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Sunday, December 6, 2015

Critique of Labor and The Greens on ‘Policy Compromise’


 
above: Labor and the Greens can work together; But need to be conscious of each others' electoral imperatives ; Carbon Tax was good policy ; but a 'political death warrant' for Labor


Dr Tristan Ewins

Recently the Australian Greens negotiated a compromise with the Liberal Federal Government in Australia on the question of pursuing tax evasion by “Australia’s wealthiest private companies”. ‘The Age’ reported that as part of the compromise “Up to 300 of Australia's wealthiest private companies will be forced to disclose their annual tax bill for the first time.”   But that the legislation also will “shield up to 600 more companies that would have been brought under new transparency requirements.” 

Labor has branded the deal “a sellout”.  They had pressed for all companies with revenues of over $100 million to be affected by the reform – whereas the Greens negotiated a compromise with a threshold of of $200 million. Labor argued a compromise was not necessary – on the assumption the Government itself would have been forced to compromise before the end of the sitting of Parliament.

(Read more: http://www.smh.com.au/federal-politics/political-news/greens-deal-with-scott-morrison-on-tax-shield-sparks-labor-fury-20151203-gle9ft.html#ixzz3taKrNOA9
Follow us: @smh on Twitter | sydneymorningherald on Facebook  )

Also considered recently in discussion has been the decision by the Greens several months ago to agree to another compromise - tightening means tests on Aged Pensions in order to save $2.4 billion over four years. 

By contrast Labor was arguing for reform of Superannuation Concessions delivering windfall gains to some of the very most wealthy: though arguably Labor wasn’t considering a broad enough base (including the upper middle class) in order to bring in serious revenue without need for unfair austerity elsewhere.  

To summarise: Shorten’s plan foreshadowed savings of $14 billion OVER TEN YEARS.  But the Government is facing a deficit ballooning to over $40 billion a year ; and root and branch reform of tax is what is necessary – not only to get the deficit under control, but to pave the way for a reforming Federal Labor Government which actually improves the social wage, social insurance and social welfare by tens of billions in the context of a $1.6 trillion economy.

Again by contrast:  The deal agreed to by the Greens with the Liberals  had 170,000 of the most financially disadvantaged Pensioners standing to gain $30/week as of 2017; But approximately 330,000 (relatively better-off)   Pensioners would see cuts through tougher means tests ; and more than double that into the future. 

 


 

The following are some excerpts regarding my thoughts: not only on this specific compromise, but on the ALP working with the Greens generally.

 

SL in relation to the Greens ; Is it right for the SL to Criticise ALP Policy?

 

At the ‘ALP Socialist Left Forum’ Group we’ve had plenty of debate on the place for criticisms of the ALP. Should criticism be considered ‘treason’ of some kind? Should we work for co-operation with the Greens – or should we fight them tooth and nail on account of the threat to several of our most talented Left MPs ; and the likelihood of declining Socialist Left influence in Caucus and Cabinet?

 

Nonetheless: Labor often gets it wrong on policy.  For instance, we often pursue symbolic policies for appearances sake which are far from the ‘root and branch’ reform needed to serve the interests of our constituents.   Shorten’s Superannuation Concession reforms are very modest , and at this rate Labor will be pressed to pursue extensive austerity if we regain government. Perhaps regressive policies such as more attacks on vulnerable groups such as Sole Parents.  Or an increase in the Age of Retirement.  And yet Labor’s Platform leaves the way open potentially for an expansion of progressive tax and social expenditure.  Labor still has options for a genuinely progressive mandate.

If as the most significant Left formation in the country (The broad ALP Socialist Left)  we do not criticise our own party's policies when our leaders get it badly wrong - then who will step into that space? There are a number of possibilities. Either groups like the Greens will step into that space ; or because of our silence the Left more broadly will be demobilised.  This would especially be a threat if the Greens’ tending towards compromise marked ‘a move to the Centre’ which again would leave a space in the Left of the Australian political milieu.  A new challenger on the Left of Australian politics could take a long time to re-emerge therefore ; just as it has taken decades for the Greens to establish themselves properly.  This would simply assist the broad Australian Right in consolidating their hegemony.

