Social Justice doesn't need to be 'put on hold' to Fight Inflation

 

above:  Albanese doesn't need to 'put social justice on hold' to fight inflation

In Australia the Labor Government is being warned not to spend too much for fear of exacerbating inflation.  At the same time workers are urged to moderate wage demands to avoid a ‘wage/price spiral’.  This is the ‘common sense’ of the day.  But at the same time the labour share of the economy has fallen by over 10 per cent of GDP since the 1970s.

Furthermore, income inequality is marked.  ACOSS observes that:

“People in the highest 20% income group receive 42% of all national income, which is more than the share of the lowest 60% combined. People in the lowest 20% receive only 6% of all household income, while the second lowest 20% receive 12%.”

Here, those in the lowest 20% bracket earn on average $753 a week. While those in the highest 10% bracket take $5230.

Meanwhile, in terms of wealth the bottom 20% average $36,000, while the top 10% average $4,754,000.

Amidst this the Federal Labor Government’s support for an increase of the minimum wage in line with inflation is welcome. But ‘the bigger picture’ is one of increasing inequality, and an increasingly lower share of the economy going towards the needs of working Australians.  At some point Labor needs to confront inequality ; and rectify these imbalances.  But rather than suppressing wages or implementing austerity, the ‘heat’ could be taken out of the economy by raising tax.  Temporary tax increases could target those on middle incomes, while permanent tax increases could target those on high incomes with the goal on funding social wage measures – like Medicare Dental.   Because of the need to moderate demand at this time, the ‘middle’ will be affected either by interest rates, or wage suppression, or tax.  Choosing ‘the tax lever’ achieves this while providing the means to fund infrastructure, welfare and social wage initiatives.   At the same time wages – especially at the lower end – could rise – with the aim of furthering distributive justice.  Overall wages should also rise where the wage share is lower ; and where rectification is necessary. Labor should make representations to Fair Work Australia to achieve this ; and to increase the share going to lower income earners overall. But in the immediate term demand would be moderated through higher tax.  Over the longer term such taxes on ‘the middle’ could be removed to promote an economic recovery. 

The question Labor needs to ask is: ‘can social and distributive justice be furthered while tackling inflation at the same time?’  In this context, pursuing the Stage Three tax cuts makes no sense economically, and from a social and distributive justice perspective.  They will see a flat 30 per cent tax rate for all incomes from $40,000 to $200,000.   This will see an increase in overall demand rather than have a dampening effect.  (though by then the inflation genie may be 'back in the bottle' so to speak)  It will also minimise progressive redistribution and entrench inequality.   It means proportionately those on lower incomes will pay more for the services and infrastructure functions of government, The Stage Three Tax Cats will also cost the Budget billions: almost $250 biillion over nine years.  This money could fund high speed rail, and Medicare Dental, while improving pensions, and winding back user pays in Higher Education.  It could also fund a massive investment in public housing, while improving the wages of Aged Care workers significantly. And probably much more besides.  Some would say such investment would act as a stimulus ; but again it depends on what temporary and permanent tax increases accompany said measures.  Importantly, if such spending kicked in a bit later down the track, the inflation crisis might be over ; and stimulus may in fact be appropriate once more.

The bottom line is that managing inflation does not have to mean social and distributive justice are put on hold. There is scope to improve welfare and social wage while dampening demand overall in the immediate term ; but also rectifying the imbalance between capital’s share of the economy and labour’s share of the economy.  When we have Labor Governments we need to make the most of such opportunities.  We need an Albanese Government that makes the most of the possibilities of government ; and makes long term structural reforms which further the goals of social and distributive justice.

Labor in Government provides Opportunities that Should not be Wasted

 

In the run-up to the Federal Election many progressives tried to justify Labor’s small target strategy by arguing that Labor would get things done once in government. But that too much detail beforehand would confuse and overwhelm people.  Now the day has come.  Labor has enjoyed a strong victory. And it’s time to deliver.

The Greens have argued for Medicare Dental ; but Labor could make the policy its own while winning broad and ongoing Greens support for the remainder of the term.  The squeeze on the cost of Gas also demands subsidies in favour of those on low incomes and welfare.  While an increase in the supply of public housing could improve housing affordability. Pressure on the NDIS should be lifted with additional funding ; as should pressure on our hospitals.  Waiting lists have exploded with Covid ; and action is urgently required. Accessibility and affordability in Higher Education should also be addressed with lower fees and an increase in repayment schedules clearly above the average wage.  Tied grants should be provided to the states to fund an increase in teacher numbers ; while a National Curriculum should be designed which promotes active, informed and critical citizenship.   This includes understanding of political processes and opportunities for public sphere participation ; as well as sophisticated ideological literacy. Finally, promises on Aged Care should be implemented. Albanese has promised an increase in care personal attention hours for residents ; but to implement this we need Aged Care Worker Ratios. Winning Government is not the end of the journey ; it is only the beginning.

