'For an Equal and Democratic Australia' model ALP Platform - Updated for 2018

Dear Friends and Comrades;

We’re Promoting an Updated version of the ‘For an Equal and Democratic Australia’ Model Platform for the ALP. The program is updated for 2018 from a very similar version platform I promoted for the 2015 Conference.

At this point we’re still considering suggestions to expand the document – and your ideas are welcome. Contact Tristan Vaughan Ewins at Facebook if you have a suggestion you would like to make.

The ALP needs a vision for the ‘big picture’ of social welfare, democratic and nation-building reforms it needs to implement in government.

Included are proposals on tax and welfare reform, social insurance, environmental reform, a ‘democratic mixed economy’ and much, much more.

Please also propose motions in support of this program at your local branch, or your ALP student club. Or you may belong to a ‘third party organisation’ (eg: a welfare organisation, charity, student union or other advocacy group). Motions of support from these organisations are also welcome! If you successfully pass a motion in favour of this document please leave a comment to Tristan Vaughan Ewins at Facebook so I am aware of this and can promote our success in garnering support.

With enough support and wide enough distribution we may influence debate on the ALP National Platform – to be decided upon this year in 2018.

If you are a delegate we would especially be interested – pls let us know.

But we will keep on campaigning after that also: to continue to build momentum for a genuinely progressive Federal Labor Government for 2018 or 2019 and onwards.

Again: if you support the goals of this ‘minimum platform’ please respond to this paper by ‘liking’ it at our Facebook group – and that support will be noted for purposes of our campaign.

see: https://www.facebook.com/ALPequalanddemocratic?focus_composer=true

We may also see if we can promote this cause via the ‘Megaphone’ Petition Platform to mobilise further support ahead of Conference.

As supporters of this Program we endorse the incorporation of the following into the ALP Platform for 2018:

a) ALP Core Mission:  We believe that the ALP exists for the purpose of improving fairness, democracy and equity. We support the promotion of a robust civil society characterised by informed and active citizenship ; and civil rights and liberties (including industrial rights and liberties), as well as preservation of the natural environment upon which human survival itself depends. Also we support separation of church and state - amidst freedom of faith and worship.  We support the advancement of ‘political’, ‘social’ and ‘economic’ citizenship; That includes the defence of civil and democratic rights and liberties; the provision of social wage and welfare rights; and finally the pursuit of a ‘democratic mixed economy’.

  

b) A Democratic Mixed Economy:  We support a variety of strategies for a ‘democratic mixed economy’. That includes a mixture of public and co-operative ownership and control (including but not necessarily limited to public ownership of critical infrastructure and natural public monopolies, and strategic Government Business Enterprises), as well as mutualism, 'union-friendly' co-determination and other related strategies; and also crucially including ‘democratic collective capital formation. (‘collective capital formation’ was a term used by Swedish social democrats to describe their Meidner Wage Earner Funds ; but might also be applied to superannuation for instance). Specifically we support a stronger role for producers and consumers co-operatives in the Australian economy on both a large and a small scale. For instance, government co-investment may be required to help co-operative enterprise increase its scale so as to remain competitive and hence viable. We support very significant but initially-capped aid to co-operatives via cheap credit, tax concessions and free advice/economic counselling - with co-operative enterprise supported in a variety of spheres, including credit unions, insurance, child care and aged care, manufacturing; as well as co-operative small and medium businesses. (for example in hospitality) 

c) Reform Tax to Extend Social Investment and Expenditure: We have as a medium term objective the goal of meeting the OECD average regarding our Tax to GDP Ratio. That means an increase in the Tax to GDP ratio by 5% ideally over as long as three terms of Labor Government. Specifically this translates to an increase of $80 billion/year in today’s terms. 


d) Specific Revenue Measures: To fund these new commitments we support measures including but not necessarily limited to the following:


· very significant strategic and equitable rescission of superannuation tax concessions (perhaps $10 billion/year or even more)

· Progressive expansion of the Medicare Levy

· restoration of a robust Mining Super Profits Tax

· the establishment of a progressively structured Aged Care Levy.

· Progressively restructure the income tax mix, and thereafter fully index the bottom three thresholds.

· Restoration of Company Tax and strong measures on Corporate Tax Evasion ; network with like-minded parties to create a global shift against the ‘race to the bottom’ on corporate tax

· Halving the rate of Dividend Imputation (perhaps $10 billion/year)

· An inheritance tax on inheritances valued over $2 million and over. (indexed)

· Consider stronger measures further limiting Negative Gearing for investors holding portfolios including several properties.


The total measures implemented must provide for the aforementioned increases in social expenditure, and very significantly add to rather than detract from the progressive nature of the overall tax and spending mix.


e) Specific social expenditure/infrastructure measures we support for implementation in the first term of an incoming Federal Labor Government include: 

• a progressively-funded National Aged Care Insurance Scheme providing a broad range of high quality aged care services for all those aged 65 and over with the need (including high intensity care, low intensity care , and ‘ageing at home’) – and without forcing disadvantaged and working class families to sell or take equity against the family home to achieve the highest quality care. Also mandate a nursing skills mix in every aged care facility that includes a Registered Nurse on-site 24 hours a day.
  
  · Robust and progressively applied increases in state school funding; including improvements in funding formulae as proposed in ‘Gonski 1.0’ ; over the longer term we aim to improve the quality of state education (including infrastructure and student to teacher ratios) to the point where demand for private schooling is very significantly reduced.  The point is to achieve true equality of opportunity in education.
  
  · Completion of the National Broadband Network – publicly owned and with Fibre to the Premises (FTTP) technology; as well as other public-funded and owned infrastructure in areas such as transport, communications, water and energy; keep it public and provide as a social and economic good – not just ‘to realise a profit’.
  
