Labor needs to Develop Stronger Policies and Mobilise Early to Beat the Liberals Next Time

above:  ALP Shadow Treasurer, Chris Bowen (a member of the NSW Right) has argued for "Equal Outcomes in Health" ; Let's see that principle fully acted upon in Labor policy approaching the next Federal Election.

In the wake of the federal election result there has been a good deal of introspection and analysis of the result: including analysis of Labor’s strengths and weaknesses.  But leading up to and after the election I was saddened to see some in the Party inferring Greens policies were ‘unaffordable’. Arguably that is not the right way to differentiate ourselves from the Greens party.  Rather Labor needs to consolidate its credentials as the party of the ‘Red Left’ in Australia ; with strong social justice policies which inspire our organisational and electoral bases.

Dr Tristan Ewins

It's upsetting when some of us in Labor complain about "unaffordable" "pie in the sky" Greens policies. The Greens' policies were more ambitious than Labor's policies, yes.  And perhaps were less credible as a consequence of their lacking access to quality costings.  But at the end of the day the difference between Labor and the Liberals is perhaps around one per cent of GDP annually.  (also add other policies not related to spending – like support for penalty rates)  And the 'unaffordable' Greens policies maybe add up to in the vicinity of one to two per cent of GDP/year more than ours at the most. (these are just rough estimates though I admit)

The problem with the Greens is not 'unaffordable' policies. That's 'Liberal-Speak'.  It’s rhetoric which can rationalize opportunism on austerity for instance.  It’s loaded-rhetoric which ‘locks in’ small government.

The real problem for the SL is that Greens gains are losses for the ALP Left within the PLP (Parliamentary Labor Party): affecting our policy influence as far as policy is determined by Cabinet.  (or the Shadow Cabinet as it is for the time being) And a common accusation is that sometimes the Greens distort facts on Labor Policy to achieve that.

But despite claims to the contrary, people who were insisting that we needed Greens preferences to win were proven right.  We cannot escape from the fact Labor and the Greens need each other.

So for the most part "big spending" promises are 'not the problem'. Promoting incremental extension of social insurance, social welfare and the social wage - should go without saying for Labor. We did not go far enough on tax reform and superannuation concessions reform. Yet nonetheless it was the most promising economic platform we've promoted in years. By this I mean it was the first election in years where we had not locked ourselves arbitrarily in to a policy of holding spending and tax down as a proportion of GDP.  

Probably  we retreated on policy in the face of bad responses in focus groups and polling. (take our retreat on Aged Care funding)  This suggests that while we began selling our message earlier than usual, we could have began even sooner. Because selling a message which challenges 'common sense' Ideological assumptions (as Gramsci may have put it) takes time and effort. (especially with a hostile media)   Our aspiration should be to raise social expenditure and investment by perhaps 2.5 per cent of GDP upon taking government after the next election.  (maybe more if you factor in cutting superannuation concessions)

If people want evidence of the need to begin campaigning early then look at the disinformation on Medicare privatisation in the media and from the Liberals. Privatisation was narrowly interpreted as ‘selling an asset off’. Labor’s message was therefore deemed a ‘scare’. Yet upon reflection Labor’s implicit definition of privatisation is legitimate. Medicare is a relatively modest scheme of socialized medicine by some international comparisons:  providing for the costs of a variety of consultative services and procedures publicly.  Nonetheless, Medicare (and the PBS – Pharmaceutical Benefits Scheme)  contain national health costs radically compared with the overwhelming dependence on private health cover in the United States. The danger, though, is that we are nonetheless developing into a ‘two tiered’ health system in health as in education. With increasing degeneration into Galbraith’s ‘private affluence, public squalor’.   The more this progresses the more entrenched the situation becomes ; and the more divided the country grows on the basis of social class.

This - accompanied by growing out-of-pocket expenses - would be both inefficient and unfair: an expression of the principle of privatisation as opposed to socialisation. 

But Medicare must be extended as well as defended. Medicare does not currently include comprehensive dental , podiatry and physiotherapy , or medical aids like glasses, hearing aids or prostheses.  We need a reforming government which provides for this through the progressive reform and extension of the popular Medicare Levy without austerity elsewhere.

It’s also notable that we sold NDIS (National Disability Insurance Scheme) well in the past. But we can't sustain an argument that improved social wages and social insurance can be provided without significant tax reform elsewhere. $7 billion from negative gearing and Capital Gains Tax concession reform was important. (adding up to 0.4% of GDP)  At least we were somewhat on the front foot. And Labor’s defensive stand against $50 billion in Company Tax cuts was crucial to its message ; and to a revolt in sections of the electorate against ‘corporate welfare’.

But I think we can and should do better. It requires planning and arguments put well in advance. It requires promoting a public debate which challenges peoples' assumptions about the desirability (or undesirability) of 'small government', low taxes, the importance of social investments, social insurance and so on.  It requires a party of activists – mobilized to a significant degree throughout the whole electoral cycle.

In short: we need an ALP with a vision reconceiving of a 'forward march of labour'. An idea of what 'progressive' actually means. That is 'how we want to progress things’. And that must mean an extension of social insurance and the social wage ; an emphasis on public infrastructure and services ; a more progressive tax system - and so on.  Which takes real resources-  Hence the emphasis on tax reform.

