Labor's 'last best chance' to prevent a 'downwards spiral' of austerity

 

above: As Finance Minister Penny Wong is well-placed to attempt to 'head off' any strategy of unnecessary austerity for Labor's May Federal Budget. Penny, Please stand up for what it right!

Tristan Ewins

Dear Readers:  I wrote the following after the government’s announcement that it was cutting back higher education funding in order to pay for a much-reduced version of the Gonski education reforms in the May Budget:

As to what is determining Labor’s behaviour – I think there was an element of cynical opportunism when it came to Sole Parents.  (playing on peoples’ prejudices – but ultimately causing more self-harm in the process – by losing credibility with parts of its base… )

But on Gonski I think it’s a bit more complex.  I think – as a friend of mine said a short way back – that Labor is ‘curling up into a ball’ in the face of attacks from powerful vested interests.  Hence the collapse on superannuation concessions – ie: tax shelters for the rich; on the Minerals Resource Rent Tax; and now the retreat on Gonski. 

It seems they would rather compromise their core ‘signature’ policies then take on the powerful and wealthy vested interests…  And what they don’t seem to grasp is that this does not win respect over the long term.  It only makes our adversaries more confident, brazen and aggressive in their attacks on what remains of the welfare state, the tax-transfer system, the social wage….  IN short – If we never fight -  It means we almost completely lose control of the discourse over the long term.  We all but completely lose control over the definition of the prevailing ‘common sense’ on everything from tax to industrial relations, and social expenditures, infrastructure and welfare…  The Conservatives get their way no matter which party governs….  Failure to defend social justice, progressive taxation, the principle of redistribution  - will mean the self-liquidation of Australian social democracy unless someone else steps into the breach.  And the Greens could not achieve that on their own either.

But that said there IS progress for state education if Labor’s policies go through….  The means of paying for it are regressive; But it is still a more progressive overall outcome than what we already had…  Students – including students from low income backgrounds – will have to repay ‘start-up scholarships’.  This is bad.  Though it is mainly students from higher income backgrounds that will lose out from the decision to prevent them paying their HECS fees up-front.  And at least repayment will be deferred.   (the obvious question now being where the repayment threshold is set) 

Regardless, though, it is a Positive-Sum Affair for disadvantaged students taken overall  – many of whom would never enjoy the opportunity of tertiary study were it not for this re-ordering of priorities.  Hence additional resources for indigenous, disabled, non-English speaking and poor-literacy students – and the ‘Lion’s Share’ going to state schools.

In short – this policy could also be crucial in stemming the drift of students to private schools to the point of ‘critical mass’ – where otherwise the state sector would become permanently second-class and residual.  The policy inflicts an injustice on tertiary students –but will provide opportunities for many who otherwise would never have a hope of a tertiary education; or even of making the most of Year 12.

The policy involves about half the resources that Labor originally promised, also.  Much is expected of the States given their finances.  The States should not be obstructionist – or blur the issues.  But while they are low on cash themselves – the logic of events could lead to user-pays infrastructure inflicted on us by the State Governments.  The states should promote the cause of federal tax reform to make all this unnecessary  – but it seems they are only interested in increasing the GST and removing exemptions for food  – as today’s conservatives  seem to ‘believe in principle’ in flat taxation that hits the poor hard.   Apparently this Ideology is not “class warfare” but anything else even mildly progressive is...

All this also begs the question what is going to happen to the National Disability Insurance Scheme (NDIS).  Tony Abbott says he supports it.  But Of course he will have no problem ‘neutralising’  the issue by paying for the program with savage austerity against the apparently ‘undeserving’ poor – for example the unemployed; and possibly against mentally ill recipients of Newstart deemed able to do ‘some’ work.  Where Labor would get the money from is anyone’s guess.  But with a price-tag in the vicinity of $15 billion/year to implement the policy I am afraid we are going to ‘squib’ the issue again by only half implementing the policy; and projecting full implementation into a distant future that may never come.