  
  · Construction of ‘East Coast Fast Rail’ and State-Owned Centralised Renewable Power Generation
  
  · greater public support and funding for pure and applied scientific research via the CSIRO.
  
  · A review of existing job network services; considering the possibility of re-consolidation of a single provider in the public sector (Centrelink); And regardless of this ensuring an emphasis on a more compassionate, patient and understanding approach to case management; especially considering the special needs of the long term unemployed, the under-employed, disability pensioners, those with differing skill types and levels; and for older job-seekers,
  
  f) Welfare Reform: We reject the ‘blame the victim’ and ‘blame the vulnerable’ mentality promoted by the Conservatives. Along with that we reject all forms of ‘Punitive Welfare’. Specifically we propose raising the Aged and Disability Pensions, Youth Allowance, Austudy, ABStudy by a minimum $50/week. (then indexed)  Newstart to be raised by $75/week (also fully indexed).  We also support a more generous Carers’ Allowance ; and reject effective labour conscription for ‘Work for the Dole’ , as well as rejecting waiting periods for Newstart which force vulnerable Australians to exhaust their personal savings.  (or even drive some into homelessness) We understand that many pensioners – for instance the disabled – require flexibility which existing labour markets do not provide. To overcome ‘poverty traps’ we support ‘positive incentives’ and ‘flexible work’ without loss of pensions. FINALLY: We believe the ALP should consider – and conduct research into – the replacement of NewStart with a Guaranteed Minimum Income. (GMI)
  
  g) Retirement Age: We are committed to maintaining a retirement age of 65 instead of raising it to 67 or 70. Indeed we are also open to the possibility of reducing the retirement age below 65 into the future. Specifically we support reducing the retirement age for those who have suffered physical debilitation as a consequence of demanding work. (eg: manual labourers)
  
  h) Industrial/labour rights: We support a legislated real increase in the minimum wage as well as pattern bargaining rights for unions.  As well as stronger re-regulation of the lower end of the labour market more generally. And we support effective subsidies for some of the most exploited and underpaid workers (including in child care, cleaning, aged care and elsewhere)– whether through direct subsidies, tax concessions, enhanced social wage provision and other effective measures. We also support the industrial rights and liberties of workers; including a right to withdraw labour ‘in good faith’ (including political strike action), and including a right to secondary boycott when ‘in good faith’ in solidarity with ‘industrially weak’ workers
  
  i) Further Educational Reform

• Curricula for ‘active/critical citizenship’: We are committed to reform of school curricula for the purposes of promoting ‘active and critical citizenship’. Without bias, the point of such reform would be to impart balanced and inclusive understandings of political values, movements and ideas, and social interests. We believe active and informed citizenship means a stronger pluralist democracy.
  
  · We support restoration and expansion of tertiary education funding; including for universities and the TAFE sector; with an expansion of tertiary education placements on the basis of an understanding of education as a modern social right, and not an exclusive privilege.
  
  · We also support the humanities and social sciences for the sake of effective pluralism in the Australian public sphere. And we support provision for tertiary academics’ participation as ‘public intellectuals’ and not only on the basis of the bulk of published academic works.
  
  · Furthermore we support progressive reform of the HECS system: reversing any fee deregulation, and with real increases in the repayment threshold significantly above Average Weekly Earnings; and forgiveness of debts of those who have a good reason for not being able to benefit from the prior education. (eg: because of disability)  Over the medium to longer term we support reversion to free tertiary education.
  
  · Gender equality: Finally, here, we support and strive for equal participation, and on-average equal achievement - between men and women in higher education, and greater participation and opportunity for those from disadvantaged and working class families.
  
  
  j) Treaty and a Republic: We are committed to beginning formal dialogue with representatives from the entire range of indigenous peoples with the aim of negotiating a Treaty. We support an incoming ALP government initiating such a process in its first term. Also we support the realisation of an Australian Republic at such a time that public opinion is such as to achieve the change.
  
  
  k) Environment: We are committed to increasing the proportion of renewable energy sources so as to achieve a real reduction of emissions even as the economy and population grow. Specifically we aspire to reduce Australia’s greenhouse gas emissions by 25% below 2000 levels by 2025. To this end we support large scale public investment in renewables, as well as generous subsidies for lower income households to acquire micro-renewable energy systems; and incentives for landlords to invest in micro-renewable energy. In further environmental reforms we are committed to sustainable land use and water management, achieving ‘world’s best practice’ in food production.
  
  We also support an Emissions Intensity Scheme that would set an emissions intensity benchmark for the whole electricity sector, which will reduce in line with emissions reduction targets; 50% by 2030. To ensure that this mechanism would successfully reduce emissions, benchmarks will be set five years in advance as recommended by the Grattan Institute, and revised as the need for greater emissions reduction appears. The EIS would be accompanied by the maintenance of the Renewable Energy Target, and large scale investment in renewable energy through reverse auctions, provided the assets are held in public ownership at the end of construction. We also support providing microgeneration grants to households and businesses to promote uptake of renewable generation technologies, and reform of feed-in tariffs so consumers producing their own energy are paid an appropriate amount when selling the excess back into the grid.
  
  l) Humanitarian Migration: We support a very significant expansion of Australia’s humanitarian migrant intake. Additionally, we want for an ALP government to pursue diplomatic channels to encourage other prosperous countries in the region to also increase their humanitarian intake very significantly. For asylum seekers we support humane onshore community-based processing.  (that means close detention centres including in Nauru)
  
  m) ABC and SBS: We support continued (and extended) funding of the ABC and SBS – and the pursuit of ‘participatory media’ principles and strategies through these channels. We support a role for the ABC and SBS in pursuing an ‘authentic’ public sphere, and an inclusive pluralism. (with the exception of not providing a platform for the far right) And we support representative ‘popular’ participation on the ABC and SBS boards of management

n) Public and Social Housing: We support very substantial new investment in high quality public housing (a minimum ‘surge’ of $10 billion) facilitated through tied Federal grants to the States, and also social housing where it is more cost-effective - to increase supply, and hence also affordability. (combined with the necessary public investment in local infrastructure in emerging suburbs) That includes expansion of ( largely ‘non-clustered’) public housing stock to at least 10% of total stock over perhaps three terms of Labor Government. Where appropriate we support a mix of low, medium and high density stock. Further: High density housing development in capital CBDs, and amongst strategic activity/transport hubs - should not be left ‘only to the private sector’ ; and public developments could include more generous provision of space, and high quality amenities such as common rooms, gyms, pools, parks and gardens. Planning laws should also be rigorous to ensure a viable spread of amenities and services where-ever housing developments occur.

