Will Labor Stand Up against Small Government and Austerity? And Reflections on Greece, Anti-Semitism and more

 

above:  Shadow Assistant Treasurer Andrew Leigh has been unfortunately equivocal on the issue of tax reform needed to ward off austerity under a future Shorten Labor Government.

 

In the following reflections the blog publisher, Tristan Ewins considers the dilemma faced by Labor on tax reform; as well as the Greek economic crisis, rising anti-Semitism and other issues.  He also calls for readers to register their support for a genuinely progressive Labor Platform at this year's National Conference.  Without such a Platform Labor will lack the flexibility on fiscal reform it needs in order to hold off against austerity - and instead improve the social wage and welfare

 

by Tristan Ewins

Reflecting on this week’s QandA episode raises crucial questions as to whether or not Labor will seriously resist pressures towards austerity and small government amidst a manufactured ‘debt crisis’.  Tony Jones repeatedly pressured Assistant Shadow Treasurer Andrew Leigh to respond on that very question.  And sadly Leigh was largely evasive in response. (probably under pressure from his Shadow Cabinet colleagues)  Statements regarding a crackdown on corporate tax evasion were somewhat encouraging, yes.  But Sydney Morning Herald columnist Michael West is correct to proclaim approximately $2 billion of savings over three years as ‘pocket fluff’.   That tax policy is not going to ‘turn the tide’ on small government, punitive welfare and austerity.  In the context of an economy valued at approximately $1.6 Trillion the effect will be relatively marginal if there is not additional progressive tax reform elsewhere.  Empty rhetoric and tokenistic policies will make little difference for those who need our help.  I believe Leigh is better than this - and am hoping for a less equivocal stand into the future.

Of course Liberal proclamations to the effect that it is ‘cleaning up Labor’s mess’ also need to be met with healthy scepticism.  Current fiscal strains can be traced to repeated tax cuts and ‘middle class welfare’ during the Howard/Costello years.   Rather than capitalising on the China mining boom, investing the proceeds for the future, Costello and Howard implemented a series of tax breaks – largely for the relatively well off – resulting in today’s structural deficit.   Because from the outset it was clear the boom would not last forever, the short-term focus adopted by Howard and Costello condemned Australia to its current fiscal crisis.   (nb: the fiscal crisis is not the same as the ‘manufactured public debt crisis’; debt is serviceable; but there is a need to reform tax to maintain the social wage, welfare, public infrastructure) The situation was further worsened as a consequence of Liberal opportunism over the Mining Super Profits Tax -  which saw a responsible policy destroyed – further locking Australia into a fiscally unsustainable footing.

Labor’s next National Conference will take place mid-year 2015; and it is critical for Labor to reflect on what it stands for; and how it can defend services and social welfare against the Ideological Liberal drive towards austerity.  There is also a need to address an infrastructure crisis – with fiscal pressures locking the country into polices of infrastructure privatisation which pass on inefficient cost structures onto the broader economy. (the consequence of profit margins and inferior costs to finance via the private sector)   

What is most important is for Labor’s 2015 National Conference to endorse a Platform which keeps Labor’s options open!  Locking into a small government, low tax policy will provide Labor with no room to move in response to fiscal pressures; and consequently pressures towards brutal austerity. Without a reformed Platform this year, Labor will lack the mandate to pursue the necessary change after the next Federal election. At the blogs ‘Left Focus’ and “ALP Socialist Left Forum’ last year we initiated a campaign in favour of progressive tax reform, reform of superannuation concessions and more; including an expansion of progressive taxation in a first Labor term by about $40 billion.  (or by 2.5 per cent of GDP in the context of a $1.6 trillion economy)  

Such a policy would see Australia only ‘edging towards’ average OECD levels of government social expenditure – and should not be viewed as being ‘too radical’.   But failure to embrace a reform footing would inevitably mean sustained austerity even under a Labor government.   And a lack of meaningful opposition to the fiscal policies that underscore Liberal austerity would only strengthen the Conservatives’ hand, with policy convergence on austerity, punitive welfare and the like. 