Labor would be more credible if they stood up on these signature policies even if it means abandoning the idea we can have a ‘Positive Sum Affair’ FOR EVERYONE.  Again this is the myth cultivated with the whole ‘social justice equals class warfare’ discourse. ( ie: that ‘the state should get out of the picture’)   This is sold as a liberal principle and ironically it exploits past Australian egalitarian traditions and self-image.  But in fact this discourse rests firmly on the interests of the wealthy; who seek to divide us all against each other on the basis of an economically Liberal Ideology, ‘downwards envy’ and other prejudices.

THAT outcome (ie: squibbing on NDIS) is what we need to agitate and mobilise against as the 2013 May Federal Budget approaches.  Without an assertive, confident and progressive Labor the task will become all the more difficult for the government, and  Labor will not be able to inspire activists, trade unionists, environmentalists into the kind of on-the-ground campaigning which alone can counter Abbott’s advantage of uncritical and biased monopoly mass media coverage . It could actually be a more difficult task, in fact, than had they stood up to the vested interests in the first place.

Finally: now that we have ‘squibbed’ on the issue of superannuation concessions even centre-left commentators like Tim Colebatch are arguing that significant austerity cannot be avoided.  But let’s be clear: Compared to other OECD countries we have small government in Australia.   By some estimates removing ‘middle class welfare’ could save a few  billion; but this pales in significance to the money that could be saved by winding back superannuation concessions for the top 5%-10% income demographic, and by reducing dividend imputation – just for a start.  Instead  of conceding the logic and the agenda of austerity rather Labor and the Left need to go on to the front foot and move towards an extension of social welfare for the most disadvantaged and the most vulnerable….  Aged Care is perhaps the most vital area where action is necessary – when one considers the regressive nature of existing user-pays mechanisms – and the sheer extremity of the human suffering by these amongst our most vulnerable citizens….

Tony Abbott apparently has a Democratic Labor Party background if you trace it back far enough…  And while the DLP and the NCC did untold damage to the ALP during the years of the split, you would at least expect from them a  ‘Catholic social welfare’ outlook with a measure of compassion for the poor.  Some have commented that towards the end of his life B.A Santamaria realised that in facilitating the neo-liberal hegemony the DLP did more damage to its cause then had ever been inflicted on them by the Left.   And now Abbott himself promises to be the bearer of previously unheard of austerity.    

It is not only Labor that needs to search its conscience when it comes to the treatment of the vulnerable, including Sole Parent families.  Abbott could have used his leadership of the Liberal Party to lead it down the path of ‘compassionate conservatism’ after the fashion of the immediate-post-war German Christian Democrats.  Instead the disabled and the unemployed stand to suffer, and one can only speculate where else the axe may fall when it comes to further austerity in the Ideological pursuit of ever-smaller government.   The American-style rhetoric against practically any and all social investment is incessant – with no regard for the human consequences when the time comes to put this rhetoric into action…   The rights of the Aged don’t seem to be ‘factoring in’ with either of the major parties, and nor do we hear much from the Greens on that issue as well.

For both Abbott and Labor – Search your consciences when it comes to austerity and the rhetoric of  small government.  Neo-liberalism is not the proper ideology of Labor and social democracy, and nor is it the proper Ideology for compassionate Conservatism with a Christian ‘social welfare’ outlook.

For Labor’s part it is not too late for a mix of tax reform and reprioritisation of expenditure that avoids austerity against the vulnerable.   There is the potential mix of MRRT reform, reduction of dividend imputation, and winding back of ‘middle class welfare’ – that combined could bring in maybe $15 billion a year.  Reform of superannuation concessions has been ruled out for this year – but must factor into our plans for the future.

We have a choice.  Only a progressive ALP can inspire and mobilise its core base and potentially sympathetic social movements.  The May Budget is perhaps our last best chance to achieve this.

For details re: Labor’s Tertiary Education cutbacks see:  http://www.afr.com/p/national/education/extra_bn_for_schools_under_gonski_tFWyWqxCXfag4O1BvsOkMJ

Why are Sole Parents Under Threat?

above: Sole Parenting IS work in itself!