o) Internal Reform:  We support internal democratic reform of the ALP; including a direct role for union members in supporting particular policies and platform items; as well as direct election for ALP National Conference delegates; actual adherence to State and National Platforms; and a ‘mixed model’ for election of the Party Leader which may include rank and file, Parliamentary Labor and trade union components. We also support the establishment of a ‘progressive public sphere’ in this country, including (for our part) ALP related forums, and policy and ideas conferences and publications which are inclusive, authentic, progressive, and which accommodate difficult debates.

p) Strategic industry policy: We support an active industry policy aimed at the maintenance of ‘strategic industries’ with ‘strategic capacities’ in Australia; including through automotive production and shipping-construction. This means a public investment rather than a public subsidy or handout.  And it could create the basis for a more-independent foreign policy as well. Said industries can also involve high wage, high skill labour. And there are a variety of potential models, including joint multi-stakeholder co-operative-state ventures – involving workers, regions and government. This ought also be supported by attempts to emulate Denmark's success in related Education and Training.

q) Multilateral Disarmament and Peace: At the same time we support a policy of realistic multilateral disarmament with the aim of freeing resources for purposes which meaningfully improve peoples’ material; quality of life


r) On Health Care we support the following:

· provision of comprehensive Medicare Dental – with a wide array of dental services provided at minimal cost and promptly for pensioners and low income groups; The main aim here must be to radically slash waiting lists which currently can be in the vicinity of two years unless in the case of a ‘dental emergency!’ This means that vulnerable people are denied help until things reach ‘the critical point’. With new funding and resources public dental waiting periods must be no more than six months.


· Also increase investment in the Pharmaceutical Benefits Scheme to extend its coverage

· Improve the rate of Bulk Billing

· Tighten means tests for ‘Lifetime Health Cover’ in order to pay for the removal of penalties for low income individuals (including pensioners) who let their policies lapse; Over the longer term we aim to improve the quality of public health to such an extent as to significantly reduce demand for private health insurance. During the interim we also support the growth of Health Insurance Mutual Associations as alternatives to Private Health Insurance.

· Also extend Medicare to cover physio, optometry (including glasses or contact lenses), speech therapy, podiatry, psychology; provision of hearing aids where necessary; and also cosmetic surgery for those in extreme need (for instance as a consequence of physical injury)

· Improvement of and substantial new investment in mental health services to ‘close the gap’ regarding the life expectancy of those with mental illness; as well as to improve productivity and quality of life.  (for example there are in the vicinity of 200,000 to 300,000 Australians with Schizophrenia who on average live 25 years less than the general population)


s) ‘Physical and virtual commons’ ; ‘Public Space for Public Use’ ; We believe that ‘physical and virtual commons’ are necessary to provide support for a strong, participatory and democratic civil society’ ; In part this means decoupling public space from any strict and/or exclusive relation to consumption. Local communities must have centrally-located meeting and gathering spaces – and this requires a significant public investment, and associated regulations. In part this can also be supported with dedicated space in local business districts – including in shopping malls. Such developments should be dependent upon the provision of ‘community kiosks’ which would provide comprehensive information on how to become active in community organisations and clubs, social movements, political parties and so on. But excluding the far-right. Once-off public meetings and gatherings could also be promoted via these ‘community kiosks’ ; and citizens could ‘sign up’ for mail outs and/or emails regarding ‘what is going on’ in communities on a month-to-month basis.

t) A Comprehensive Bill of Modern Human Rights: Finally: We support a comprehensive ‘Bill of Rights’ in this country, supporting liberal and civil rights of suffrage, speech, assembly, association, faith, conscience. As well we support ‘social rights’ including education and health, a guaranteed minimum income; housing; access to communications and information technology; access to transport; access to fulfilling employment with a remission of exploitation; social inclusion including opportunity for recreation and participatory citizenship; respect and human dignity.

Treasury ‘White Paper on Tax’ seized upon by an Abbott Government Considering Regressive ‘Reforms’

The Abbott Government's 'White Paper' on Tax could see big changes to superannuation and the overall tax mix.  But the Paper seems oriented towards the Government's Ideological preference for 'small government', 'low tax' and 'simple/regressive tax' as opposed to a progressive tax system. Labor and the Greens need to enunciate a comprehensive alternative - also informed by a progressive ideology of equity and fairness.  Tristan Ewins looks at the alternatives.

 

Tristan Ewins

31/3/2015

The Federal Australian Treasury’s White Paper on tax reform seems to have been received well by the Abbott Conservative Government. 

Amongst other suggestions, it urges slashing the Company Tax rate to make Australia a more attractive place for investment.   

But arguably decreased Company Tax is not the answer and will only lead to further ‘corporate welfare’. 

The white paper complains that 70 per cent of Commonwealth tax revenue is drawn from personal and company taxes.  But what is the alternative?  A higher GST?  More user pays?  More austerity in the context of an-already stunted social wage and welfare state?

