above: Where to for Labor in July?
Wasted Opportunity on Superannuation Concessions needs to be ‘Put Right’ at ALP National Conference in July! Australia Institute Data shows a stronger line on reform is needed.
Tristan Ewins
Recently Bill Shorten announced projected reform of superannuation concessions affecting around 180,000 Australians. ‘The Age’ in particular observed that the two key reforms concerned
“would see
retirees lose tax-free status on annual superannuation earnings above $75,000,
and more people paying 30 per cent tax on contributions.”
Certainly Bill Shorten’s announcement is “a step in the right
direction”, bringing in $14 billion over ten years.
But it is a very modest intake when considered in perspective.
The problem is that Shorten
appears to be ruling out further action on top of this on superannuation
concessions AHEAD of the ALP's 2015 July National Conference.
And more alarmingly: arguably $15 billion out of a total of $50 billion will soon be going to 'the top 10 per cent' income demographic.
Former Australian Tax Office
public servant, John Passant has explained that this means “the top ten percent of income earners get
30% of the tax concessions on super.”
(discussion with John Passant, 22/4/15)
And ACOSS has argued that the top 20% income demographic receives half of all superannuation
concessions. (ie: that will soon be over $25 billion annually!)
To get that in perspective, the
Australia Institute observed in 2014 that: “The [entire] age pension currently costs
[only] $39 billion”.
Is this really the
best possible use of taxpayers’ money? Does it fulfil the ‘distributive
justice’ test? And given the scale of
the gain to only the top 10 per cent income demographic is it even politically
wise when we consider what else might be done with the money?
A more decisive policy here could fund a suite of progressive reforms: National Aged Care Insurance; NDIS and Gonski; build the National Broadband Network Fiber-To-The-Premises; Medicare Dental; address life expectancy crisis for indigenous and mentally ill; expand mental health services; crisis accommodation for cases of domestic violence; welfare reform; build transport infrastructure publicly; invest in public housing to put downwards pressure on property prices and rental costs... Many of these policies have been suggested in the ‘For an Equal and Democratic Australia’ document which points the way to the kind of policy a reforming Labor government could potentially introduce.
A more decisive policy here could fund a suite of progressive reforms: National Aged Care Insurance; NDIS and Gonski; build the National Broadband Network Fiber-To-The-Premises; Medicare Dental; address life expectancy crisis for indigenous and mentally ill; expand mental health services; crisis accommodation for cases of domestic violence; welfare reform; build transport infrastructure publicly; invest in public housing to put downwards pressure on property prices and rental costs... Many of these policies have been suggested in the ‘For an Equal and Democratic Australia’ document which points the way to the kind of policy a reforming Labor government could potentially introduce.
Labor needs to
think of policies in terms of tens of billions – not just ‘token policies’
which attempt to win over voters on appearances only. Further reform of Superannuation
Concessions is essential. As is reform of the broader tax mix – ideally to
bring in new revenue in the vicinity of $40-$50 billion. (about 2.5%-3% of GDP)
(modest in the context of an economy valued at $1.6 Trillion)
Right now, with
the mining boom over – Labor is 'on track' to capitalize politically from the
Abbott government’s austerity . And yet
Labor is also ‘on track’ to again introduce austerity of its own in government
should it maintain its inflexible commitment in its National Platform to ‘small
government’. (though probably less severe, and less cynically targeted - you
would hope!)
Specifically the problem is Labor’s commitment to holding
down tax as a proportion of GDP.
Labor must ‘think bigger’ (and better!) than this!!!
These issues MUST
be addressed at Labor’s National Conference in July.
From conversations and research I have become aware that
there are some within the Labor Party who are resigned to (or even in favour
of) the National Conference being reduced to a merely token affair. Shadow Treasurer Chris Bowen, for instance,
is in favour of a more robust and inclusive discussion
of policy at Conference; but on condition that Conference (and the Platform itself) have no binding
influence on policy. (Bowen, pp 122-124)
In a conversation with one colleague specifically (and probably there are
more), this colleague was resigned to
the notion that Gonski and NDIS are ‘dead’ in their original form – presumably because
they think the money cannot be sourced for reforms on a large scale. (the
assumption seems that ‘small government’ cannot successfully be refuted; that
we should not even try) Even mild
redistributive policies are apparently viewed by some as an ‘ideological
anachronism’ – belonging to an apparently ‘defunct’ tradition of social
democracy.