On  Jan 1 2013, the Australian Labor Government moved 84,000 sole parents, whose youngest child had turned 8, from Parenting Payment Single (PPS) (Grandfathered), a single parent pension, to NewStart, an unemployment benefit. The government justified this decision by suggesting they were merely encouraging workforce participation and bringing equality to 2 different groups of single parents, (pre and post 2006 recipients).

 

Maarit Hahkomaa argues for the recision of that decision in light of the existing pressures on sole parents - and the needs of their children. The May Budget is the perfect opportunity to sets things right again...

Maarit Hahkomaa

The Governments suggestion that this amendment to legislation was a measure to encourage increased workforce participation by sole parents is not supported by statistical evidence regarding workforce participation by sole parents. 

“In June 2011, there were 950 thousand lone parent families, making up 15% of all families. About two-thirds of these lone parents were living with their dependants. 

There were 780 thousand single mother families in June 2011, making up the vast majority of lone parent families (83%).

The parent was employed in 59% of lone parent families with dependants in June 2011. In these families, 70% of single fathers were employed compared with 57% of single mothers. Employment among single parents generally increased as the age of the youngest dependant increased, with 73% of single parent families whose youngest dependant was 15–24 years old having an employed parent, compared with 35% whose youngest dependant under 5.”  http://www.abs.gov.au/ausstats/abs@.nsf/Products/6224.0.55.001~Jun%202011~Chapter~Lone%20Parent%20Families)

In June 2011, there were 1.2 million jobless families - some 19% of all families. Of these, 910 thousand were jobless couple families - about 1 in every 6 couple families - and 290 thousand jobless lone parent families - almost 1 in every 3 lone parent families.

(http://www.abs.gov.au/ausstats/abs@.nsf/Products/29A3CF0D42678E8CCA25791800129C47?opendocument)


The revision of the Fair Incentives to Work legislation was initially introduced in 2006, when there were approx. 800000 single parent families receiving PPS.  The change in legislation, which moved single parents from PPS to Newstart when their youngest child turned 8, (rather than receiving PPS until youngest child turned 16) would apply to new applicants after July 2006. Existing PPS recipients would continue to receive PPS under the former legislation – known as Grandfathering.
The provision for “grandfathering” of PPS recipients at the time was a deliberate move by the then Liberal party Government to make the changes in legislation more palatable to the general public.

Senator SINODINOS (New South Wales) - Tuesday, 9 October 2012 “It was a very deliberate decision on the part of the government to grandfather people who were on these payments at a certain date. The reason for that was actually to make it easier for the public to accept the reform by making it clear that it was not having a retrospective impact but rather that it was focused on new recipients. This has been an important principle in a lot of social security legislation and, indeed, tax legislation over the years. Its purpose was to make it easier for the community to accept the reform.” (http://parlinfo.aph.gov.au/parlInfo/search/display/display.w3p;query=Id%3A%22chamber%2Fhansards%2F3a74ad30-c7a6-48d2-b316-bc4615cee12a%2F0011%22).

As such, the change in policy went largely unnoticed and undisputed in the wider community, just as the Government intended.

The introduction of the Social Security Legislation Amendment (Fair Incentives to Work) Bill 2012 which endorsed moving “grandfathered” sole parents from PPS to Newstart if their youngest child had turned 8 before Jan 2013, is an ill thought out and prematurely implemented policy which has been found by the Governments own Parliamentary Committee to violate the human rights of sole parents and their families in Australia.

Mr Harry Jenkins MP, Parliamentary Joint Committee on Human Rights, Fifth Report of 2013 (March 2013) “1.120 The committee considers that the government has not provided the necessary evidence to demonstrate that the total support package available to individuals who are subject to these measures is sufficient to satisfy minimum essential levels of social security as guaranteed in article 9 of the ICESCR and the minimum requirements of the right to an adequate standard of living in Australia as guaranteed in article 11 of the ICESCR. Nor has it indicated the basis on which it makes that assessment. In the absence of this information, the committee is unable to conclude that these measures are compatible with human rights.”