Dividend Imputation, Corporate Taxation, Corporate Welfare

On the good side, Gareth Hutchens of ‘The Age’  (30/3/2015) notes arguments have arisen for the potential rescission of Australia’s regime of Dividend Imputation. (tax breaks on share dividends; ostensibly to make up for ‘double taxation’)

For a start, lower Company Tax rates dilute arguments about the unfairness of ‘double taxation’.  Australia’s Company Tax rate has been reduced markedly since the Keating Government which introduced the dividend imputation system.  Countries such as the UK and France – which once had imputation – have now dropped the measure.  It no longer appears ‘necessary’ either for ‘fairness’ or ‘competitiveness’.

To clarify: Nicholas Gruen of ‘The Age’ pointed out in 2012 that the cost of Dividend Imputation to the Australian people (as represented in the Government) of over $20 billion a year!  

The result of falling Company Tax, dividend imputation and other pro-corporate measures has been much lower levels of tax paid by business, and the effective consequence of ‘corporate welfare’, in tandem with other effective corporate subsidies. 

For instance David Holmes  at ‘The Conversation’ has noted– “the fuel tax credit scheme to the mining industry”  which delivered $2 billion in corporate subsidies for mining corporate interests in 2011 alone; and a total of over $5 billion all up.

But it goes much further than this.  Corporate welfare can also be interpreted as taking the form of a falling minimum wage and a falling wage share of the economy. In Australia specifically the wage share fell by about ten percentage points since 1959.  (see the associated graph via the hyperlink above)  That means higher levels of exploitation of working people by business. That is, Australian workers are subsidising corporate profit through lower relative wages.

Further, there is an assault on welfare rights to ‘make room’ for effective corporate tax subsidies; and ‘punitive welfare’ , ‘work for the dole’ etc, effectively reduce the bargaining power of workers because of an insecure and desperate ‘reserve army of labour’.

Also consider the proliferation of ‘user pays’ measures. (for example for access to transport infrastructure;  school ‘levies’; a higher cost of living re: water and energy etc)  User pays mechanisms can only spread as a consequence of lower taxes.  What we do not pay for collectively as tax payers, we will pay for (and usually we will pay more) in our capacity as private consumers.   

Declining levels of corporate contributions (via tax) to the construction of infrastructure, and the development of skills which the corporates benefit from – means the burden is increasingly paid by workers, consumers and individual (private) tax payers.  More corporate welfare!

Privatisation of communications, energy and water utilities and assets such as state-owned banks also saw an end to progressive cross subsidies. At the same time – progressively from the 1980s and 1990s - a more regressive tax mix (including the GST) ‘began to bite’.

Importantly, the argument that rates of corporate and personal income tax must fall because of ‘competition’ does not apply to all companies and individuals.  Many companies cater to Australian markets and Australian consumers.   The threat of capital flight is not universally applicable; and contributing to a ‘race to the bottom’ on corporate tax will result in spiralling and out-of-control corporate welfare.  Global action is necessary to stop the existing ‘race to the bottom’ on tax. 

To get the situation in perspective: Company Tax (now 30 per cent)  has been reduced by approximately 20 percentage points since the time of the Hawke Labor Government. 

The cost to the Australian people of this is tens of billions in revenue annually - which might otherwise have been directed towards infrastructure and education (which the corporate world benefits from after all), as well as health, social services and welfare. 

Even though a return to the ‘high water mark’ of corporate tax may not be possible, an increase to levels enjoyed by other advanced economies might be doable, and would make a big difference.  (nb: US Company Tax goes as high as 39 per cent; Japan 37 per cent and France 34 per cent – see HERE)

Furthermore, arguably most Australians are not so ‘mobile’ as the proponents of lower income tax suggest either.  Taxes also contribute to the quality of infrastructure and services which underscore the desirability of living in particular country. This includes the professionals which some say are likely to ‘pack up and leave’ if progressive income taxes remain.   Indeed the quality of education, services and infrastructure also acts as a ‘pull factor’ for investment and skilled labour.

Income Tax and GST

Treasury is also pressing for lower income taxes and a higher, less discriminate GST.  (eg: apply it also to education and food)

But because apparently an increase in GST is rejected by the Andrews Victorian Labor Government we might hope for a more equitable alternative.  

Unfortunately, though, it is more likely we will simply see further austerity.

The Treasury white paper apparently complains that only Denmark relies more on income and company taxation than Australia.   But ‘just because other people are doing something’ is not a strong argument to follow suit.  More appropriate would be to consider what –if anything – is wrong with the Danish tax system and economy.

Wikipedia states of Denmark that:

It has the world's lowest level of income inequality, according to the World Bank Gini (%),^[8] and the world's highest minimum wage, according to the IMF.^[9] As of January 2015 the unemployment rate is at 6.2%, which is below the Euro Area average of 11.2%.^[10] As of 28 February 2014 Denmark is among the countries with the highest credit rating.

So Denmark has a strong economy.  It has chosen ‘a different path’, say, compared with the Anglosphere. But its path of high, progressive taxes, labour market regulation and strong social welfare works! 

Finally the Treasury White Paper has considered the threat of bracket creep, and apparently the Abbott Conservatives are considering an increased GST as an alternative.

Bracket Creep refers to workers being pushed into higher tax brackets as a consequence of inflation, and (only nominally) increasing wages.  Both Labor and Liberal governments have a history of dealing with bracket creep by returning the proceeds to tax-payers through tax cuts.  Though even under Labor arguably this has sometimes been dealt with in a regressive way.   Higher brackets have been eliminated or cut - or raised so high as to minimise their progressive impact - and restrict (relatively) strong progressive taxation to only the most wealthy of all.  Arguably this is to the benefit of the upper middle class and the wealthy; and to the detriment of working people, including the working poor.  It means the working class and the poor pay more proportionately; and that those in need suffer with the constriction of the social wage and welfare.

But this is not an honest Liberal-National Federal Government.  Joe Hockey made the ingenuous claim, for instance, that Australians pay 50 per cent of their income in tax.  