But both sides capitulated to short-term opportunism on superannuation concessions - which will be costing tens of billions to benefit the rich and the unambiguously well off.  With the new parliament it is to be hoped that the impending $50 billion bill for superannuation concessions will drive policy by necessity.  And Labor can use its position in the Senate to ensure these changes are fair for middle and lower income Australians.  Hopefully Xenophon can be convinced of this also. His votes will be crucial.   Also thankfully while Labor did not develop a strong enough policy, here, at least at the early leaders’ debate Shorten kept his options open on future reform.  Turnbull by comparison locked into ‘no further reforms’.  It will be interesting to see if he sticks to that.

The Liberals will accuse us of being 'big-spending'.  But that is rhetoric we need to refute vigorously. My personal ambition was to see Labor increase tax and related social expenditure by maybe 2.5% of GDP in its first term. (that that is considered 'radical' shows how far we've regressed in this country from anything like social democracy)  

But even increasing progressive tax and associated expenditure by 1.5% of GDP (or $24 billion/year out of a $1.6 trillion economy) in a first term Labor government would be meaningful. That should be ‘the policy floor’ – which we resort to only if necessary - and below which we compromise no further.

Crucially: there are vulnerable people who need our help sooner and not later. That includes the elderly, the ill, the disabled, the poverty-stricken, and the long term unemployed for a start. This requires tens of billions new spending to be meaningful.

With Shorten’s election campaign appearance on QandA, he was confronted by an aged pensioner who argued that an unforeseen contingency (eg: a broken washing machine) could send her broke.   In other words, that it may come down to a choice between paying bills, seeing the doctor, or feeding oneself. Shorten conceded there was ‘nothing he could do’.  Which probably translates as: ; ‘internal polling shows people don’t want higher taxes’ or that they ‘resent pensioners’, and hence Labor was ‘cutting some of the most vulnerable loose’.   We have to do better than this next time.    And the way we do that is through a solid campaign footing for a full three years between now and the next election.

But keep in mind that's in the context of a $1.6 TRILLION economy. We're talking about affordable reforms that the media and Conservatives will portray as 'radical' and 'irresponsible'. The Liberals especially don't want to compromise at all on their 'small government, neo-liberal, laissez faire' Ideology and agenda.  No matter what the cost to vulnerable  and disadvantaged Australians.

In fact we need to develop a public debate about how low social spending and how small the public sector are in this country - and why moving closer to the OECD averages - even if only gradually - would be a good thing.

I have argued to increase spending and taxes by roughly 2.5% in the past.  I don't think we can just transplant the entire Swedish model over two or even three terms. But I do think gradual progress is possible. And depending on unforeseeable circumstances perhaps it could be less gradual.  (history is interspersed with ‘watershed’ moments which had not been predicted)

Let's say we had a pool of $40 billion extra a year to work with out of a $1.6 trillion economy. (ie: 2.5 per cent of GDP) And then maybe cut superannuation concessions by around $15 to $20 billion to start as well. (out of approximately $50 billion)

With that we could do a great deal if not all of the following:   

·         Fully Implement the Gonski education reforms, and NDIS

·         reform and extend Medicare into dental, prostheses, optometry, physio, psychology, podiatry ; cut waiting lists ; stop the encroachments of increasing co-payments

·         increase investment in public and social housing

·          implement a National Aged Care Insurance Scheme

·         reform Mental Health with more proportionate resourcing of the sector and policies to tackle mental-health related early mortality – with perhaps 300,000 Australians suffering schizophrenia, for example,  dying 25 years earlier than the general population. ;

·         introduce a Universal Basic Income (UBI)  as proposed by NSW Labor policy activist Luke Whitington, and begin eliminating poverty.

·         also fund various infrastructure projects publicly as opposed to creeping privatisation- with the consequence of passing efficiencies on to the broader economy.

·         top up local government with federal funding - redistributing resources to help local government in working class and disadvantaged areas to provide better quality services and infrastructure.

·         Pay for a reparations component of a Treaty with indigenous Australian peoples

 

·         Implement a trial 'co-operative incentive scheme' to support the development of co-operative enterprise in Australia  - supported by tax breaks, cheap credit, advice., and in some instances government co-investment

·         Reform welfare payments – Aged, Disability, Sole Parents; Student Allowance; Carers etc; increasing by $50/week plus inflation perhaps over two terms

 

·         Finally we could reform higher education and make the HECS system far more progressive. Raise the minimum repayment threshold for a start.   And implement Industry and Labour Market policies which bring us closer to full employment: with a big boost to the Budget bottom line.

What's important over the next year or so it that we adopt the posture necessary to promote the next wave of reforms in what they used to call ‘the forward march of labour'. ALSO even in the wake of our election loss we should still aim for a Company Tax rate of 30 per cent or higher and not back down from that. (ie: whether in government, or vetting legislation in the Senate)  Because it is both necessary and reasonable for the corporate sector to contribute to the services and infrastructure it benefits from. The alternative is neglect - or otherwise 'corporate welfare'. 