 

Don't get me wrong:... I'm all for staying and fighting within the Party. But when the Party leadership gets it badly wrong its up to us whether we vacate that (public) Left space and/or demobilise the Left - or whether we choose our battles - and publicly dissent at times – in the context of important debates – such as a much more robust winding back of superannuation concessions for the wealthy and the upper middle class.  We must do this because there is the alternative of Left demobilisation. And before we know it even our own people don't know what we're supposed to be fighting for anymore... (take privatisation, tax reform, social wage and welfare expansion and reform, industrial rights and liberties etc)

 

Insofar as criticism is constructive we shouldn’t just tolerate criticism of  Labor policy - indeed it must be encouraged. 

Nonetheless,  the trend towards Labor and Greens just trashing each other always seems to involve a degree of 'spin' and is not necessarily 100% honest.  What we need is honest, reciprocal criticism.

 

There's also the urgent question: What will WE (ie: Labor) do on Company Tax? Here we really need ALP and Greens to team up and vote down Company Tax cuts - because that is Corporate Welfare.  That is business avoiding paying their share for the services and infrastructure they benefit from!  So instead ordinary citizens, workers, taxpayers - are left to pick up the tab – directly or indirectly. (whether with an increased GST, or austerity elsewhere) Where does Shorten line up on this? (seriously)  There are many billions at stake.

 

More on Greens Compromises

 

Regarding Greens’ compromises it must be observed: It’s the old dilemma over whether to compromise and get something 'right here right now' - or whether to hold back - in the hope of discrediting the Conservatives - and getting something much better with the next change of government. Labor has faced these dilemmas itself at times.

 

For instance, the Carbon Tax was the best policy - but was politically impossible after Gillard’s commitment "There will be no Carbon Tax in a Government I lead". The Greens should have recognised this. There were other options. Like billions in annual direct public investment in renewables research and infrastructure.  In a convoluted kind of way the Greens’ insistence on the Carbon Tax could even have been considered an instance of opportunism in its own right.  The Greens got their policy – and it granted them prestige with their constituencies.  But arguably it sealed the fate of the Labor Government.  This is not to say the Greens shouldn’t press their leverage to get robust policy compromises from Labor.  And arguably Julia Gillard should never have backed Labor into that corner in the first  place.  But direct investment in renewables research and public infrastructure would not have involved a blatant, high-profile broken promise.  Of note:  Labor must not back itself into a corner on ‘small government’ now either!

 

 

What Reforms must Labor and the Greens pursue now as the 2016 Federal Election approaches?

Instead of just positioning against each other with the hope of gaining an electoral advantage over largely ‘cosmetic’ policies, again Labor and the Greens should be projecting root and branch reform in any Labor Government where the Greens hold decisive sway over the cross-benches


More specifically: Labor and the Greens need to move together to secure a minimum $35/week increase in all full pensions INDEXED upon Labor taking government.
This must include Newstart and Student Allowance.   Although I've been arguing for this for years already and $35/week isn't as much as it used to be. Full indexation is crucial, and perhaps now the figure should be somewhat higher.  (eg: $40/week)

 

Also in an exchange at the ALP Socialist Left Forum Facebook Group I accepted the need for subsidies to help the elderly invest in air conditioning and heating. Increasing the Aged Pension should be part of that. Existing pensions and payments make insufficient consideration of contingencies which vulnerable Australians may be faced with.  From a visit to the dentist to having to replace a washing machine – such everyday challenges can leave our most vulnerable destitute.  

Some would call the Greens' compromises through 2015 opportunism. Labor would attract that claim from the Greens themselves if it was Labor who had made the compromises. The Greens are trying to shake off their reputation as a ‘protest party’ – which never has to compromise.  Labor argues the Greens are about appearances re: policy protest – but are not about outcomes. 

But there is the argument that some of the compromi...ses the Greens have pursued have helped the most vulnerable. Though in a way which has hardly been fair to some people who would not fairly qualify as 'rich'.

There are two sides to this. What matters is that if we get a Labor Government - and if the Greens hold the cross-benches - there will be no more need for 'compromise with the Liberals'. And in that case we should see the whole policy schema recalibrated in a way which is truly fair - and doesn't involve 'compromises' whereby one constituency (not really 'privileged' by any reasonable measure) is played off against another (truly, genuinely disadvantaged). Better to target the top 15 per cent income and wealth demographics for redistributive measures aimed at improving the lot of those on low and middle incomes ; workers and vulnerable welfare recipients.