As Ben Phillips explained at ‘The Conversation’:

“ Nobody in Australia pays 50% of their income as personal income taxation. According to NATSEM modelling, around 3.5% of those who have a tax liability actually face a top marginal tax rate of 49 cents in the dollar. Around 25% of taxpayers are paying a top marginal tax rate of at least 39 cents in the dollar.”

To summarise – Australia’s income tax system involves several brackets.  Higher brackets and rates only apply after specific thresholds are met. So as Phillips insists: NO-ONE is paying 50 per cent of their income in income tax! 

Hockey is not stupid.  Surely he understood this.  Apparently he was attempting to tap into populist anti-tax sentiment through a deceptive and false argument.

But depending on your notion of ‘the good society’ tax as a whole needs to go up; and the tax and spending mix also needs to be reformed.

Negative Gearing, for instance, benefits upper middle class investors; but does not create much in the way of new employment.  And important social programs demand higher levels of social expenditure.

Crucial priority areas which need substantial public funding include:

·         Full implementation of the National Disability Insurance Scheme as well as ‘lifting up’ the standards and resource base for state schools; Extend the NDIS to apply to aged disability pensioners

·         A big public investment in a National Aged Care Insurance Scheme: to provide for the needs of aged Australians both at home and in care

·         Investment in a comprehensive Medicare Dental Scheme

·         Implement Programs to ‘Close the Gap’ on both Indigenous Life Expectancy and Life Expectancy for the Mentally Ill

·         A big investment in new Public Housing stock – solving the housing affordability crisis by increasing supply

·         Fair Welfare and amelioration of Poverty – Raise all welfare payments by at least $35 a week on top of the current indexing arrangements; Thereafter implement fairer indexing arrangements for Newstart, Sole Parents and Student Allowance;  Relax criteria and significantly slow the withdrawal of payments for disability pensioners attempting to re-enter the work-force; Eliminate welfare poverty traps

·         Restructure the Higher Education Contribution Scheme (HECS); raise the repayment threshold and lower interest on debt; suspend all debt for former students who acquire a disability which interferes with or prevents work

·         Public investment in public infrastructure – Including the National Broadband Network – with Fibre to the Home Broadband

At a crude estimate these items would likely cost over $50 billion a year to implement out of an economy valued at around $1.6 Trillion.

Options to fund include Company and Income Tax reform, and withdrawal of Dividend Imputation;  but also the following

·          reform of Superannuation Concessions for the wealthy and the upper middle class*

·         cut Negative Gearing and plough the proceeds into Public Housing;

·         implement an Inheritance Tax;

·         Restore the original (Rudd-inspired) Mining Tax

·         Increase and progressively restructure the Medicare Levy

·         Implement a banking sector tax on super profits

·         Implement progressively-structured infrastructure levies on business and individual taxpayers– to provide for communications, transport, energy-related and water and sanitation related infrastructure – without regressive user pays mechanisms or inefficient/wasteful private finance

·          Implement a progressively structured Aged Care Levy

The Treasury ‘white paper’ on taxation seems at a first glance to largely comprise a ‘wish list’ for Liberals pursuing an ideological ideal of small government, low taxes, and high levels of inequality. (which the Liberal ideologues put down to ‘merit’)   Labor and the Greens need to develop their own responses.  And hopefully this post will contribute meaningfully to that process.

 

*It should be noted, however, that even $1 million in accrued superannuation will  provide a relatively modest retirement income of $33,000 a year.  (compared with a Single Aged Pension of just over $22,000 and in the case of a couple roughly $17,000 each)  This is far from grandiose – though assuming the recipients’ home is owned it provides relative comfort compared with those fully dependent on the Aged Pension.   (more than $10,000/year additional income)   But The Australia Institute has suggested that cuts in Superannuation Concessions  - which cost taxpayers tens of billions annually – could instead be channelled into a more robust Aged Pension – lifting the full Single Rate to just over $26,000/year, and just under $40,000/year for couples.   The rate at which the Aged Pension is withdrawn could also be slowed, benefitting those with smaller superannuation accounts – and especially women – who have suffered as a consequence of interrupted working lives and the devaluing of ‘feminised’ professions.

Joe Hockey shows how “Class Warfare against the Vulnerable” is done

 

 

Joe Hockey is promoting a 'Social Civil War' - pitting even low wage workers as well as the well off and the middle class against the welfare-dependent.   In response to this regressive campaign, Labor cannot accept the Liberals' 'terms of debate' but must propose its own policy agenda for just and socially fair Australia.

nb:an Apology to 'The Australia Institute'; In a typo I accidentally referred to that left-wing think tank when I should have referred to the right-wing 'Sydney Institute'. The typo has been corrected.

Tristan Ewins

Australian Treasurer Joe Hockey has been “on the attack” recently; targeting Australians who for whatever reason have been welfare-dependent, or have benefited from welfare during their lives.  Specifically, Hockey asserted that one in ten Australians were welfare-dependent in some way, with a total welfare bill of $146 billion a year in a $1.6 Trillion economy. 

Apparently, this is meant to produce a ‘shock and horror’ effect amongst an electorate which is considered to be ‘narrowly self-interested’, without any sense of social solidarity, or of the gains to be had through such reciprocal solidarity and also the various forms of collective consumption.

Interestingly, though, Minister for Social Services, Kevin Andrews himself has observed that cash payments in Australia comprise around 7 per cent of GDP, compared with approximately 19 per cent in France; and approximately 14 per cent in Sweden!  Though in Denmark, for instance, there is a much more substantial social wage, with social expenditure at approximately 31 per cent of GDP compared with approximately 19 per cent in Australia.  (also approximately 33 per cent in France,  and approximately 29 per cent in Sweden)

More particularly Hockey has alluded to those dependent of Youth Allowance,  Newstart, the Aged or (military) Service Pension, and the Disability Support Pension.   Apparently in an attempt to stir up division and resentment, Hockey argued that “the average Australian”, whether “a cleaner, a plumber or a teacher” works over a month every year to provide for the nation’s welfare bill. (Herald-Sun, June 12^th, 2014, p3)   This ‘political play’ to narrow financial self-interest ignores the benefits of reciprocal social solidarity via welfare.