Finally – the fiscal reform we have suggested here would provide scope for other progressive policies.  This could include (but not be limited to)

·         a National Aged Care Insurance Scheme,

·         comprehensive Medicare Dental

·         alleviating poverty for the welfare dependent and for low-wage workers

·         properly implementing Gonski and the National Disability Insurance Scheme without resorting to punitive policies against other vulnerable groups

·         developing a policy with the aim of ‘closing the gap’ on life expectancy for those with mental illness

But without progressive fiscal reform  Labor could only provide the same drift towards austerity; even albeit more reluctantly.  Certainly Labor could not pose as the party of social progress; and would stand to cede further electoral ground to the Greens; while also damaging its attempts to renew and inspire its membership base.

Other issues also arose from the most recent QandA.  For instance the argument was forwarded that childcare subsidies only worsened cost pressures as private providers pocketed the money without passing on the savings.   The obvious response is that greater emphasis on public and not-for-profit childcare would help do away with those pressures. 

Similarly, it was no surprise that while the question of housing affordability was raised – and even the question of negative gearing – there was no consideration of the potential role of a big investment in public housing to promote urban consolidation (helping to address social problems like increasing transit times to work that damage families and communities); and also increase housing supply and drive down prices.

Greek Depression and the Eurozone

All these questions around austerity are also relevant for Europe, and especially for Greece. Unfortunately Germany had tried to tie an EU financial bailout package to austerity and privatisation – to the point of severely impairing the ability of Greece to repay its debts sustainably.  The Social Democrats in Coalition with the Christian Democrats in Germany need to question this; and promote a new policy. With Greek unemployment at over 25 per cent, the consequence is economic Depression, loss of tax revenues, and unnecessary and extraordinary human suffering.  For Greece and other similarly affected economies (eg: Spain), the answer is one of sustainable economic restructuring, and sustainable repayment of debts on the basis of full employment.  The wealthy must also be made to shoulder a fair part of the burden.  This must mean active industry policies around creating new export industries – that improve these nations’ balance of trade.  Hence employment could be kept high, and the improved balance of trade could aid in the repayment of debts without a downwards deflationary and recessionary spiral; or forced privatisations and the like.   By comparison austerity is a ‘double whammy’: hurting the Greek and Spanish people while also destroying their ability to repay debts.

Importantly there remain broader questions of disproportionalities in capitalist economies: the consequence of competitive pressures which drive constant renewal of the means of production.  The Euro-zone economic crisis also provides an opportunity to question neo-liberal Ideology; and indeed to question capitalism as we know it.

Anti-Semitism Resurgent

Finally, this week’s QandA also saw a question in reference to growing anti-Semitism not only in Europe but also in Australia.  Anti-Semites appear to have been emboldened by the military policies of the State of Israel in its conflicts with Hamas particularly.  In Europe Jews increasingly feel unsafe – and are targeted violently ‘simply for being Jews’.  But this turnaround has not resulted in the same degree of public consternation on the Left as has  Islamophobia.   And indeed while there is a great deal of damaging ignorance and fear with regard Islam in Australia, the Left nonetheless needs to be careful and vigilant with regard this emboldening of anti-Semitism.  A new generation is being desensitised to the past sufferings and persecution of the Jewish people; and hence some may be open to historical revisionism on the Holocaust into the future.

The targeting of Orthodox Jewish communities appears to be especially fruitful for the anti-Semites – because significant numbers have always been fearful of what is clearly at variance with the ‘mainstream’ and is ‘different’.   On the Left there are periodic qualifications to the effect that while we condemn the military and other repressive policies of the State of Israel, we do not accept hate crimes and violent attacks against Jews.  But we need to be much more consistent and forthright.  We need to confront where the current tenor of debate on the State of Israel and its policies is leading.  For genuine Leftists certainly it is not in any way our intention to legitimise anti-Semitism.  But we have a responsibility to confront the emerging Anti-Semitic trends just as forthrightly and consistently as we confront bigotry against Islamic communities.  And just as consistently as we criticise human rights abuses by the State of Israel under its current right-wing leadership.