Sam Dastyari’s estimate that corporate tax evasion is costing $31 billion a year is also relevant here.  And you would think Labor needs a stronger policy than it took to the last election.  That is: Labor’s policy only aspired to claw back $2 billion of this over 4 years.

Labor desperately needs a sense of what its professed ‘forward march’ comprises ; and why that is desirable and right.  Let’s begin a debate sooner rather than later: moving Labor onto ‘the front foot’.  This means shifting straight away to a ‘permanent campaign mode’ based on ‘solid but partial mobilisation’ through the activism of our rank and file.  (full mobilisation throughout the entire electoral cycle could prove exhausting, however)  Also we need to implement an early release of ambitious policies which our activists and supporters could mobilise around.  We don’t want to be pressed again to retreat on crucial policies (for example Aged Care funding)  due to public fears re: the presumed need for a Budget surplus and low taxes – as occurred in the recent federal election campaign.

A non-binding ‘policy conference’ some time over the next year could also help mobilise the enthusiasm of Labor’s rank and file ; inspiring innovative policy development to drive Labor towards the next federal election.  Contrary to Bowen this Conference should not replace the binding ALP National Conference which determines Labor's Platform.

Reflecting on the Leader’s Debate and what it means for Australia

above: Arguably Bill Shorten won the recent Leaders' Debate for Labor ; But the leader needs to make clearer the connection between education and infrastructure, and a strong and fair economy.  Labor could also do with more policy ambition ; and needs to 'do the right thing' for the elderly, and other vulnerable people.

Tristan Ewins

IN the recent Leader’s Debate (29/5/16)  for the coming Australian Federal Election it could reasonably be argued that Labor leader Bill Shorten did a pretty good job.  Slogans such as ‘Budget Repair that is Fair’ are arguably cutting through ; though Labor needs to come up with more detail as the election day approaches.  

Shorten’s approach is basically to defend Australia’s minimalist welfare state and social wage – but without such significant new initiatives – say on the scale of the NDIS. (National Disability Insurance Scheme)  His strategy is ‘to hold the line’ against Turnbull’s Ideological drive for ‘smaller government’ at the expense of pensioners and other vulnerable Australians. The opposition of the Australian Medical Association to the erosion of Medicare and bulk-billing could be crucial.  Shorten is also ‘holding the line’ on Gonski and against the projected deregulation of Higher Education.

But Labor’s back-down on restoring Aged Care funding was especially disappointing: and will have bad consequences for some of our most vulnerable Australians.   Labor needs to revisit these areas if actually elected.  Labor Governments cannot take it for granted they will enjoy the protracted time in office as enjoyed during the Hawke/Keating years.  Labor has to ‘seize the day’, and entrench important reforms while it can.  Personally I have advocated for the vulnerable elderly and the mentally ill: suggesting the importance of addressing a mental-health related life expectancy crisis. (where about 300,000 people are dying 25 years earlier that the general average)  And also I have suggested the necessity of tackling unfair user-pays in Aged Care ; as well as the crisis there with regard quality of life, and in resourcing and staffing the system.

But Shorten needed to do a better job making the connections between education, infrastructure, human capital and a strong economy. He was spot-on identifying the waste and unfairness of Turnbull's $50 billion corporate tax cut over 10 years.  (A measure which will likely result in real increased economic growth over decades of only a tiny fraction of one per cent according to Treasury.)

But cuts to public investment in education and infrastructure especially are bad for the economy, bad for growth, bad for investment. Businesses will take what they can get. But they also look for an educated workforce and top quality infrastructure.  The ‘trade off’ between reduced Company Tax, and reduced spending on infrastructure and education – will leave the Australian economy worse off. 

Amidst talk on the economy Labor’s Negative Gearing measure is perhaps its most significant new initiative: with the hope it will make housing more affordable, partly as a consequence of encouraging investment in new stock.  This would also stimulate growth.

Ultimately, there is the choice of whether we pay for infrastructure and Education fairly through progressive tax;  or unfairly through 'corporate welfare' (an unfair tax system); or whether we just cop out entirely - 'leaving it to the market' - which will mean privatisation.   Turnbull is suggesting  an arbitrary ‘locking in’ of smaller government, aiming for around 23.9% of GDP  . By locking into the 'even smaller government' option (by some tens of billions) Turnbull will have no choice except to privatise.  But privatisation comes with big inefficiencies. The higher cost of private finance ; the costs of marketing;  private dividends; corporate salaries and so on.  And there is the possibility of private monopolies or oligopolies with unacceptable market power to fleece consumers.  Not only will that create unfairness - it will also create inefficiencies that flow on to the whole economy. Shorten needs to be crystal clear that not only is Labor strongest on health and education - But that Labor's commitment to public education and infrastructure is best for the economy as well. This is a great Labor strength if only Shorten is willing to play to it!