Meanwhile in a speech to the right-wing Sydney Institute Hockey launched into a tirade against those he describes as “leaners” as opposed to “lifters”.   For Hockey it is claims that the wealthy must ‘pay their fair share’ that comprise ‘class warfare’; and not the Federal Government’s attacks on welfare, as well as their assaults on Medicare and rights and conditions for labour.  Rather than ‘social solidarity’ Hockey proclaims ‘individual responsibility’. (ie:  ‘sink or swim’)   

In an infuriating furphy, Hockey promoted his personal interpretation of “equal opportunity” as opposed to the ‘straw-man’ of “equality of outcomes”.    On this basis he also attempted to defend the Federal Government’s Higher Education ‘reforms’ – which will see a fee deregulation (some of the highest fees probably reaching well over $100,000), as well as a reduction in the repayment threshold for student loans, and also an increase in the rate of interest paid on those outstanding loans.  (‘The Age’, June 13^th, 2014, p 8)  This will affect women - whose working lives are often interrupted.  

In the same vein, there will be those with significant university debts who for various reasons (eg: disability) may not be able to continue their pursuit of a career in law, medicine etc.  These peoples' university debts could easily spiral way out of control. The element of ‘risk’ here means that many young students from disadvantaged backgrounds will not dare to take on a university debt.  Those that do also may be distracted from gaining their most from study because of the necessity for part-time work.  And ‘equality of opportunity’ in this context is a lie: because those students tend to be concentrated in lower socio-economic zones, with relatively under-resourced schools.   (they may also lack the support of parents who have enjoyed a tertiary education)

In response to Hockey one of the most important of his assertions to deal with is that ‘straw-man’ argument of ‘Equality of Outcome OR Equality of Opportunity’.    Instead of this false dichotomy it is much better to frame the issue as a matter of Fairness.  Pretty much no-one – even on the far Left – want full ‘equality of outcomes’.   Rather there is support for redistribution via the social wage, welfare state, social wage, and forms of social insurance for the sake of distributive justice. (as opposed to full equality)  ‘Equality opportunity’ is part of the picture; but so too are ‘fair outcomes’.

Here, ‘distributive justice’ assumes that the outcomes gained in the labour market through ‘supply and demand’ of skills – and ‘consumers’ capacity to pay’ are not necessarily just.   For cleaners, as well as hospitality, child care, and aged care workers – people whose work deserves respect –there is an argument for intervention and redistribution as the means of achieving fairness.   (not absolute equality)   Those measures of redistribution – through the social wage, tax-transfer system,  welfare state, labour market regulation - do not have to put the remuneration of a cleaner ‘on par’ with a surgeon, for instance.  But all workers who face disadvantage and injustice in the labour market deserve fair outcomes; and those means of intervention are effective means of providing those fairer outcomes.

Arguably Joe Hockey is is attempting to ‘divide and rule’ the nation.  An element of divison is inevitable – perhaps even desirable – in a democracy.  The point of democracy after all is ‘to set oppositions free’ and resolve them through democratic processes. 

But Hockey is inciting resentment against the vulnerable – no matter what he has said to the contrary.   This is qualitatively different than attempts to tax the wealthy – which Australia’s Conservatives try and dismiss with hypocritical howls of ‘class warfare’.

More specifically, Hockey’s approach comprises a ‘bold gambit’.  Low-income workers themselves are to be ‘played off against’ the welfare dependent. Rather than raising minimum wages and conditions, or improving the social wage – they are urged to express resentment against the vulnerable.  The ‘endgame’ is a US-style class system.  The very wealthy are to be ‘untouchable’ and largely untaxed lest we be bombarded with cries of ‘class warfare’.   Taxes are to be ‘simpler’ and ‘flatter’ – that is, more unfair. The middle class are to provide ‘the base of stability’ for Conservative political forces: their lifestyles supported by the exploitation of the working poor. And the working poor – indeed, the ‘underclass’ - are to be ‘disciplined’ by fear of homelessness and destitution – with the erosion of the ‘social safety net’. 

Crime will also likely escalate as a consequence of desperate inequality; but this insight is to be ignored for the sake of a warped, and ultimately immoral, notion of ‘meritocracy’.  How this ‘meritocracy’ is meant to work without real equality of opportunity (especially education); while there is ‘hyper-exploitation’ of the working poor; and amidst ‘windfall’ inheritances in the most privileged families - is not really considered by today’s Conservative Ideologues.  It is ‘an inconvenient truth’.

In Hockey’s ‘grand statement’ to the ‘Sydney Institute’ those designated as ‘leaners’ are to be reviled.  There are Aged Pensioners. (who have largely paid taxes their whole working lives)  And yet no mention of self-funded retirees – whose liquid assets alone can range well over a $1 million – but who receive enormous superannuation tax concessions.  The total bill of those concessions will soon cost the nation over  $40 billion a year. As Richard Denniss of the Australia Institute observes:   "the top 5 per cent of income earners get a third of the benefit, and the bottom 20 per cent get literally nothing."

Then there are the disabled. Underlying resentment against Disability Support Pensions is the notion, for instance, that ‘mental illness’ is not to be seen in the same way as ‘extreme physical disability’.  We’re talking about people with anxiety disorders, depression, schizophrenia, bipolar disorder...   Something Andrew Robb could probably advise the Parliamentary Liberal Party about: and yet from a cursory web-search he does not appear to have done so. 