Closing Appeal:

Our Campaign in favour of progressive reform of Labor’s platform is approaching the goal of 500 supporters on Facebook.  See HERE for our ‘model Platform’.  And See HERE to register your support. 

To help us ‘get over the line’ and maybe even go further depends on your support!  Please ‘Like’ our page at Facebook; and let all your friends and networks know about our campaign.  It is crucial to achieve a Labor Platform this year which at the very least keeps our options open on tax reform, progressive welfare reform, and extensions of the social wage.

nb:  independent socialist blogger John Passant has also written a piece on the insufficient nature of Shorten's proposed tax changes.   Readers may be interested in taking a look:

"Labor's tax avoidance crack down statement was the old pea and thimble trick. It wants to give the impression of doing something about big business tax avoidance (always a popular issue among ordinary workers) without really frightening the big business horses"See:  http://enpassant.com.au/2015/03/03/labors-crackdown-on-tax-avoidance-shorten-fiddles-and-revenue-burns/

Does the ALP have a Social Democratic Vision beyond Austerity and Small Government?

 

above: Treasurer, Chris Bowen and Finance Minister, Penny Wong need to decide between 'Labor Values' or Austerity

 

There is an urgent debate that needs to be had in Labor before any commitments to further austerity writes grassroots Labor activist, Tristan Ewins.  Five-year commitments to 'quarantining' unfair superannuation concessions could prove to be costly to both the 'Budget bottom line' and to broader goals of social welfare and distributive justice.

Tristan Ewins,  July 31^st 2013

For anyone who hadn’t noticed – Buried at the end of a news story on page nine of the Herald-Sun on July 31^st   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 31^st)

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 31^st 2013; and Richard Denniss at: http://www.abc.net.au/pm/content/2013/s3758128.htm

 

For a Budget both Sustainable and Fair

Above:  Wayne Swan is under political pressure to produce a surplus for May 8th. But to re-engage with voters Labor needs to do a lot more; delivering truly meaningful and substantial social programs that appeal both to Labor's working class and liberal middle class electoral bases. This needs to be provided for through a progressive tax restructure including reform of superannuation tax concessions, dividend imputation and consideration of further 'super profits' taxes where appropriate.

By Tristan Ewins

As the May 8^th 2012 Federal Budget approaches top Labor policy-makers will be nervous. While there is enormous political pressure to deliver a surplus only very substantial progressive new initiatives hold the prospect of re-engaging with Labor's traditional working class and liberal middle class support bases. 'Treading water' on policy simply will not do at this point. So many voters are 'disengaged' after years now of systemic smears and disinformation in the media. Very substantial new programs are the only chance, now, of breaking through: at the very least saving the Senate, and leaving behind a reform legacy that Abbott will not be able to uproot.

But what specific programs could Labor embrace in order to re-engage with voters; perhaps even to win in 2013?

Immediately there are a number of options which spring to mind:

• Medicare Dental
• Gonski recommendations on education
• Further funding to improve the quality and equity of Aged Care; with a long-term official policy of establishing universal Aged Care Social Insurance
• Robust Cost of Living initiatives for disadvantaged and working class Australians, including pensioners and Newstart recipients
• Substantial investment in public housing to assist those low income families and individuals experiencing housing stress; with the additional benefit of increasing housing supply, driving down rent costs
• Targeted tax-driven cross-subsidies for sectors struggling under the weight of the 'two speed economy'; to include tourism, education and manufacturing;
• Fast rail and other infrastructure projects (eg: infrastructure for emerging suburbs) expedited along the East Coast, with the additional benefit of stimulus in states which are economically struggling.

It is difficult to estimate how much would be necessary in way of funding for industry cross-subsidies. Although a fast-rail line along the Australian East Coast – costing $100 billion - could "dramatically cut emissions" and provide great convenience for travellers, and those utilising rail freight.

Such infrastructure initiatives could be financed via the issuing of government bonds, which could spread debt repayments over decades, with competitive annual repayment rates.

Development of infrastructure in new suburbs is also crucial on practical, environmental and equity grounds: and could create jobs along the economically languishing South-East Coast. Urban design, including public transport, parklands and other social facilities are crucial for the quality of lives of those young families who have been driven by the Howard housing bubble and population growth onto the 'urban fringe'.