If the change in policy has been found to violate the human rights of the sole parents who were still “grandfathered” under previous legislation then it follows that moving sole parents to Newstart when their youngest child turns 8 has ALWAYS been a violation of human rights given that the Newstart payment has not been increased in real terms for 20 years.

The Newstart allowance, in its absolute form has been shown to be an inadequate level of income support for a single unemployed person with no dependent children. The Newstart allowance is undisputedly recognised to be $140/fn below the poverty line.

A study involving a single mother with 3 children over the age of 8, has shown that on PPS the Mothers net financial position was much higher. In one fortnight the parent worked 25 hours on casual pay and earned $845.25 and then received $526.04 from the PPS pension. However, on NewStart, the parent worked 42 hours in one fortnight on Part-time pay and earned $846.39 and claimed $225.16 in allowance. This is a total of $1371.28 for the fortnight compared with $1071.55 (Loss of $300.00/fn) with a 17 hour increase in work time – time away from her children.

The Newstart allowance is a completely inappropriate form of income support for a sole parent family. The unique needs of a sole parent family are entirely different to a single person with no dependent children and a coupled family where both parents can share the responsibility of raising their children. Parenting is and should be recognised as a full time job.
The policies and decision making by this Government fail to recognise the value of parents and are destroying the family unit – the building block of our future society.

Sole parents do the job of two parents. They don’t have time off, they don’t get holidays and the increasing financial pressure being placed on sole parent families will not produce a healthy nor stable future society.  Grandparents raising their grandchildren, have also been moved to Newstart and these elderly people, who have already contributed a life time of paying taxes and contributing to the community, have been sent to Job Service Providers and told they need to start actively looking for work in order to keep their Newstart payments.

Senator SIEWERT (Western Australia) Tuesday, 9 October 2012  argued:

“Schedule 1 of the Social Security Legislation Amendment (Fair Incentives to Work) Bill 2012 will drive already vulnerable single parents, the majority of whom are single mothers, further into poverty. What this bill does is drop single parents who are currently on parenting payment single down to a payment which is nearly $140 less than what they are on at the moment. We know that Newstart is now around $132 to $140 below the poverty line. In other words, we are dropping single parents onto the poverty line. Aren't single parents still parents? It is not only the mothers and fathers that we are dropping there, but their children as well. That is what you are about to pass in this place.”

90% of sole parents in Australia are women. This policy is therefore also a violation of women’s rights. There is a rising concern amongst the sole parent community, that women will stay in violent relationships because they will not be afforded the financial support to meet their most basic needs of housing, food, transport, clothing and education for their children should they leave.
This policy, aided by the Members of Parliament who refuse to oppose it, facilitates violence towards women and children by failing to ensure adequate levels of financial support for domestic violence victims.

Allowing sole parents to study as a recognised activity under Parenting Payment Single, provided an enormous incentive for sole parents to increase their skills and education level once their children were at school. Many sole parents, who were supported under the Parenting Payment Single pension, report that because they were financially supported to study, they were able to find better jobs and leave the welfare system entirely, providing an excellent example of the benefits in providing adequate levels of income support to sole parents. 

Moving sole parents to Newstart, which does not allow them to commence study after their youngest child has turned 8, entraps families in the welfare system and creates a cycle of poverty rather than alleviating the circumstances which restrict sole parents to working in casual or part time employment for low wages. This will cost the Australian Government exponentially more in continued welfare support for people who are unable to study or retrain and therefore enter higher paid jobs.

Sole parents who have left a marriage, who may have funds from a marital property settlement, are unable to buy their own homes, buy a car, have a credit card or get a loan. The Newstart payment, as opposed to the Parenting Payment, is an unemployment benefit and is not recognised by lending institutions as an income.

The elected members of the Australian parliament who refuse to address these issues, are perpetrators of negligence.