Turnbull argues he ‘has a plan’.  But all this ‘plan’ boils down to in the end is a massive corporate tax cut: premised on discredited ‘trickle down economics’.  The expected ‘surge in new investment’ will never come.  As opposed to an economic plan, Turnbull’s approach is only to ‘talk about having a plan’.  There is no substance.  Just a mantra about ‘jobs and growth’, and references to Turnbull’s past business background.  Turnbull assumes a highly conditioned electorate will ‘trust’ the Liberals on the economy: and will trust in his business background as opposed to Shorten’s personal background representing workers.

Also importantly: Turnbull is attempting to trade on his commitment to build new subs in South Australia.   Building the subs will cost $50 billion and create 3,000 jobs.   But by comparison the Conservative LNPs withdrawal of only modest support for the auto industry will cost 50,000 jobs.    And it was projected about half of those jobs (about 24,000 of them) are lost in South Australia alone.   Hopefully workers have long memories; and if not so then Shorten should remind them! 

This is also an area that Shorten should arguably revisit if he wins the election.  Former Prime Minister Kevin Rudd had suggested an initiative which may have saved those 50,000 jobs for only a $2 billion subsidy.  Australia could potentially develop an ongoing ship-building capacity: building vessels not only for ourselves, but for the world.  But if the auto industry could be restored, arguably there are more jobs in the balance there.  Winning back the trust of the auto-manufacturing companies would be difficult, though, after Tony Abbott effectively ‘drove them out of town’. 

Tellingly, during the debate Turnbull suffered on the theme of climate change.  The problem with high expectations is that when they fail to be realised the disappointment is all the more bitter.  There is a Centrist, politically and social liberal demographic out there which may have swung the election for Turnbull.  But Turnbull’s compromises have given the impression of ‘weak leadership’.

Finally: during the debate both leaders were asked to clarify whether or not either one of them would ‘lock in’ with no further changes to superannuation concessions.  In an act of irresponsible opportunism, Malcolm Turnbull indicated he would make just such a commitment.   But Shorten did not answer the question clearly. 

Let’s be upfront. According to many commentators superannuation concessions could soon cost close to $50 billion a year.  That is: more than the entire Aged Pension budget.  This will be partially mitigated by the modest measures taken by both the major parties: reducing concessions for the richest of the rich.  But while average income earners should not be targeted, there arguably remains a broader demographic including the indisputably well-off and the upper middle class.  Let’s say at least the top 10% income and wealth demographics.   In order to reel in this massive imposition on average tax-payers  a broader base needs to be targeted.   Broad enough to save tens of billions , but narrow enough to be fair.  Labor itself has not yet found this balance -aiming for too-narrow-a-demographic to make the difference to the Budget which is needed.

For Shorten what is also absolutely necessary is to create a ‘sense of proportion’ around claims in the Conservative tabloid media that Labor are ‘irresponsible big spenders.’ Spending has hovered around 25% of GDP across BOTH Labor and Liberal governments for many years now. In fact both Labor and Liberal have maintained a regime of ‘small government’, and any Australian government would need to double spending by approximately $400 BILLION a year to reach proportionate Swedish levels of expenditure! (ie:  at approx. 50% of GDP)   As an admirer of the Swedish welfare state, nonetheless that may not be within our grasp!   But in fact, if we want to INVEST in education, health, aged care, transport and communications infrastructure, then we do need more progressive tax and higher spending. The alternative is that our services and infrastructure will decay. People will suffer ; and so will the economy.  

To reinforce that ‘sense of proportion’: Labor’s proposed changes to Capital Gains Tax and Negative Gearing will save only $7 billion a year.  And Labor’s measures on superannuation concessions will save only $14 billion over ten years.   (which is not so much as it sounds when you consider it is staggered over a decade!) 

But Malcolm Turnbull’s approach of cutting Company Tax by $50 billion over ten years – while opposing Labor’s savings via progressive tax measures - cannot but result in a big hit to Education and Health, services and infrastructure.  At the same time it could make any return to surplus impossible.  (once the tax cut reaches its full amount it will cost the Budget even more over time)

All in all Shorten ‘won the debate’.  But this is no guarantee of winning the election.  Shorten’s defensive posture - for the most part ‘protecting what we’ve got’ – will appeal to many people.  But ultimately we need more if we are to protect the vulnerable, and promote the rights and interests of the working class, and of low to middle income earners. Here’s hoping for more ambition from Labor as the campaign continues.

Analysing the Morrison Federal Election Budget, and Considering the Shorten Labor response

above:  Treasurer, Scott Morrison's pitch on 'Jobs and Growth' is more of a Slogan than a 'Plan' or a reality

Some are interpreting the Morrison Federal Budget as 'modest' and 'non-controversial' ; A closer look reveals that much of the Hockey austerity agenda remains

Tristan Ewins

The first (and possibly last) Scott Morrison Federal Budget is being widely misinterpreted as modest and non-controversial – playing to the theme of ‘living within our means’.  Effectively token personal income tax cuts for those on high incomes are suggestive of Liberal Party priorities in the context where other income tax-payers experience no relief. 

Further; increases in tax on tobacco may seem like a ‘safe bet’; but neither side of politics appears concerned at the distributive ramifications. 

