mining boom is the main driver of the dollar's rise, which has wiped out sales and profits for industries lacking its huge profit margin as a cushion.” http://www.watoday.com.au/opinion/politics/resource-tax-amounts-to-40-nationalisation-of-the-mines-20100607-xqn0.html

The point of this is that with the robust dollar, some industries such as tourism and manufacturing are becoming less competitive. Restructuring the tax mix as Rudd Labor is attempting to do is one way of redressing this situation. But cutting overall tax as a proportion of GDP is not an acceptable alternative as there remains a need to provide for welfare and services; including education and infrastructure from which business clearly benefits. (and therefore must pay its fair share to support)

As the debate on the proposed mining tax has developed the fragility of Australian democracy has in some ways become apparent. While the mining giants have a war-chest of billions to draw upon in pushing fear and disinformation, no political party, NGO or social movement can possibly compete.

Much of the Australian media have also apparently abandoned any pretence to inclusiveness and objectivity; throwing themselves head-first into what could honestly be described as a ‘campaign’. Somewhere, we must assume, there is a convergence of interests. The ‘Herald-Sun’, a Melbourne newspaper, for instance carried the headline:

“Bloody amateurs! Harvey Norman chief blasts Kevin Rudd, Wayne Swan over mining tax” http://www.heraldsun.com.au/news/national/bloody-amateurs-harvey-norman-chief-blasts-kevin-rudd-wayne-swan-over-mining-tax/story-e6frf7l6-1225878174465

But excluded entirely from this article was recognition that elsewhere Gerry Harvey, the CEO of major retail chain Harvey-Norman, had actually stated that he did not oppose the tax. http://www.insideretailing.com.au/Latest/tabid/53/ID/8405/Rudd-government-bloody-amateurs--Gerry-Harvey.aspx

Meanwhile: amidst the fear and disinformation, Labor’s implementation of paid parental leave – a landmark reform – received minimal attention from significant sections of the Australian media.

And Chief Executive of the Australian Industry Group (AIG), Heather Riddout, after stating her support for mining tax reform, focusing on “super-normal” profits in ‘The Age’, was ignored by much of the Australian media. (The AIG is a significant and important employer peak body) http://www.theage.com.au/opinion/politics/pilloried-tax-is-a-step-in-the-right-direction-20100609-xwq2.html

Finally, sections of the media have constantly referred to the ‘mining super profits tax’ instead as the ‘super tax’, with an obviously altered connotation.

This kind of ‘framing’ of the debate – with very selective quotations, and sometimes a virtual ‘media blackout’ of themes inconsistent with the ‘campaign’ - is both biased and deliberate; and is a genuine threat to Australian democracy in the meaningful sense of the word.

Much attention has been paid to the perceived hypocrisy of the Labor government in devoting public funds to an advertising campaign of its own; but while Rudd Labor seems to be contradicting its past policy here, there are subtleties that are lost in this debate. In fact civic organisations need to be empowered as against the potential clout of big business; not just in these circumstances, but also more broadly.

In fact a fair compromise would be to devote sufficient public funds for information campaigns and advertising to be available for political tendencies across the political spectrum. One way or another we need to make sure the resources of political parties, NGOs and social movements and such are sufficient to be able to get their message across clearly, and not to be disadvantaged – or even eclipsed - by the level of resources available to the most powerful and wealthy interests.

Theoretically, government has other options at its disposal also. Were a ‘capital strike’ to take place, government could ‘step into the breach’. Abandoned mines could be commandeered, with fair compensation being paid to those who formerly held title.

And a public mining company could be established directly: with the effect of profits flowing directly to the community, literally providing many billions which could be invested in infrastructure and social services.

Perhaps the current political climate, influenced by the long-held neo-liberal consensus, works against such options. But when billions are being ripped out of the country with ‘super-profits’ every year, it is in the national interest for government to invest directly in mining.