The elected members of the Australian parliament are public servants, who assume a duty of care to the people they represent when they accept their ministerial positions. Allowing sole parents and their families to suffer incredible hardship and forcing them to remain trapped in a cycle of welfare dependence under this inappropriate legislation constitutes a dereliction of their duty of care. Damage in the form of sole parents experiencing increased rates of poverty, homelessness, depression, domestic violence and distress at not being able to provide the most basic needs for their families is a direct result of this failure of elected members to adequately carry out their duty of care.

There are approximately 900 000 sole parents in Australia and they all vote. Their families and friends also vote. Allies of the Sole Parents Movement also vote.

The votes of these people will be given to those electoral candidates who are prepared to meet their duty of care obligations to the public who elect them.

The following are the demands of the Sole Parents Movement and their allies.

1.  An immediate reversal of the cuts to Parenting payment single.
2. An immediate return of ALL sole parents to Parenting payment single until their youngest child turns 18. (A child is not legally recognised as an adult in any other law until age 18). 
3. An immediate revision of the base rate of Parenting payment single to ensure that it is above the poverty line and provides adequate support for a reasonable standard of living. 
4. An immediate amendment to the legislation to introduce compulsory workforce participation when a sole parent’s youngest child turns 12. Most sole parents will enter the workforce much sooner by choice, however provision needs to be made for parents who have at risk children and other obstacles to looking for work.
5. An immediate reinstatement of the Pensioner Education Supplement and a continued commitment to allow sole parents to combine study and work to meet their participation requirements.


Maarit Hahkomaa is a Sole Parent activist

A Final Plea for Federal Labor and the May Budget: Progressively Fund Gonski and NDIS – and No More Austerity!

 

Above:  A message for Bill Shorten -  Please do whatever you can to lock in funding for Gonski, and for the NDIS which you were instrumental in championing;  And Please do not do so at the cost of further callous austerity as in the case of Sole Parents!

 

In the following article Tristan Ewins argues that Labor needs a credible narrative on NDIS and Gonski - with progressive funding mechanisms 'locked in'.  He argues that it is an Abbott government which would really 'divide Australia'; and again that reform of Superannuation Concessions for the top 5% or 10% income demographic are key to delivering on Labor's Social Insurance, and educational 'equal opportunity' agenda.

 

(nb:  Just in April 5th:  Bill Shorten confirms that about 16,000 wealthy Australians will be targeted - those with superannuation incomes over $100,000 a year (ie: superannuation savings of about $2 million or more) - bringing in about  "$350 million over the forward estimates period."  (now the ABC is reporting a higher figure of $900 million; but SBS says that's 'over four years')  The question is STILL - where is the rest of the money ($20 billion or more) coming from for NDIS and Gonski?  At Facebook Richard Denniss is calling the decision 'pathetic'.  PLS read on - and your comments and ideas are welcome here!)


by Tristan Ewins

Increasingly Coalition rhetoric in Australia emphasises what it labels the ‘divisive’ nature of Labor policies. Abbott poses as the bearer of conciliation; of ‘good government’; of a ‘traditionally classless’ Australia where issues of distributive justice never even come in to the ‘national conversation’.  Of course the old egalitarian Australian ethos rested on labour movement traditions: on a strong labour movement, and far-reaching industrial relations regulation. But as far as Abbott is concerned ‘why let the truth get in the way of a good story’?

In fact, the person with a ‘plan’ to divide Australia is Tony Abbott.  The Abbott ‘plan’ is to create ‘two Australias’: divided on the basis of the quality of health care, education, aged care, child care, parental leave and transport infrastructure that citizens can afford or otherwise enjoy.  Quite likely, the Abbott ‘plan’ is to entrench these divisions to the point where they become permanent. That is - to the point where the Conservatives ‘capture’ a vital ‘middle demographic’ which develops an economic self-interest in the withdrawal of welfare and social wage mechanisms for the less-well-off, and including the end to all pretence of ‘educational equal opportunity’.  Further down the track there is the potential prospect of that ‘classic Thatcherite mixture’ of labour market deregulation and ‘trickle-down’ economics; resting upon the development of a permanent layer of exploited and politically disengaged working poor. The ‘Abbott plan’ would also almost certainly mean that user pays mechanisms – and potentially privatisation - are applied to make up again for budget shortfalls. Ordinary workers would also suffer the brunt of such attacks. 