In the ‘big picture’, though, there are still big cutbacks implicit in this Budget that may escape voters’ eyes at a casual glance.  Cuts in Medicare and Higher Education will undeniably lead to an intensification of user pays and privatisation over the course of a re-elected Turnbull LNP Government.   The LNP is hoping to evade scrutiny by adopting some distributively-fair policies.  But a thorough analysis reveals a Budget which retains too-much from the disastrous 2015-16 Hockey austerity Budget.

And yet there are some aspects which are mildly encouraging.

Under the reforms foreshadowed by Treasurer, Scott Morrison, Wealthy superannuants would no longer be able to “draw tax-free earnings from balances over $1.6 million.”   The Government is also "planning to introduce a $500,000 lifetime cap on the amount of after-tax contributions a person can make, backdated to 2007."  Labor has criticised the “retrospective” nature of the policy, but the measure will still only bring in $2.9 billion over four years.   Meanwhile high income workers will also be hit with a lowering of the threshold at which the concessional rate of 30 per cent applies for payments into superannuation accounts.  That is: lowered from a $300,000/year  threshold currently to a threshold of $250,000.    Other superannuation measures will subsidise low-income workers, and support the ‘topping up’ of low-income spouse’s accounts by a partner.  Those measures are a move  in the right direction. 

But Sally Rose of ‘The Age’ also observes that without a crack-down on negative gearing these policies could simply drive more investors into property – contributing to an intensification of a housing bubble which already locks so many young families out of the market.

‘The Age’ also proclaims that Scott Morrison is ‘taking aim at the multinationals’, hiring 700 tax professionals to lead a crack-down on corporate tax-avoidance.   Tax avoiders will face significant penalties.  But the projected savings of $3.9 billion are highly optimistic at best, despite the projection that corporate tax evasion is costing over $30 billion a year.   

What is more, while the Coalition’s ‘Youth Jobs’ initiative is a significant improvement on existing Work for the Dole programs, nonetheless it amounts to another form of labour conscription and exploitation.  The good news is that the program links into the skills which may actually lead to work later down the track.  The unacceptable side of the equation is that young workers will be paid a pitiful $100/week extra for working a 25 hour week.  ‘The Age’ fears the policy may create “a conveniently revolving door for cheap labour.”   The question is whether or not the opportunity for skills development will ‘break the cycle of unemployment’, or whether competition will simply increase for a limited pool of jobs.  (where there is only one job for every five job-seekers) This raises the question of whether government needs to intervene more directly with an industry policy that links skills with additional new jobs over the long-term.

There will be some additional money for schools and hospitals – but significant pain as well.

Medicare rebates will be frozen at $37 for six years, driving  the erosion of the public health system, and heralding the introduction of steadily increasing co-payments. Prescription medicines will also increase in cost by $5 , and a user-charge will be added to Pathology services (eg: blood tests) adding up very substantially for those with chronic conditions for which medication and blood tests are non-negotiable.  

The ‘Herald-Sun’ projects “$1.2 billon” in aged care cuts.  ‘Pain management’ for residents in Aged Care will be cut-back on account of what is described as an “unsustainable” growth in expenses.  (What price the amelioration of an elderly person's suffering?)  A crack-down on ‘false claims’ by Aged Care facilities is anticipated to bring in almost $500 million ; but there is no recognition of the fact little can be done about quality of life and oppressively unfair user-pays without a very significant injection of new funds.   By ‘quality of life’ I refer to a host of problems – from underpayment and under-staffing which impact on basic questions such as when residents are turned in their beds to avoid bedsores, or whether aged care workers can be certain residents are actually eating, or whether or not there is poor morale and a revolving door for skilled staff..  It also refers to the lack of things for residents to do ; of the terrible boredom, the lack of meaning, the lack of pleasant surrounds, and the lack of privacy.  Finally it includes the need for a registered nurse on the premises 24/7 in the case of an emergency.

University fee-deregulation has been dumped for the time being ; but big cuts remain in place – still begging the question of how the sector will cope.  Likely options include further reductions in HECS (Higher Education Contribution Scheme) repayment thresholds to well below Average Weekly Earnings. (AWE)  Liberal arguments, here, that government and students need to spread the cost of degrees ’50/50’ deserve to be treated with healthy scepticism. Not only does business benefit from the skills acquired by students ; but also the most equitable way of spreading the burden is through a progressively structured tax system.  If repayments are to be geared to the actual financial benefit gained, then there is no better way to go. On the other hand, higher repayment rates for those on over $100,000/year could have a ‘progressive aspect’, and should not be considered in the same light as reductions in repayment thresholds and increases in repayment rates elsewhere.

Arguably students will be hit hard with debt in order to pay for big Corporate Tax Cuts. True to its mantra of ‘small government’, essentially the government is arguing it will ‘do more with less’. IN reality, though, this adds up to ‘no new programs without cuts elsewhere’. Linking the National Disability Insurance Scheme to welfare-cuts, there will be cutbacks in pensions for new recipients amounting to $15/fortnight, and a push to reassess the pension eligibility of some 90,000 Disability Pensioners. For those already living in poverty this can impact with malnutrition, or exposure to the elements as the costs of heating and cooling become unsustainable.