 

Target 'the top 15 per cent' as it is a narrow enough constituency for redistribution to be fair ; narrow enough to be electorally viable ; and broad enough to bring in serious revenue for serious reforms....

 

The problem right now is that most in the Parliamentary Labor Party will oppose taxing the sole residence of the elderly - fair enough - but they may not support other progressive measures (as listed) necessary to repairing the welfare state, social insurance and social wage.

 

Ideally we should pursue a more progressive tax mix which does not necessitate the elderly being forced to sell their home towards the end of their lives when familiarity can be so important. We should hit superannuation concessions for the wealthy and the upper middle class. We should restructure the income tax mix radically. We should consolidate Company Tax and begin to gradually wind back D...ividend Imputation - which most advanced economies manage to do without. (worth over $20 billion now)  Perhaps we should tax the banks. And perhaps we should tax the largest inheritances ; and introduce a Tobin Tax on financial transactions. Finally we should definitely raise the Medicare Levy - and progressively restructure it into more progressive tiers.

With this we can bring in tens of billions. We can introduce National Aged Care Social Insurance ; we can implement Medicare Dental, Physio and Optical and cut waiting lists. We can fully implement NDIS. We can implement Gonski and transform HECS into a genuinely progressive tax.  We can invest billions into social and public housing, as well as infrastructure of all kinds – increasing housing supply , making housing affordable , providing transport and services to new suburbs. We can revivify Legal Aid, and we can provide Federal Funding for Local Government - to make Local Government less dependent on relatively regressive levies/council rates. And we can reform welfare, support payments and pensions and lift the most vulnerable out of poverty. Finally, we can invest in the ABC and SBS. That's what we should do ; and it doesn't necessitate driving the elderly from their homes - even if their homes are valuable. And especially if their residence is their major asset - and they are not wealthy aside from this by any reasonable measure.
 

In conclusion – Labor needs to settle on policies of depth and substance. Because while ‘cosmetic’ policies may win over some voters – that is not our ‘reason for being’.  Labor should not be driven by the quest for government purely for its own sake: outside the context of winning deep, meaningful reforms.  Before Thatcherism and the decades-long retreat of the Left there was reference to the notion of “The Forward March of Labour’.  We need to reconceive of our reform trajectory.  Of what comprises our ‘forward march’ on policies which reform social wage, social insurance, welfare, personal and collective liberties, the extension of democracy – and more. 

And we need to establish our reform trajectory quickly and soon if we are to have the time and the opportunity to sell such a package to voters ahead of the Federal Election in 2016.

9 comments:

  1. nb: another possibility THEORETICALLY is that if the Greens move towards the Centre, Labor could move to the Left ; and as the most left-leaning Party would also remain the most sizeable progressive party in a 'Progressive Bloc'. But the neo-liberal ideologues in some quarters of the Right might fight tooth and nail against that. Also its hard to foresee Labor shifting on refugees when its dug itslef into a hole there. That means in such a scenario things would become very complex. Also theoretically Labor could lose some votes with a more liberal refugees policy ; but could win these and more back with progressive economic, industrial and social welfare policies. ALSO the Greens grassroots would fight a move to the Centre - so this scenario (Greens moving to occupy the Centre) is likely to remain purely theoretical.

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  2. I agree with the direction you're taking this discussion,Comrade. In fact, I've been making many of the same points myself in public,going back to at least March of this year:

    https://www.youtube.com/watch?v=XnnOA90YgCU

    Our differences lie in our relative emphasis on class, including our different notions as to what the concept of class defines e.g. your use of the term "middle class". This may seem a minor difference,Comrade,but to me,the misunderstanding of class is a fundamental error from which flows a river of errors, which in turn, perpetuate the policy errors of the ALP.

    The class collaborationist language which Comrade Shorten uses all the time is fundamental to his understanding of how labour should relate to capital. I don't think this is an accident, nor do I think it dishonest on his part. He genuinely believes in it, just as his forebears, Hawke and Keating believed in it. I heard him using it this past Sunday in the interview he engaged in with Barry Cassidy. It's a view which undermines labour militancy and gives Labor MPs the go ahead to vote for "realistic" cuts to the social wage i.e. public health, education and welfare. Raising the age at which the pension can be taken is just one of many examples. The continued collaboration with the Coalition on regressive taxation and calls to reduce the company tax flow from this premise i.e. that the working class and the capitalist class have interests in common. This notion is usually served with a patriotic, nationalist wrap. Comrade Shorten and the rest of the ALP leadership, especially those in the right faction, do it all the time.