Just how widespread these views are I cannot tell. But there is a now-long history of Labor
governments (dominated by the Party’s Right)
cutting and regressively restructuring tax, capitulating to the ideology
of small government, and pursuing cynical policies such as assaults on the
welfare rights of sole parents. Top
income tax rates, for instance, have been reduced or eliminated. The tax system has become ‘flatter’. Again, Chris Bowen has come out in favour of
a ‘simpler’ tax system which includes lower Company Tax; which probably translates as a less
progressive tax system. (Bowen, pp 60-67) Though there have been some efforts in the
opposite direction from Labor governments as well; for instance raising the tax
free threshold. (Though Ross Gittins
argued in the Sydney Morning Herald that these measures were
not really as strong as Labor had claimed once reductions in the low-income
tax offset were considered)
More generally an outlook of pragmatism appears to
make policy often a matter of tactical
expedience.
To summarize, this kind of pragmatism is highly questionable. Bill Shorten was elected to reform the Party;
and part of what people wanted was fidelity to Conference decisions. Shorten
also has to offer his supporters on the Left something - after they were
pivotal in his success. If Labor fails
to deliver on progressive tax, new social programs – and end up implementing
only more austerity – just not as severe
as the Libs - that would show a
lack of conviction and principle. For
instance Gonski and NDIS were immensely popular policies! Dropping or otherwise avoiding strong policies
as a matter of tactical expedience could
simply mean Labor continues hemorrhaging
support to the Greens. That would not be
'realism'. It would be both ideological
and practical self-destruction. Surely
the ALP Right itself must recognize this and commit to more robust policies!
We are yet to see an outcome, here, however. I hope these views I have encountered are not
as widespread within Labor as I fear.
But it is a debate Labor has to have with itself between now on the
National Conference in July this year. There
is talk to the effect that the ALP Right
will not hold the numbers on its own at Conference this year. Should progressive independents move in
support of a more traditionally social democratic policy framework the
consequences could be favourable. And
sometimes relative progressives break ranks from within the National Right as
well.
I
look at the Rudd/Gillard years as involving wasted opportunity. The same might be said of the Hawke/Keating
years. For example, the "Australia Reconstructed" document suggested something 'Nordic' - but we
got very little of the kind. We need a
Labor Party which pursues an agenda of steady, gradual reform - but appreciable
reform nonetheless. Real (steady)
Progress is needed - not 'one step forward,
two steps back'. So If Labor increases
progressive tax and associated social expenditure and investment by 5% of GDP
over three terms (roughly a decade) - that's a legitimate medium term agenda.
Another thing that really struck me in one
discussion with a Labor colleague was his notion of the rise of a 'wants not needs generation'. In contrast I would hold that the masses are
still concerned with issues of non-negotiable need. That is,
cost of living; housing
affordability; costs and quality of education; threat of illness or need of
aged care for family members. I think my
Labor colleague overstates peoples disengagement from 'non-negotiable-needs'. A
lot of people really are still 'doing it tough'. And they are inclined to vote on that basis! This needs to find reflection in the ALP’s
National Platform.
None of this is likely to change unless progressives in
the ALP begin organizing and agitating now – ahead of July’s National
Conference. Superannuation Concessions
are ‘the elephant in the room’ – and a lack of decisive reform here will
severely limit Labor’s options following the next Federal Election. (assuming Labor wins) Labor
doesn’t have to ‘lock itself in’. And it
is better for Labor to ‘keep its options open’ rather than lock into minimalist
policies which offer very little real progress.
A POLICY of ‘tactical expediency’
is self-destructive; even though
tactical decisions do need to be made during election campaigns. And for Labor to ‘keep its options open’
there needs to be a Platform which does
not irretrievably commit Labor to small government upon gaining power; a
platform which does not ‘lock Labor in’ to merely token reform of
superannuation concessions.
Bowen, Chris, ‘Hearts and Minds’, Melbourne University
Press, Melbourne 2013
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