The Government anticipates an economic transformation ‘beyond the mining boom’, yet while it is subsidising Defence jobs in the construction of subs and other hardware (inefficiently creating 3,600 jobs at a cost of about $50 billion), the death of Australia’s auto industry undeniably occurred under the Liberal Party’s watch, with perhaps 50,000 jobs lost directly and indirectly.  

The goal of raising Defence expenditure to 2 per cent of GDP  by 2020-21 remains : but if the Liberals want bipartisanship with Labor, here, they must ensure this is not at the expense of other important programs.  If bi-partisanship is ‘in the nation’s interest’ the Liberals must disregard Ideological qualms and accept a small increase in ‘the size of government’ to lock in Defence commitments.  And Australia’s military assets should always be reserved for the actual defence of Australia and its allies, and not in adventures and wars of aggression overseas.  (as with the Gulf War of Bush, Blair and Howard)

More generally the Budget is light on infrastructure construction.  Hence the need to make tough decisions to ‘increase the size of government’ or make further painful and damaging cuts is ‘postponed’.  Given infrastructure demands in transport, communications, energy and so on, it is a situation which cannot be sustained over the longer term.  

‘The Age’ reports that Shorten Labor has responded with “$71 billion Budget Savings” of its own. This includes opposition to Turnbull’s tax cuts for corporations which will see the Company Tax rate reduced from 30% to 25% over ten years.   Some analysts are anticipating an utterly unsustainable cost to the Budget of over $50 billion over ten years should this Turnbull policy be adopted.  This should not be surprising given the Liberals’ track record of tax cuts for the wealthy and upper middle class  (unsustainable because in the context of the mining boom) –  and ultimately funded by austerity elsewhere, impacting upon those on middle and lower incomes, as well as those mired in poverty.

Here,. The Turnbull mantra of ‘Jobs and Growth’ has no substance.  While low Company Tax rates may attract some investors, the other side of this decision could be neglect of services and infrastructure necessary to sustain economic activity.That might mean less ‘jobs and growth’ and not more.  And while a small proportion of the cuts will flow through to workers, most of the tax cuts will simply be pocketed by business.  Under this scenario, If essential infrastructure and services are not to be neglected the only alternatives include privatisation and user pays, or for taxpayers to ‘pick up the tab’ elsewhere. 

None of those options are desirable or fair.  But this scenario also raises other problems such as reduced workers’ consumption power, and the inferior cost structures involved in the private finance and operation of profit-geared services and infrastructure. The Liberal obsession with ‘small- government’ with ‘no exceptions’ betrays an impractical posture where good sense is sacrificed for Ideology.

 In light of what it once called a ‘debt and deficit disaster’ the Liberals’ projected Company Tax cuts are being dismissed as fiscally irresponsible by Shadow Treasurer Chris Bowen. 

Somewhat disappointingly, though, Shorten has argued Labor will oppose the Liberals’ $1.6 million cap’ on superannuation savings which attract the concessionary tax rate.  Again: The argument is that the policy would have ‘retrospective’ elements, and hence is opposed ‘on principle’.  Some corners of the media are speculating that the idea may be to ‘wedge’ the Liberals on their own core constituencies.  (ie: the wealthy and upper middle class)    Nonetheless Labor’s own policy seeks to remove superannuation concessions from retirees already living on superannuation-streamed incomes of $75,000/year and over.   Labor expects this will impact upon 60,000 superannuation account holders with accounts valued at over $1.5 million.   But Labor is also reducing the threshold for the ‘high income super charge’ (HISC) from $300,000 to $250,000, affecting  110,000 people, and diluting their concessional tax rate on their contributions by a flat 15%. (ie: a 15% concession down from 30 per cent)

In April 2016 Shorten and Chris Bowen had argued that this, and measures on corporate tax evasion would save $20 billion over a decade.    Again: that is in the context of superannuation tax concessions soon costing as much as $50 billion EVERY YEAR, and Corporate Tax evasion costing over $30 billion EVERY YEAR . (according to Labor Senator, Sam Dastyari)

It is clear now that no-one is willing to truly ‘get serious’ on the reform of superannuation concessions and tax.  On Superannuation Concessions alone Labor needs to target a ‘broader base’ ; hitting the upper middle class as well.  While the upper middle class may not be as privileged as the ‘top 1 per cent’, nonetheless it is not fair for the remainder of society, including low and middle income workers, to subsidise their lifestyles.  A better policy here could free tens of billions for investment elsewhere in services, infrastructure, and welfare.

But despite this there remain very-encouraging Labor policies as well ; which will still see Labor outstripping the Liberals on distributive justice and the public interest. 

The Gonski education reforms will be implemented, as will the National Disability Insurance Scheme (NDIS), and the construction of the National Broadband Network with superior Fibre-to-the-Home technology.

Exploitation of students (and taxpayers) by dodgy private vocational education outfits will be cracked-down upon with an $8000/cap per student, and a re-emphasis on TAFE.   This is estimated as saving $6 billion over a decade. 

Shorten Labor’s reforms limiting access to Negative Gearing to new investments, as well as restricting Capital Gains Tax concessions could save over $7 billion a year.  And a Deficit Levy on high income earners will be made permanent, saving $16 billion over a decade.   The Negative Gearing policy especially should lead to more-affordable housing and more new housing.  So while there is ‘room to improve’, this is a step in the right direction. 