Labor needs to differentiate itself from Abbott at a fundamental level.  Labor’s commitment to Social Insurance must mean socialisation of risk regarding health care, aged care and disability care – providing real social security for all Australians and their families. It must mean collective social consumption in these areas to provide the best value for all.  And socially-financed infrastructure needs to avoid the drawbacks of privatisation and regressive user pays mechanisms.  Labor needs to generate a winning narrative along these themes.

But while quality public education, as well as collective consumption and social insurance are in most peoples’ interests, such policies come with a price.  With that in mind I return again to the question of superannuation and tax reform –  concerned that in the face of another ‘fear campaign’ Labor may be on the verge of ‘losing its nerve’ before the May Federal Budget.

In ‘The Age’ today - April 4^th 2013 - this writer was concerned to hear that Labor Minister for Superannuation, Bill Shorten claimed that changes to superannuation concessions would not be adverse to people earning “up to four times the average weekly wage”.  That is in the vicinity of or over $250,000/year if applying to full-time work; or according to the Herald-Sun on April 2 – around ‘the top 1 per cent’.  Though if including part-time work as well the figure would be much lower – ie: closer to $200,000/year. 

Referring to a paper written by Labor MP Andrew Leigh from 2006, Matt Cowgill pointed out in ‘The Drum’ in 2011

“only 4.5 per cent of Australian adults have an income that exceeds $100,000 per year, and only 1.5 per cent have an income that exceeds $150,000 per year.”   (http://www.abc.net.au/unleashed/2614076.html

Those figures are now out of date, but they would remain close enough to the current reality to impart some idea of who are the real ‘battlers’ – as well as who are doing very-well. (and how many of these there really are)

Further: despite claims that millionaire status ‘does not mean what it used to mean these days’, studies by the Australian Bureau of Statistics from 2011 showed barely 10% of Australians enjoyed a “net worth” of over $1 million.

So do the millionaires really need further tax breaks?  Even when some individuals may face retirement on ‘a mere $50,000/year’, what do we have to say for Aged Pensioners – who have worked their whole lives – now trying to survive on about $20,000/year – and less if treated as a couple?  

By contrast, this author has long argued for superannuation concessions to be removed from at least the top 5% income demographic – which would bring in around $10 billion according to Richard Denniss of the Australian Institute.

Bill Shorten had been instrumental in backing the National Disability Insurance Scheme, and had made no secret of his discomfort regarding austerity against Sole Parents.   Yet Shorten now appears to be going significantly further than Labor MP Joel Fitzgibbon’s concern for his constituents in the mining industry earning a ‘meagre’ $140,000/year. 

And let’s be clear: Even in the ‘Herald-Sun’ on February 9^th 2013, Karina Barrymore observed that the average final superannuation savings for women was only $112,000 – and $192,000 for men.  

Genuine ‘battlers’ cannot afford ‘welfare for the rich’ in the form of massive tax breaks for people who can save more money in a year than others can aspire to save in a lifetime.  And these are tax breaks which discriminate against average working Australians – who simply don’t have the spare income to divert in to superannuation tax shelters.  Such tax breaks come at the cost of the infrastructure, services and welfare upon which the vast majority of Australians depend.  In a sense it is ‘class warfare’, yes.   But it has been a ‘war of aggression’ against poor and working class Australians: waged in the interests of the wealthy, and in the interests of the ‘upper middle class’ – who find themselves in the  ‘ideological and economic orbit’ of those most wealthy. (Importantly while the upper middle class may not be 'fabulously wealthy' - a term deployed by Craig Emerson - they are certainly very comfortable compared with the vast majority of workers - and quite capable of paying their fair share towards the social good)

Admittedly, though, the position of some mining workers can be ambiguous – as they enjoy high wages – but many depend on their industrial organisation to get a fairer deal from the mining bosses.  Their living expenses can also be higher than average Australians. Many are torn between solidarity with fellow unionists, and a sense of their economic interests as part of a relative ‘labour aristocracy’.

