Tristan
Ewins, July 31st 2013
For anyone who hadn’t noticed – Buried at the end of a news story
on page nine of the Herald-Sun on July 31st was an announcement
to the effect that Labor was pledging “no changes” “to superannuation for at least five years”, “locked
in” via legislation. Deceitful as
always, the Herald-Sun proclaimed this would prevent “tinkering” via “super
taxes”. (this is deceptive because the
issue is with existing TAX BREAKS on superannuation rather than the
implementation of any new tax)
And on the same day on page 2 of the Herald-Sun was the
proclamation that “households face thousands of dollars in higher bills for
fresh food, health and education payments” if the GST is increased and/or
expanded in scope – as demanded by the Business Council of Australia. (BCA)
So what’s the connection between these?
As the China boom recedes somewhat – and with the prospect of
an ageing population - the government is facing a reduction in tax revenues,
including revenue from Company Tax and the GST – at the same time as an ageing
population will increase health expenditures in the context of a narrowing tax
base. Then there’s the fiscal impact of winding back the Carbon Tax. And on top of that you can add the fact that
the country is suffering a massive infrastructure deficit – with business
recognising that crisis – and its impact upon productivity – by demanding that
workers, citizens and consumers pay the price.
According to Grattan
Institute chief executive John Daley extending the GST to education,
health and food “would potentially add $3000 a year to average household costs.” And the BCA is also looking to attack
organised labour in order to firm up their profit margins.
Malcolm Maiden at ‘The Age’ puts it this way: that “The BCA
wants stronger fiscal discipline and a more flexible industrial relations
environment…” Translated that means:
curtail industrial liberties, remove safeguards for wages and conditions; cut
the social wage and welfare… Maiden also
observes that other moves are also apparently ‘on the table’; perhaps including
massive cuts to Company Tax and a “ceiling on tax revenue as a proportion of
GDP.” (The Age, July 31st)
To put it bluntly: Labor needs to decide WHAT and WHO it
stands for. Does it stand for the traditions of social
democracy? Does it stand for the
vulnerable, and for the low and middle income earners of the working class? Does it stand for social security and social
solidarity? Or does it stand for small government, corporate welfare, regressive
taxation, ‘survival of the fittest’, ‘the
top end of town’, and a preference for abstract economic goals, and
increased private dividends and profits –
instead of concrete social goals and needs?.
Richard Denniss of the Australia Institute has pointed out
that changes to Australia’s income tax regime from before the GFC hit (ie:
2006 - under Howard) were costing $40 billion for the year 2013 alone.
And crucially he has made the additional observation that
those superannuation concessions the Federal Government seems so eager to
quarantine will cost about $50 billion a year by 2016. And according to Denniss
that’s with a dominant percentage of superannuation tax concessions (ie: tax breaks) going to the top
5% income demographic! This at the same time as the Federal Labor
Government continues austerity against pensioners, and considers further cuts
to welfare and services! (see: (See: http://www.abc.net.au/pm/content/2013/s3758128.htm
)
Of course the BCA will look after its own interests, and the
profit margins and dividends of its members. It will try and push the case for effective
corporate welfare: for cuts in the tax business pays at the same time as taxes
and user charges go up for workers, tax payers and consumers to provide the
infrastructure and services its members benefit from. This – and also assaults on workers’ wages
and conditions – is about shoring up profit-margins and dividends by increasing
the intensity and the rate of exploitation.
There are points of ‘cross-over’ when it comes to the
interests of citizens, workers and business.
Keeping business generally viable means preserving jobs. But the public interest and business interests
should not always be seen as synonymous. We should seek BOTH to divide the pie fairly AND to grow it
through technological improvements to productivity, and support for high-wage
industry. (ie: NOT by intensifying exploitation
through attacks on wages and conditions)
And we need to retain
focus on the social goals that underscore our economy. That is: not promoting profit as an abstract end in itself – but promoting
economic activity which adds to the quality of life of citizens and workers. This necessarily entails social investment in
properly not-for-profit sectors: health
care, aged care, public housing, education for human development – and not just
for the labour market. It might also
mean reductions in the working week, and in peoples’ working lives – for concrete
human needs that go beyond abstracted goals of growth.