    If the ALP left could vocally support this one change in political orientation, we might begin to gain credibility and the horsepower needed from rank and file activism, to wit: that labour is entitled to all it produces. With that sort of class conscious backing from amongst rank and file, especially the rank and file in the union movement, we would become a force to be reckoned with. As it stands, the right just laughs us off as being dreamy eyed idealists who have no choice but to collaborate with them as they collaborate with the capitalist class, eventually moving through the revolving door of good government into corporate boardrooms.

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  3. Absolutely excellent article! Thanks very much. As a lifetime Labor voter and supporter, and an active member of community groups, we are so sick of Labor having no apparent vision, and making decisions accordingly.

    We were disappointed with the Rudd and Gillard governments, especially the worst of the worst, the endorsement and expansion of Howard's policies for sole parents.

    Sole parents and their children have been betrayed by a woman who calls herself a feminist. Disgusting.

    Recent occasions where the LNP has passed legislation with the support of Labor are contrary to the principles of Labor’s raison d’etre. What does Bob Hawke think of the complete undoing of his 1987 child poverty promise?

    If anyone could design a cut with the intention of having teenagers drop out of school early, then these family payment cuts are just that.

    The fact that sole parents are not presently included in these cuts is just buying into the divide and conquer myth, and over time, will become another reason for sole-parent bashing, a favourite pastime of the Abbott/Turnbull government.

    In 1986, I attended the conference in Sydney to discuss the Social Security Review paper on Income Support for Families with Children by Bettina Cass. One theme that emerged unanimously from that conference was that parenting children necessarily incurs additional costs and that families should be helped with these additional costs, as in nearly all OECD countries.

    This was especially true for all parents in the low-paid workforce, who were eligible to receive the payment Family Income Supplement, renamed Family Allowance Supplement by Bob Hawke’s government.

    This was the payment which was effectively doubled, and then indexed, under Hawke’s child poverty promise. This was the core part of the promise for children.

    This was renamed Family Tax Benefit under the Howard government. Have we forgotten about what it means, and its history, starting with child endowment in the 1920s?

    How can anyone think that the expansion (“trial”) of more draconian income management, which costs the government huge amounts to administer, is even worth looking at.

    The existing income management “trials”, some having now been in place for nearly ten years, have not been properly evaluated. They are ineffective and undermine the self-worth of the people affected. Existing income management should be terminated immediately, which will raise revenue.

    Income management was always a bad idea. It should be abolished, not more ‘trials’ put in place.

    Let’s income manage those on the highest incomes, and see how they enjoy having their choices taken away from them.

    Excerpt from Bob Hawke’s speech 23.6.1987:

    “Labor's new Family Allowance Supplement will be paid, to mothers, on the basis of family income and family size.

    The Family Allowance Supplement will total $22 per child per week - with an extra $6 a week for children aged between 13 and 15.”

    The statistics showed that this measure, and especially its indexation over time, did indeed improve child poverty rates in Australia.

    Now child poverty is on the rise again – in 2014, 18% of children lived in poverty, or one child in every six. Child homelessness is also increasing.
    ... cont’d

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  4. cont

    And Australia chooses at this time to make cuts to its already stingy income support.

    Australia’s support for unemployed people, including those over 55 years old, sole parents with children over 8, is the lowest in the world (except Korea) *

    Successive governments since Paul Keating in 1995 have refused to even discuss raising these measly payments to the poverty line. Nothing in 21 years: not even a small increase, not even a more adequate indexation formula, not even a small change to the income test.

    This is a state of affairs which should not be tolerated in Australia. Bob Hawke recognised this. Gough Whitlam recognised this.

    Susan J Barclay,
    Melbourne, Member FGFP, AUWU, CSMC
    https://www.facebook.com/unemployedworkersunion/photos/pb.349971545141556.-2207520000.1449465985./418158291656214/?type=3&theater OECD

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  5. Thanks Susan I really appreciate your knowledge and insights here. :-)

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    Replies
    1. Yes, those were some enlightening pieces of history, Susan. To me, it confirms the drift toward class collaboration and the transfer of the wealth the working class produces to the upper 10% and the companies they own. It's a drift in time. And those who do not learn from history are condemned to repeat their errors.