And yes, the chorus of claims of ‘class warfare’ are hurting Labor. There remains an idea of an ‘idyllic’ and ‘classless’ past; and old Labor stalwarts such a Bill Kelty are harking back to the Hawke years of consensus and ‘national reconciliation’.  But comprehensive ‘class peace’ was always chimerical.  Attacks on the wage share of the economy, as well as the social wage and welfare state, and industrial rights – never ended.  Though even former Conservative Prime Minister John Howard himself stated at one point (while still in government)  that he favoured the principle of progressive taxation!  And during the early period of the Accord, on the Left there was not an abandonment of social and distributive justice – but an aspiration to expand social wages as occurred in Sweden.  Yet today distributive justice and a compassionate welfare state are considered ‘unspeakable’: branded as “divisive” and of representing “class war”.

But this is ‘the crunch’. When considered together the NDIS and Gonski  will cost the Budget bottom line in the vicinity of $20 billion. And that is without even considering the huge infrastructure backlog affecting the states, with the prospect of regressive tolls  for new and maybe even existing roads, and insufficient public transport options for many workers to even have a viable choice how they commute to work. 

It is also without considering the plight of our most vulnerable aged citizens: their unnecessarily pronounced suffering as a consequence of insufficient funding for Aged Care; and the highly regressive ‘user pays’ mechanisms that increasingly apply.   

nb: For more comprehensive critiques of the the Aged Care crisis in this country see here: http://leftfocus.blogspot.com.au/2009/02/another-look-at-aged-care-crisis-call.html

And for a more recent critique by this author see here: http://leftfocus.blogspot.com.au/2012/04/talking-about-aged-care.html

NDIS and Gonski in particular have become ‘signature’ Labor policies.  So where is the money coming from?  

And let’s keep in mind: Come September people will be asking the same question of Abbott.  

Labor needs to ensure its ‘signature’ policies are fully costed without further regressive austerity!  This is the precondition for making the most of exposing the radical austerity that will underscore Abbott’s ‘plan’ for Australia.

On March 21^st Jessica Irvine – also from the ‘Herald-Sun’ - suggested a whole suite of potential policies, including an increase to 30% of taxation rates on those on incomes of $300,000 and above.  That apparently would bring in $500 million a year.  (about 2.5% of what is necessary to pay for Gonski and NDIS!)    Perhaps Irvine’s intention was to foster less significant expectations – in order to make ‘root and branch’ reform of superannuation concessions politically awkward and damaging for Labor.

The monopoly media is also attempting to rush Labor into a commitment – perhaps to protect the interests of the wealthy, and to render NDIS and Gonski ‘unfundable’.  Allowing time for further speculation could also be damaging – as it was with the Carbon Tax.  But not nearly as damaging as getting it wrong: dropping ‘signature’ policies, or turning again to callous austerity (eg: Labor policy on Sole Parents) in a ‘Zero Sum’ outcome for Labor’s constituencies.

While ‘The Age’ has generally been giving Labor a much harder time since Gina Rinehart became the most significant individual shareholder in Fairfax, it pretty much ‘got it right’ on the super concessions debate in a recent editorial.  Hence the following:

“The rich can avoid the 45 per cent tax rate on earnings above $180,000 by diverting large sums into super at the same concessional rate of 15 per cent that applies to everyone else. Treasury figures show 37 per cent of the value of concessions flows to the top 5 per cent of earners…”

Super is being exploited to subvert a long-accepted, progressive policy of taxing higher earnings at a higher rate. Super concessions become more generous for higher earnings. The average male retiree, Treasury figures show, gets about $270,000 in age pension payments and tax concessions. The concession alone is worth $520,000 on average for the top earners - well over twice the total average ''nest egg'' of male workers nearing retirement and more than four times their female peers' balance. The top 20 per cent of earners get half the value of all concessions.  