BY leading the debate Shorten has forced Turnbull and Morrison to adopt some ‘Labor-esque’ Budgetary policies.  To the extent to which Labor is setting the tone for the election this has to be welcomed.  

On the other hand while Labor is condemning the far-from equitable cuts that Morrison has projected elsewhere in the Budget, Shadow Treasurer Chris Bowen also points to the maintenance of “higher taxes” under the LNP than any time during which Labor was in Government. 

This can partly be traced to priorities.  For example the $50 billion Defence contract to build 12 new subs ; and the decision to raise overall Defence expenditure to 2% of GDP.   But at the same time: eventually Labor needs to confront the fact that it cannot afford its social agenda without raising tax significantly on those who can really afford it. 

As considered earlier, Aged Care requires many billions new expenditure annually to wind back regressive user pays structures, and improve the quality of care and infrastructure. 

And Mental Health spending needs to rise absolutely and proportionately with billions new funding as well.  There is a truly shameful National Emergency whereby the mentally ill are on average dying 16 years earlier than the general population, and those with Schizophrenia (maybe 300,000  Australians) are dying 25 years earlier than the general population average.   Catherine Armitage of ‘The Age’(‘A kind of creeping euthanasia’, 11/4/16)  has pointed out  that 9000 Australians with a serious mental illness are dying prematurely as a consequence of this situation every year. This far outstrips the road toll and suicide rate combined several times over.  Both Labor and the  Liberals need to support fully-funded government programs to ‘Close the Gap’ on life expectancy for the mentally ill, much as there are programs to ‘Close the Gap’ for Indigenous Australia. 

Again: The Liberal obsession with ‘small- government’ with ‘no exceptions’ betrays an impractical posture where good sense is sacrificed for Ideology.  Labor needs to decisively reject this Ideology and embrace reforms which reject ‘small government’, and instead promote social solidarity, collective consumption, social insurance, truly progressive taxation and so on.  The Nordics already demonstrate what is possible. But to be serious even a ‘gradualist’ posture by Labor – aiming to emulate the Nordics over the course of two or three decades -  should see social expenditure and investment rise by tens of billions under Shorten Labor. 

Labor is providing a clear choice in this election: on Gonski, tax reform, NBN and NDIS.  But we need to do better.   In Australia we should no longer ‘take small government for granted’.  With the end of the mining boom, we need to reform tax just to ‘stand still’ on social services, infrastructure and welfare.   Tax reform is ‘the price we pay for civilisation’.  And a progressive policy trajectory necessarily entails ongoing, serious and cumulative  reforms on this front.

Other sources:  

Herald-Sun:  4/5/16,  6/5/16,  7/5/16 , 9/5/16

The Age:  4/5/15 ;  6/5/16

From Aged Care to Austerity ; Issues of Concern to Progressives as the Federal Budget Approaches

above:  Scott Morrison will likely bring down an Austerity Federal Budget in May ; But he is taking a harder line on Superannuation Concessions than Labor.  Labor needs to 'up the Ante' on Superannuation Concessions to maintain as much credibility as it can on Distributive Justice.

Dear readers; 

The following letters have been written over the past month ; Most have not been published (except here).  But I hope that here (at my blogs) they will promote reflection and debate.   This time we’re looking at the following:

·        Superannuation Concessions

·        liberal rights and the trashing of Cori Bernadi’s Office

·        Labor and Negative Gearing

·        Life Expectancy for the Mentally Ill

·        Aged Care

·        The Threat of Austerity in the Upcoming Morrison Federal Budget.

Dr Tristan Ewins

 

Labor needs to up the ante on Superannuation Concessions

Turnbull’s tougher stance on Superannuation Concessions raises the prospect of it ‘outflanking’ Labor on one front pertaining to distributive justice.  The tax concessions threshold stands to be cut back from incomes of under $300,000/year to those under $180,000/year – compared with Labor’s current target of  under $250,000/year.  (‘The Age’, 20/4)  Malcolm Turnbull has wasted much of the ‘small l liberal kudos’ and political capital he had won after deposing Tony Abbott.  To win the Federal Election, Bill Shorten and Labor cannot afford for him to ‘claw it back’.  As a minimum Shorten must now match Turnbull’s policy.  Even better: he must outbid Turnbull on distributive justice ; and the related theme of Budget repair without Austerity. Indeed Labor should welcome the opportunity for a degree of bipartisanship on an issue where its ‘distributive justice instincts’ were already demanding a stronger policy. Richard Denniss of The Australia Institute has projected that Superannuation Concessions will soon cost taxpayers  $50 billion every year : mainly in the form of an effective subsidy for the unambiguously well-off.  (paid by the rest of us)   A responsible policy would aim to cut this expense by half as a minimum; targeting the well-off specifically; and done as soon as is humanly possible.