All sides of politics recognise the infrastructure deficit
and the need “to do something about it”. It is hurting our productivity – and in so
doing hurting both workers and business. But we have a CHOICE in the WAY in which we respond to
that crisis.
The Labor government can choose a path of austerity –
attacking pensioners, the social wage, the welfare state, and industrial rights
and liberties. Or it can choose to
embrace social democracy more than merely rhetorically – returning to questions
of distributive justice and ‘the social good’.
And Labor can choose to act on
those principles of distributive justice by committing to a gradual expansion of
the social wage and welfare state as a proportion of GDP - instead of embracing socially damaging ‘ceilings’
on tax and social expenditure. Such ‘ceilings’
would only flow into greater social disadvantage and injustice - and most
likely into infrastructure privatisation whose inefficiencies hurt both
business and consumers.
Notions of the social wage, public infrastructure and welfare
‘crowding out’ the private sector also need to be challenged. A benefit of relative economic abundance is
that consumers can potentially have significant room for discretion in their
spending priorities at the same time as a decent proportion of peoples’ incomes
is diverted into the ‘social infrastructure’ of services, physical infrastructure
(eg; transport, communications, schools, libraries) and welfare – without which
society itself would collapse, or lapse into barbarism. It also means that people can potentially
enjoy earlier retirement ages and shorter working weeks – as technological
improvements to productivity make this possible over time without hurting absolute
material living standards. Though progressive taxes
(ie: not the GST) would need to rise in order to maintain that “social infrastructure”. (a fair ‘trade off’) The Nordic countries,
and other European countries such as Denmark and the Netherlands – give us some
idea what might be possible.
But in order to pursue such a social democratic vision Labor
cannot and should not ‘hem itself in’ with ill-thought-out five year commitments on
superannuation concessions which do not even have the authority of a National Conference
position behind them!
Also, another hung parliament cannot be completely ruled out,
and the Greens will likely want reform on tax and tax concessions in that event. ‘Locking itself in’ to such a position simply
leaves Labor open to further accusations of promise-breaking should reforms in
that area become necessary; or are seen as preferable after a meaningful,
inclusive and genuine internal debate.
If removing superannuation concessions, reforming dividend
imputation, and restructuring the broader tax mix can bring in tens of billions
there is simply no need for the kind of austerity Labor is contemplating in
order to return to surplus. What’s more –
Labor can implement such a program WITHOUT harming the low and middle income
demographics which it depends upon for its electoral base. It can aim at a fairer contribution from the
wealthy and the upper middle class. And
through reform of tax, welfare and the social wage – Labor can pursue a
distinctively social-democratic vision of ‘the good society’ which is much
deeper than simply ‘more and more’ private consumption and production –
regardless of the social cost.
But by contrast – allowing social and economic infrastructure
to ‘wither on the vine’ will hurt everyone – workers and business included. And turning
to privatisation of infrastructure also passes the price of inferior cost-structures
on to consumers – including both citizens and businesses.
Standing for the same agenda of austerity and distributive
injustice as the Liberals – but ‘not quite as much’ isn’t enough to cut it for
Labor; to inspire and mobilise the people we need behind us to win this
election.
ALP activists need to make their voices heard on these
issues: regardless of whether they do so through the decision making forums of
the Right or the Left; and/or through their local branches; and by writing to
their local members. We need to signal
our intention to fight the ‘small government’ template: to stand for social
welfare and social justice; and a distinctively social-democratic vision of ‘The
Good Society’.
References: ‘The Age’
and the ‘Herald Sun’, July 31st 2013; and Richard Denniss at: http://www.abc.net.au/pm/content/2013/s3758128.htm