And we reiterate the same point here as made in an earlier article:

“Superannuation concessions are currently around $30 billion, and will cost $45 billion perhaps as early as 2015. And the top 5% income demographic alone is already receiving over $10 billion of those existing concessions.  (See: http://www.abc.net.au/worldtoday/content/2012/s3568235.htm )

Taken proportionately, that would also mean $15 billion in concessions for the top 5 per cent alone by 2015.

Drawing additional revenue from ‘the top one per cent’ quite simply does not target a broad enough base to bring in sufficient funds.  If Bill Shorten and others want to ‘back down’ on superannuation concessions, and other very significant progressive options for tax reform, then Labor’s signature policies are either finished – or they will come at the cost of deep austerity elsewhere.   Even further means testing of benefits such as the Private Health Insurance Rebate cannot bring in anywhere near the kind of money that is required on their own.   The only other possibility is a series of budget deficits: and that cannot be sustained over the course of the whole business cycle either.

While the ACTU at one point was arguing for action to remove superannuation concessions for the top 10% income demographic, this author is again arguing for an absolute minimum policy of removing concessions from the top 5 per cent income demographic. This would bring in about half the money necessary for Gonski and NDIS.  Further tax reform would also be necessary – perhaps of the Minerals Resource Rent Tax – and of Dividend Imputation.  At ‘Crikey’ John Quiggin was on record as supporting an increase in the Medicare Levy to pay for NDIS specifically.

There is no need to make policy on superannuation concessions retrospective – as Simon Crean says concerns him.  But there is the need to make the system sustainable – as Swan, Shorten, Wong and others have readily admitted.   But if Labor will not at the very least remove or very significantly wind back concessions from the top 5 per cent (or more preferably the top 10 per cent)  then the sustainability of superannuation concessions is ‘out the window’.  As quite possibly are Gonski and NDIS.  One way or another Labor needs to exact at least $10 billion for this year – and more in future years - by removing overly-generous superannuation concessions.

Most importantly: Labor needs those improvements provided through such reform - in social services, welfare and infrastructure - ‘on the record’ and cemented in the public consciousness well before the September Federal election.

Australia is a growing nation which demands investment in transport, communications and education infrastructure.  And Australia is an ageing nation – with health and aged care costs set to rise. (with aged care services already grossly inadequate for many – involving untold human suffering) 

NDIS and Gonski demand about $20 billion in new annual funding.  Aged Care requires an injection in the vicinity of $5 billion annually if the government is serious about providing quality of life, supporting Carers and removing regressive user pays mechanisms. Then there is the need for reform of Newstart; and for strong investment in transport infrastructure and health services.  And simply increasing the retirement age shouldn’t be seen as an option for a Labor Party concerned with ‘work/life balance’.

For a long time Labor has proudly claimed the mantle of “small government” – arguing it has held the size of government down proportionately compared even with the governments of John Howard.  This quite simply is no longer sustainable.  If Labor does not expand taxation progressively and very significantly we will see further user pays mechanisms for education,  for health and aged care, and for transport including roads.  Privatisation simply makes matters worse – saving the government’s budget bottom line – but passing increased costs (of administration, profit margins, and finance) on to consumers.

This author would warn Shorten, Wong, Swan and others: There are pervasive elements of the media that will spin everything and anything Labor says and does against it.  But austerity against Sole Parents hurt Labor’s credibility severely. And failure to provide for NDIS and Gonski sustainably would leave the government without a compelling and credible narrative.

We need far-reaching reform of tax and superannuation concessions in the May Budget.  Without credibility on funding our ‘signature’ policies, and a record of delivering on such commitments, Labor will not be in a strong position to capitalise on the sweeping austerity, human suffering and social injustice which would follow an Abbott government.

Labor must not lose its nerve.


nb:  I sincerely hope I am wrong in this article and that Labor does find a way of funding Gonski and NDIS come the May Budget.  I'd be glad to be able to admit I was wrong!