 

Andrew Bolt was wrong on liberal rights re: trashing of Cori Bernadi’s Office

Andrew Bolt  (Herald-Sun, 21/3) condemns “leftists” and “socialists” for the trashing of Liberal MP Cory Bernadi’s office.  And indeed the tactics of those people were questionable at best.  In a picket line there is a clear physical objective – which can interfere with the profits of a private business – and thus deliver leverage to workers over wages and conditions.  Similarly boycotts of the goods of a country or a specific company can achieve leverage in a comparable way.   But the protestors against Bernadi achieved no leverage over government policy through their actions.  And while Andrew Bolt often agitates for free speech, he appears to have nothing to say about Mike Baird’s repressive anti-protest laws.   The problem with mistaken protest strategies can be that they play into the hands of the illiberal forces (ironically in the Liberal Party) who are now threatening our civil liberties.  A truly liberal and democratic society not only supports free speech – but also defends the right to protest, and even the right to engage in civil disobedience. Those rights are now under threat – and whereas Bernadi abhors ‘Leftist totalitarians’ the real threat to our rights comes from within his own party.

Negative Gearing Changes Just the First Step in Restoring the Australian Dream

Labor MP Andrew Leigh  (21/3)  rightly argued that increasing supply is the key to making housing affordable for more Australians.   Labor’s anti-Negative Gearing policies should encourage a shift to building new properties – hence helping to facilitate that crucial objective. But if we really want to increase supply we need to look at many billions invested in non-clustered public and social housing.  To provide for those people thus enabled to enter the housing market we also need to invest in the amenities and infrastructure provided in emerging suburbs.  Young families need transport and communications infrastructure, hospitals and schools, parks and gardens – to achieve the living standards they need and deserve.   But this is only possible via a significant public investment .   That goes against the grain of the Turnbull Government’s emphasis on cutting expenditure – which sabotages the Commonwealth’s revenue base - and hence its ability to provide for these things.  Company Tax cuts (read: corporate welfare)  are the last thing this country needs to provide for skills, infrastructure, social capital – all necessary for a successful economy and society.

 

Neglect of the Mentally Ill “A kind of Creeping euthanasia”; a Response to ‘The Age’

Catherine Armitage of ‘The Age’(‘A kind of creeping euthanasia’, 11/4/16)   is to be commended on her article exposing the rate at which mentally-ill Australians are dying well before their time.  That is, that the mentally ill (almost half a million Australians with a serious mental illness)  are on average dying 30 per cent earlier than other Australians – not just because of suicide, but mainly because of preventable physical illness.  That is, 9000 Australians dying as a consequence every year. This far outstrips the road toll and suicide rate combined several times over.  With the Federal Election now looming it is to be hoped that this will develop into an ongoing campaign in the Australian media, including in ‘The Age’: a campaign which will not relent until there are comprehensive and fully-funded government programs to ‘Close the Gap’ on life expectancy for the mentally ill, much as there are programs to ‘Close the Gap’ for Indigenous Australia. 

 

Responding to Morrison:  Austerity not the Answer!

Apparently Scott Morrison is under pressure to cut spending in the upcoming Federal Budget rather than raise taxes. (Herald-Sun, 17/4, ‘p 11)  What some people don’t understand, though, it that there is no ‘magic pudding’, and that cuts to health, education, infrastructure and welfare will have enormous ramifications.  Without increasing progressive taxation – which takes more from the rich than the poor – then there are two possible consequences.  Either the quality of services and infrastructure: like broadband, roads, health, education, aged care  – will suffer.  Or there will be privatisation and/or user pays.  There will be more $100,000 degrees.  State schools will suffer – as will our skilled workforce and economy.  And Australia will continue to lag behind in the quality of its broadband.  The problem with this is that ‘collective consumption’ through taxes can actually give voters a ‘better deal’ in their capacity as tax payers than as isolated private  consumers. Medicare demonstrates this.   But the Liberals have an Ideological fixation on ‘ever smaller government’ which defies practicality and common sense.  Supposed Christians like Abbott and Bernadi also ignore an older tradition of Christian Democracy which had no issue with a mixed economy and a ‘fair welfare state’.

We need a strong response on Aged Care ; This needs to be made a top issue in the impending Federal Election

Sarah Russell (The Age, ‘We’re ignoring the needs of our ageing population’, 17/4) draws attention to the under-funding of Aged Care : quality of training, staff pay,  conditions, morale, and numbers of staff on premises.  The result is poor service regarding turning in beds, assistance with eating, dressing and showering.  But the problems with Aged Care and Rights go deeper.  Those in residential care often simply don’t have anything to do but stare at TV and walls all day.  Similarly those ‘ageing in place’ (at home) can be lonely, socially isolated, and bereft of meaning in life. Hence appallingly high levels of suicide amongst the aged. (especially men)  A common response is for policy makers to throw their hands in the air at ‘the ageing of our population’.  But the current  Aged Care budget  is $17 billion out of a $1.6 Billion economy – or approximately one per cent.  An indexed annual $5 billion/year boost could make a big difference: providing programs for social engagement, purpose, entertainment and mental stimulation, moving away from ‘user pays’, increasing pensions, and providing skilled staff numbers which are desperately needed. – We need an ongoing campaign to make this a top priority in the upcoming Federal election.