Often the ability of these disability pensioners to work is intermittent at best.    And the underlying assumption that they are to be looked upon suspiciously – as ‘rorters’.   Hence ‘Disabilitywatch’ has noted moves by the Federal Government to ‘tighten up’ assessment for eligibility, including ‘work for the pension’ for those deemed able to work at least 8 hours a week.  (now to be reduced from 15 hours a week)   But arguably if a person is living in poverty due to disability, and may be capable (intermittently) of some work, then perhaps their payments could be complemented fairly in return for voluntary community work, without the threat of losing that pension altogether.  Instead we are getting another dose of labour conscription – this time for some of the most vulnerable of all.

In conclusion: a movement is building against Hockey’s ‘Robin Hood in Reverse’ Budget.  In Melbourne the day before this article was written the ‘Bust the Budget’ rally amassed around 20,000 attendees – perhaps more.  The ‘Your Rights at Work’ campaign against John Howard’s aggressively in egalitarian ‘Work Choices’ labour market legislation attracted the support of millions.  Today the same is possible if we stand collectively against Hockey’s cynical ploy to ‘divide and rule’ the country.

Yet Opposition Labor Party leader Bill Shorten is ‘treading lightly’ around Joe Hockey’s appeal to divide the nation – a ‘nation at war with itself’; a war of so-called ‘lifters’ against so-called ‘leaners’. So far he refuses to reject this characterisation of Australian society outright.

But Labor cannot accept a political discourse which is propagated on the Liberals’ terms.  Labor needs to respond to Hockey with its own powerful narrative:  of a society based on mutual and reciprocal social solidarity.  This means promoting social security and social justice through a range of measures including labour market regulation, welfare, a progressive tax mix, the social wage, and various forms of ‘collective consumption’.  Not a society of ‘absolute equality of outcomes’ – but a FAIR and JUST society!

In a practical sense that must mean a decisive break on the part of Labor with the mindset of ‘small government’.  Labor must ‘go on the policy offensive’: advocating both old and new policies.  That includes Gonski and the National Disability Insurance Scheme.  But it must also include National Aged Care Insurance and Comprehensive Medicare Dental, amongst range of other policies.   The way is open for a progressive counter-offensive mobilising millions.  Labor, the unions, the welfare sector, and all progressive social movements - must seize the initiative.

Budget Cuts spell Disaster for the Vulnerable

above:   Expect this to become more common on Australia's streets with the implementation of the 2014-15 Abbott/Hockey/Cormann Austerity Budget.

 

Tristan Ewins

The Government of Tony Abbott has proposed a Budget that makes a mockery of his claim to ‘spread the burden’ of ‘reform’ fairly.   The Budget has also made a mockery of the government’s claim to ‘credibility’ regarding its mandate – and the extreme violation of that which is now going on before our eyes.   Massive cuts to health, education and welfare fly in the face of the Government’s pre-election commitments.

We will now go through some of the most alarming aspects of that Budget drawing on the observations from ‘The Age’ and the “Herald-Sun” .

Health:  The Abbott Government is imposing an additional $7 charge for each GP visit, and an extra $5 for those needing pathology services. (eg: blood tests)   For those with no option but to regularly visit the doctor, and have blood tests taken, this could add up to $120 extra a year.  An awful lot if you’ve just been forced onto Newstart, or had all support payments withdrawn!  

Indeed, in  ‘The Age’ Ross Gittins argues health austerity may lead the ‘poor sick’ to delay seeking help until their conditions become acute.  And for those who do not care about anything without a dollar sign attached to it – this could cost the Budget and the economy over the longer run.

The rationale of providing a disincentive for ‘spurious’ visits to the GP is also very doubtful given the already-widespread application of co-payments;  and it is open to question whether pathology services are used ‘spuriously’ in any case.   If the government had balanced these changes with increases to pensions and progressive reform of the tax mix the policy may have sidestepped its otherwise regressive and counter-productive consequences.  But the opposite is now the case.

Education:  In higher education university fees will be deregulated leading to a ‘two tiered’ system at best. ‘Elite’ universities will be free to charge whatever they like – with the very real possibility of $100,000 or even $200,000 degrees. This ‘user pays’ aspect will also be applied to make up for an average 20% cut in Federal Higher Education funding supporting the cost of degrees. 

Abbott and Pyne argue there will be scholarships; but the reality will be a quality of education  generally dependent on the depth of a students’ pockets – rather than merit.  (as a consequence of the prohibitive cost)   Arguably ‘equal opportunity’ should involve extra and widespread subsidies and quotas for students with disadvantaged backgrounds.  And an understanding of education as ‘a social good’ beyond labour market requirements.

Student Loan repayment thresholds will fall regressively and interest rates on loans will sit around about 6 per cent.   For someone whose life is disrupted by disability, for instance, (or perhaps parenthood) university debts could easily spiral out of control.  The Conservatives claim students must ‘contribute’ towards the cost of degrees.  But surely this occurs already through the tax system; and progressive tax is the best way to ensure students (and business) contribute proportionately to the financial benefit gained.

The ‘united ticket’ on Gonski is also to be dropped assuming the Coalition wins the next election and has the opportunity to do so.  (though to be honest even Labor was not fully implementing the Gonski recommendations)

Finally on Education the School Chaplains program will receive a boost of approximately $250 million over five years.  But the contempt for which this government holds the poor and vulnerable exposes the lie of their upholding ‘Christian values’.

Local Government: $1 billion over four years withdrawn – probably leading to an increase in Rates or user pays – or otherwise a degradation of services

Aged Pension and Retirement:   The age of retirement will rise gradually to 70 by 2035; and Pension means tests will be frozen for three years – making it difficult even for part-self-funded retirees with limited means.   Arguably we are now living in conditions of great  ‘material abundance’ compared with many decades ago.  Aside from the systemic imperative of endlessly expanding markets under capitalism, abundance means arguments to ‘work us into the ground’ are not practically or morally defendable.