And while Cost-of-Living subsidies should aim to deliver a minimum of an additional 1 per cent of Male Average Weekly Earnings (approximately $600/year for individual adults) to assist mainstream working class and disadvantaged families with energy, water, mortgages and rent, this author does not have access to modelling to determine the cost.

Yet 'Cost of Living' is THE issue 'out there' with Australian families, including those working class and disadvantaged families it is Labor's duty to protect and assist. A big initiative, here: as significant or more significant than already suggested – could be THE crucial factor in re-engaging with Australian voters.

Labor also stands to gain, here, by linking Carbon Tax relief with broader Cost-of-Living Relief. In such a way Labor needs to develop a package in which all disadvantaged and mainstream working class Australians are significantly better off. By linking these issues Labor has a chance of changing public perceptions of the Carbon Tax, while addressing genuine Cost of Living stresses for those in need.

And tax cuts would be quickly forgotten, so Cost of Living Relief will be better addressed through a dedicated supplement, to be paid twice-yearly.

Public construction of new energy and water infrastructure could also have savings flowing on to consumers because of the lower cost of public borrowing.

Nonetheless, despite our lack of access to modelling in some areas it can be stated that were the government to reform taxation so as to bring in around an additional 1.5 per cent of GDP in taxation (approximately $22 billion out of a $1.5 trillion economy), this would provide substantial scope for the social welfare and industry assistance packages hinted at here, while also providing for the politically-desirable surplus.

Potential fund-raising mechanisms could include a move to either 75% or 50% Dividend Imputation (saving between $5 billion and $10 billion/year); eliminating superannuation concessions for the wealthy (saving approximately $10 billion/year); restructuring of income tax, reversion to the original Resource Super Profits Tax template, consideration of other 'super profits' taxes where appropriate, and reneging on projected Company Tax cuts.

There is even the prospect of emulating Abbott in terms ofa 1% increase in Company Tax for large enterprises, ploughing the proceeds into Aged Care. Given his own position on Paid Parental Leave and his eagerness to appeal to aged Australia Abbott would be hard-pressed to oppose such an initiative. It is worth noting that Company Tax in Australia is 30% as compared with 35% in some areas of the United States – so there is 'room to move'.

For now, though, it is also worth observing those initiatives for which we do have costings.

Implementing the Gonski recommendations for education could ultimately cost an estimated $5 billion/year. Although the Gonski report itself suggests the Federal Government would only have to pay for 30% of the Education initiative ($1.5 billion) – with $3.5 billion shouldered by the States.

Detractors have attempted to conceal their own vested interests with calls of 'class warfare', but the reality is that 'class warfare' has been waged not against the wealthy, but against poor and mainstream working class Australia with the neglect of public education and health care, and increasing dependence on levies for essential school infrastructure which are 'voluntary' in name only. The appeal of Gonski is in its emphasis on all students, including those most struggling – with a further emphasis on improving state school funding, but without withdrawing existing funding from the private sector. Implementation of Gonski would mean improved infrastructure, smaller classes, more teachers and more subject choice for all schools.

Meanwhile projected public dental initiatives have variously been estimated to (ultimately) involve costs running into the billions annually. Apart from crucial equity and human interest ramifications of universal public dental care, preventative public dental care could save the economy billions over the long term. Though according to the proposal put to Labor by the Greens the first phase of new public dental programs– focusing on the needs of children and low-income groups - need only cost the government $400 million for the upcoming financial year, and as much as "$8.4bn to $14.4bn across four years, depending on the options chosen".

The final expenditure priority we will consider, here, is Aged Care.

The Federal Government's standing Aged Care policy provides a real funding boost of only $577 million over 5 years.

Much more is needed,yet nonetheless by shifting its priorities and implementing means tests an improvement in service will be experienced by many.

While $1.2 billion has been devoted to providing better salaries and conditions with the aim of retaining aged care staff, user-pays mechanisms will not include any forced sale of the family home. User pays charges will apply for many – both for residential and at-home care. But full pensioners will pay no fees.