      Bob Hawke betrayed the promise of Gough Whitlam. He and Keating sold us down the same river that Tony Blair sold UK Labour down, the river of class collaborationist nationalism.

      Delete
  6. Ah - the thorny issues of deficit and taxation.

    I have a slightly different take on these matters.

    [Continued]

    Firstly, I do not see any likelihood of $40 billion deficits per year. The deficit is 35 billion and projected to decline. See here:

    http://www.budget.gov.au/2015-16/content/highlights/economy.html

    However by choosing alternative assumptions I am sure it is possible to construct different perspectives if so desired. So perhaps in the future $40 billion deficits may develop.

    With that said, I think we need a complete reorientation of our tax system and a reorientation of the labour movement to campaign for it.

    For example, when mining profits were skyrocketing, efforts by the ALP to adjust our tax regime with a super-profits tax were subverted – but part of this defeat can be associated with the fact that the ALP rank and file and unions and community activists were never used to build a campaign in defence of such taxes.

    Now that mining profits have fallen, in complete contradiction to their earlier stance, the Liberals etc want to adjust our tax regime to compensate and increasing the GST ploy is the most visible sign of this. These moves represent a shifting of yet more tax burden from companies (ie capital) to consumers (ie workers and pensioners).

    [Continued]

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  7. [Continuation]

    Irrespective of good times or bad – capitalists in government will always shift taxation from Capital to Labour. When workers buy a house they get hit with stamp duty, but when capitalists buy financial assets such as company shares, this is tax free. When workers buy a house they get no deduction for interest payments. When capitalists buy houses or financial assets they get a deduction for interest. When workers wear out houses they cannot claim expenses or depreciation, but when capital wears out, it gets all sorts of deductions and even in some cases, accelerated depreciation.

    When workers go bankrupt they lose their houses. When capitalists go bankrupt, they keep their houses.

    When capitalists pay the GST they recover the entire amount in sales revenue. When workers pay the GST this is a complete loss of purchasing power and therefore of equity in society.

    But capitalism is worse than this. According to ABS 6302.0 Average weekly earnings are around $1,137 per week and there are just under 12 million workers (ABS 6202). So each day Australian workers, aggregated, receive just over $3 billion, which is taxed heavily by payroll taxation, PAYE and GST plus sales tax when appropriate.

    However capitalists purchase as least as much and more each day on shares on the ASX. The data is in “Course of Sales” spreadsheets on the Australian Financial Review website - http://www.afr.com/share_tables/#archives

    For example; on 11 August 2015, capitalists transacted $3.9 billion in industrial stocks and $0.9 billion in mining stocks, totalling $4.8 billion. On Xmas eve, 24 December 2015, the total was lower at $1.8 billion (mining plus industrials).

    Over a year the amount must come close to $1 trillion. This is not taxed as it is deemed to be a financial supply under GST Regulations. Financial supplies such as home loans are not taxed with a GST. But shares are an asset that can be purchased with loan money and can be used to raise further borrowings. They are also liable to capital gains taxes. They are an asset just like a house and should be taxed with stamp duty or equivalent. $35 billion annually can be obtained with a 3.5% tax rate.

    A Tobin tax on foreign exchange may have greater potential for funding all those social welfare projects necessary to counter the contradictions of capitalism – unemployment, homelessness, inequality and greenhouse gasses. Currently spot FX turnover is about $15 billion per day including public holidays, see RBA table F09. This is triple the turnover of shares. In previous years it was over $20 billion. A 1% tax would hardly be noticed by these capitalists as exchange rate variations are similar and would raise $45 billion over 300 trading days.

    So this is the reality. Turnover of Labour income of around $5 billion per day is taxed heavily while turnover of Capital of at least $20 billion per day is taxed hardly at all.

    ***********************

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  8. Thanks for the info Chris ; I always appreciate your comments. You're right about the shift in tax from capital to labour. Though ironically that can hurt capitalists indirectly through lower working class consumption power. Unless they shift the burden to "unproductive" elements. That is: attack the most vulnerable. Or as in the case in the US prop of middle class living standards through the hyper-exploitation of the working poor. With voluntary voting the 'middle class' supports political stability there as well... On the basis of the disengagement of the most deeply exploited layers.

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