Other Welfare:   This is where the Abbott/Hockey/Cormann austerity really begins to bite against some of the most vulnerable of all.   Despite offensively deceitful  rhetoric of ‘spreading the burden’ the vulnerable will be driven into the most spiritually crushing poverty; and ACOSS has argued this will lead to a possible sharp rise in homelessness given the withdrawal of ‘the social safety net’.

The measures include:  

·         A six month waiting period for under 30s applying for Newstart; and then ‘Work for the Dole’ 

·         Very tough eligibility criteria for the Disability Support Pension;  particularly for those under 35

·         Unemployed under 26 forced on to the abysmally inadequate ‘Youth Allowance’

Sole Parents will also be affected by the withdrawal of Family Tax Benefit B, and deserve more robust compensatory support than Hockey’s offer of $750 per child  between the age of 6 and 12.  (see: http://www.abc.net.au/news/2014-05-13/budget-2014-ftb-cuts-worth-billions-to-hit-families/5446896 )

Furthermore: the *formula* for determining pensions will be altered by the Coalition Government.  Pensions will be indexed to inflation rather than Average Male Weekly Earnings – with a gradual fall in payments ‘by attrition’.    John Collett at ‘The Age’ believes this could cost pensioners $100 a fortnight “in several years’ time”.

The consequence will be utterly desperate circumstances for the jobless; especially the young jobless.  And those without family to fall back upon will probably end up homeless.  (those forced to move away from the support of family to find work will be hit doubly hard) This is the ‘American model’ that the Conservatives seem to be aspiring to.   The creation of a desperate class of working poor – motivated by the very real fear of falling even further down the social ladder – into homelessness; and the destruction of all hope.  But for neo-liberals this desperate ‘reserve army of labour’ is ‘functional’ in weakening the bargaining power of workers.

 It is also becoming apparent that the Federal Coalition’s $300 million cut to pensioners’ concessions will apply to everything from water to energy. (so much for fighting ‘cost of living’ pressures) Some ofthe Victorian Conservatives are outwardly angry with Abbott, as $73-$75 million in cutbacks to pensioner concessions will flow on to Victorians specifically. This could be the beginning of an internal rift within the Conservative parties: whose ‘endgame’ could include driving (or for some others providing a pretext) for desperate state governments to lobby for an increase in the GST rate, or a broadening of the GST base.



Theoretically the GST can increase in the context of a more progressive tax and welfare mix to compensate the poor and vulnerable, and average workers. But the odds are more in favour of a regressive mix – with GST ‘reforms’ hurting low income earners and pensioners again who had already been hit hard. Arguably a more regressive mix for Hockey involves a swipe at ‘the undeserving poor’ – in favour of those ‘millionaire wealth creators’, and some ‘self-funded retirees’ whose very comfortable conditions of retirement are effectively subsidised by taxpayers to the tune of tens of billions in tax concessions every year.



Also importantly: with cuts in the Carbon Tax, Mining Tax and Company Tax overall revenue is still likely to fall. The question that follows is thus: Will the GST be promoted to overcome ‘the infrastructure deficit’ – or will infrastructure privatisation reach previously unheard of extremes; with the public being fleeced in the context of ‘user pays’, and the relatively unfavourable cost structures of private enterprise? Few in the Liberal Party (or even Labor) look set to accept the proposition that a mixed economy is better for capitalism, and better for workers and the disadvantaged at the same time. So this Budget is likely only ‘round one’ of a protracted assault upon Australia’s social wage and social insurance.

Conclusions

Those enjoying incomes of around half a million a year will have to pay $6400 extra in tax. But again in a morally abhorrent fashion the government is contending that this has seen a ‘spreading of the burden’.   While millionaires will barely notice the ‘mosquito bite’ that is the temporary, so –called ‘budget repair levy’ – the effect on the poor and vulnerable will be utterly crushing and permanent.

‘The Age’ argues that the Coalition is now set to withdraw $80 billion “from schools and hospitals over the next decade.

Hockey argues Australia is “a nation of lifters, not leaners”.  He has little appreciation of the fact some of us have no choice to lean lest we fall down.  He is willing to judge the vulnerable; but he is unwilling (and probably unable) ‘to walk in their shoes’.    Under such circumstances the civilised and compassionate thing to do is to provide support for those who have the need.   Altering the formula for calculating pensions as they are, the Conservatives instead exhibit contempt for these people.

The Liberal Government would likely want to play down the legitimacy of claims to disability pensions on the basis of mental illness, for instance – playing upon popular misperceptions in order to legitimise a callous agenda.  Liberal MP Andrew Robb could possibly set them straight on that were they willing to listen…  If he has it in his heart perhaps he should make some kind of statement against these attacks against disability pensioners.  (many of whom do not have relative material wealth to fall back on)

Finally ‘labour conscription’ applied to disability pensioners able to work 8 hours or more a week  comprises further cruel exploitation of the most vulnerable.   Better to provide positive incentives for flexible community work – with untaxed payments on top of the pension -  rather than ‘the big stick’.  Flexible opportunities are crucial as disability can inhibit a person’s ability for regular work.

Abbott’s radical abandonment of the welfare state comprises both a rejection of ‘Catholic social welfare Centrism’, and also of the very-conservative but welfare-minded tradition of the Democratic Labour Party from which Abbott originally emerged.  It flies in the face of Pope Francis’s warnings about the dangers of unbridled capitalism lacking of social conscience.

What remains to be seen now is how Labor will respond over the coming years. Will Shorten ultimately capitulate on welfare, social wage and social insurance in order to maintain ‘small government’; or will he follow the principled path instead of ‘short term opportunism’?

In the meantime progressive social movements need to coalesce and prepare for the fight of their lives.

 

Hard Copy Sources:  ‘The Age’ and the “Herald-Sun'; May 14th and 15th