There will be 40,000 new home care places (Up to 100,000), relieving the impact upon the Aged Care budget of expensive residential care, while providing many aged Australians with the preferred option of staying at home. Further initiatives include $269.4 m for dementia, $1 billion for Carers' Respite (over several years) and the removal of the low care/high care distinction - which in the past saw aged Australians diverted into high intensity care facilities prematurely in order to save money. The 'My Aged Care website' is another good initiative, and the government has wisely avoided a 'free market in Aged Care'. Many amongst the aged are vulnerable and on their own enjoy little consumer choice or market power. ('The Age', 21/4/2012)

Yet again the initiatives go nowhere near far enough.

The Combined Pensioners and Superannuant's Association New South Wales (CPSA – NSW) has long argued for a Aged Care 'social insurance' model. While CPSA NSW is encouraged by the government's emphasis on at-home care, however, those most in need do not always have the choice. Billions in new funding are necessary to improve the quality of residential care, and to give the aged the choice of high quality low-intensity care in a social environment. (eg: hostels) Staff to resident and nurse to resident ratios are also crucial that those needing high intensity care.

And even for those remaining at home more programs are necessary to keep aged Australians socially engaged, and happy.

The problem with Aged Care is that for many it remains a 'hidden issue'. Aged Australians are suffering – for lack of care; because of poverty; because of social disengagement; and because of the dehumanisation and loss of individual identity that often goes with high-care accomodation.

As an absolute minimum Labor needs to devote an additional $1 billion for Aged Care in the financial year 2012-13; and announce a progressively-structured Aged Care Social Insurance Scheme over the long term – similar to the agreed 'National Disability Insurance Scheme' (NDIS). (covering care, but not pension entitlements) Specifially this author challenges Government Minister Bill Shorten to champion this cause – no less worthy as it is – as he championed the cause of disability insurance.

'The Surplus'

There are sound political arguments for Labor's pursuit of a surplus in the year 2012-13. The level of economic debate in Australia is for the most part quite low. The perspective on the Federal Budget is akin to peoples' ideas on managing a family budget. Hence apparently 'The books must be balanced'. But failure to produce a surplus will result in opportunist media-grabs by the Opposition – which irresponsibly maintains popular mythologies on economic management in order to hold on to political advantage re: perceived competency.

Deeper arguments and realities do not always 'sink in'. Media speculation about the political imperative of a surplus is usually shallow and uncritical. Many voters do not seem to comprehend that investment in infrastructure can increase capacity, improving quality of life and increasing growth over the long term. And there are those who do not seem to see how stimulus is still warranted in many state economies as a consequence of the high dollar, and with falling confidence alongside the decline of tourism, education and manufacturing. Nor how lack of transport infrastructure in developing suburbs is a drag upon the broader economy – making investment there not only sustainable, but of positive benefit.

On the other hand Jessica Irving from the Sydney Morning Herald predicts that after already-projected cuts Swan will needto "raise taxes by $7 billion to achieve his surplus." And also that: "Tax increases on foreigners earning profits in Australia, say mining companies, would also have less of an impact on domestic demand, as would reduced spending on foreign-produced defence equipment."

Were the revenue proposals in this article adopted, alongside other measures suggested by Irving such as increased taxation of foreign profits in mining, that could still leave $15 billion for social programs, while the surplus was achieved.

But regardless of the perceived political imperative of a surplus for 2012-13 Labor still needs truly substantial policy initiatives if it is to re-engage with voters who have 'switched off' or 'turned away' after almost two years of sustained media onslaught. This can only be achieved with a commitment of resources which is truly substantial and appreciable in the 'big picture' of an economy valued at over $1.5 trillion.

Yet if Labor does produce such initiatives it might also manage to rally its own base, as well as the sympathetic social movements which could provide for social base for a real fight-back; and perhaps even a Labor victory in 2013.


Tristan Ewins is a freelance writer, qualified teacher and social commentator based in Melbourne, Australia. He is also a long-time member of the Socialist Left of the Australian Labor Party (ALP).