Importantly, there are precedents which point to the workability of some form of mining super-profits tax. A ‘Resource Rent Tax’, has operated successfully in the oil and gas industries for over twenty years without any ‘collapse’ of investment.  Although as Tim Colebatch explains: while this tax is also applied at a rate of 40 per cent, it factors in only “above a benchmark (regarding profit levels) set 5 percentage points higher than Kevin Rudd and Swan now propose.” http://www.watoday.com.au/opinion/politics/resource-tax-amounts-to-40-nationalisation-of-the-mines-20100607-xqn0.html

Progressive blogger, John Passant has quoted John Kehoe of the “Financial Review’ to the effect that the existing mining tax proposal would only ‘kick in’ at 12 per cent and higher. This means the regime proposed by Colebatch would see higher taxes on ‘super-profits’ of 17 per cent and above. http://www.theage.com.au/opinion/politics/mining-tax-will-cost-jobs-and-other-lies-20100611-y1hf.html?comments=27

As observed earlier in this article, there are many big mining operations which enjoy profits way above this threshold.

While the existing proposal from Labor is fair – and does focus genuinely on ‘super-profits’ (far above average business profits), it’s important also for the government to think about the current struggle strategically.

Under favourable conditions, it’s important to set new standards; especially where existing arrangements are unfair. Some commentators (eg: John Passant) have written that it’s actually the prospect of a new precedent that frightens the mining bosses most. http://www.theage.com.au/opinion/politics/mining-tax-will-cost-jobs-and-other-lies-20100611-y1hf.html?comments=27

But the power of existing precedents certainly should not be understated.

Given this, it would be legitimate for Labor to consider some restructure of its mining tax proposal: to more precisely match regimes already existing and maintained successfully. By this I refer to the existing resource rent arrangements that apply in areas of the oil and gas sectors. That such a regime could be shown to have already been successful elsewhere – could go a great distance in allaying the fears of the Australian public. Such a compromise would still focus on ‘super-profits’, and – importantly - would establish a foothold for Labor in establishing the principle of resource rent for the mining sector.

And it is a very important principle to establish: as these non-renewable resources belong to the Australian people as represented by democratically-elected government; and there must be some reasonable kind of premium paid by miners on top of Company Tax to reflect this.

Calls for Labor to ‘dump’ Rudd clearly factor into a broader de-stabilisation campaign by the biggest mining bosses and their allies - such as the conservative Opposition which has sold-out the Australian national interest out of sheer opportunism. To replace Rudd now would also set a precedent – that Labor will ‘dance to the tune’ of big business whenever it faces real resistance.

That said: at times Rudd has looked rattled, as if he was entirely unprepared for the scale of resistance he would face in promoting resource-rent reform. Rudd needs to project an image of being calm and in-control.

Prominent political theorist, Christopher Pierson, has considered the dilemmas facing social democrats in great detail. Observing a general trend in social democratic politics, he has written:

“social democratic politics has always been resolutely possibilist or pragmatic.” “…being available to fight on another day is almost always preferred to heroically taking the field against the odds.” (Pierson, 2001. p 57)

There are times when commentators, political parties, social movements and NGOs need to be more uncompromising. If everyone always simply focused on the relative political centre, broader political debate would be silenced, and the course of long-term progressive reform stymied. That means there is still a need to talk about things even that are not possible for the time-being.

But following Pierson’s observation - Labor, for now, could do to withdraw to a ‘better defensive position’; adopting the compromise suggested by Colebatch, and selling resource-rent reform on the basis that the same regime has been implemented successfully elsewhere in the Australian economy. Again: precedent is very important in cementing an aura of credibility in the eyes of the electorate.

There are interests in the mining industry which certainly feel that they have been ‘singled out’: but beyond this there is a genuine case for reform; that the Australian people truly deserve a share when it comes the natural resources which belong, collectively, to all of them.

The challenge for Labor, though, is to apply these principles fairly and indiscriminately, regardless the interests involved; for the principle of distributive justice, and for the collective sake of the Australian people.


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