We also need a sense of scale when talking about funding for reform.  There is often a sense of panic and alarm when talking about policies which go into the billions.   How often do we hear that ‘we cannot throw money at problems’ or that funding policies is dismissed as a ‘cash splash’.  (and hence ‘irresponsible’)  But let’s be clear ; the economy is valued at some $1.7 Trillion a year. That’s ONE THOUSAND AND SEVEN HUNDRED BILLION.  Fear to pursue truly ambitious policy leads to stagnation.  And failure to commit money translates as a failure to commit resources.  Viewed thus, any public policy agenda will fail without sufficient resourcing.  Labor needs to be thinking about what is reasonable in terms of short to long term plans to expand the social wage and welfare state, as well as other programs to provide infrastructure and skill development, and to improve public broadcasting.  We need to develop popular understanding of concepts such as ‘collective consumption’ ; and how the social wage can provide better value for money for workers, consumers, tax-payers.  $17 billion is one per cent of GDP. And over several terms of Government it is a reasonable objective to aim to broaden the social wage and welfare state by 5 per cent of GDP.  

 

This is not an arbitrary figure, but an estimate of what is necessary for ambitious reform.  Again, this could fund public housing, education and health, aged care, welfare and unemployment insurance reform, infrastructure (including renewable energy, rail transport and fiber to the home National Broadband Netowork (NBN) ), and programs to secure guaranteed job placement and experience for the disabled.  Disability Pensions should be reformed also, to increase the scope to supplement income with part-time or casual work, and to take away perverse incentives to avoid intimate relationships.  (eg: measures which radically reduce pension payments to individuals in relationships and marriages)   Further ; local government should be supported so that suburbs who suffer from undeveloped social infrastructure like parks and gardens, sporting and fitness infrastructure, libraries and so on – are able to deliver better quality of life to working class families.

 

Meanwhile ; over the long term there should be plans to resocialise energy and water.  And to reintroduce public-owned competitors in markets like financial services and insurance: to counter collusion and support consumers by providing competition from government business enterprises on a not-for-profit footing.

 

Finally, the labour market demands structural reform to prevent the entrenchment of a class of working poor Australians. This may have a once-off inflationary effect ; but redistribution one way or another is necessary to deliver wage justice.   We need to address the distribution of the economic pie between capital and labour ; but also between labourers themselves as well.  Other innovative policies could include financial support and financial counselling for people planning on developing co-operative enterprise. (on either a large or small scale)  If increases in minimum wages will not eventuate without direct intervention, then there should be direct intervention.  This should be undertaken where the current framework of Fair Work Australia fails to deliver.  Allowing secondary boycotts 'in good faith' could also enable the industrially strong to assist the 'industrially weak' in achieving better outcomes for historically low-paid workers.

 

It's not good enough to put ambitious reforms off until a second term. Policies like Medicare took years to become entrenched ; to the point where any effective frontal assault against basic socialised medicine became impossible.  Here, also, once-introduced and accepted as part of the ‘socialised medicine landscape’, Medicare Dental would be very difficult to dismantle. The establishment of  a Labor Government provides the opportunity to introduce life-changing reforms. It is an opportunity that should not be wasted.

Labor Retreats on the Principle of Progressive Taxation

 

Dr Tristan Ewins

Last month Anthony Albanese announced that not only was Labor backing away from contentious reform of Negative Gearing and Capital Gains tax ; it was also prepared to back income tax cuts for the wealthy ; such that Australia will drift towards a flat and regressive tax regime with Labor’s implicit consent.  As Greg Jericho writes for ‘The Guardian’, Labor is supporting the entrenchment of a tax regime which will see those on below-median and below average wages effectively paying the same rates of tax as income earners between $120,000 and $200,000. 

Rob Harris – writing for the Sydney Morning Herald – explains that these tax ‘reforms’ will cost the Budget “an estimated $137 billion” over their first six years. Specifically, the 37 per cent tax rate will be abolished and a 30 per cent rate will apply to all income between $45,000 and $200,000.  This will occur at a time where ordinary Australian workers will need to service the massive debt induced because of Covid wage subsidies and other subsidies for business.  Those subsidies were (and at the time of writing still are) necessary ; but the debt should not be serviced in a regressive fashion which affects those least able to pay.  And because those on lower incomes spend a greater proportion of their incomes, policies which impact negatively upon them will be ‘bad for the economy’ as well.

Yes, there is a very small minority of wage labourers and others earning over  $100,000 a year. Maybe ten per cent.  But because of their relative privilege parts of this ‘labour aristocracy’ can be inclined to support economically-Liberal distributive taxation policies which minimise redistribution.   The vast majority of wage labourers and vulnerable Australians will not benefit from this policy.  In fact, the scope will be also reduced for improvement of social security and the social wage.  Labor will be restricted in its capacity to deliver reform of Social Security, Medicare, the NDIS, public and social housing, Aged Care.   In the field of social security, easing means testing of recipients with partners could also remove a perverse incentive for disabled Australians to shun relationships because ‘they cannot afford not to be alone’.  Reform of the Jobseeker Allowance (previously ‘Newstart’) is also long overdue and widely accepted.

With Aged Care, Labor is committed to staff ratios ; but to provide this without regressive user pays mechanisms the funding needs to come from somewhere else.  Either reform will be funded progressively or regressively ; or otherwise (even after the Aged Care Royal Commission) it will not happen at all.  After the Royal Commission findings ; which identified gross structural neglect of Aged Australians receiving care ; this would be a damning indictment of the major political parties in Australia who failed to mobilise public opinion around reform even after the shortcomings of the system were laid bare for all to see.  It is not too late to embrace a progressively structured ‘National Aged Care Insurance Levy’ to fund reform of Aged Care in this country.

True, Labor is also intending to reform labour market regulation ; but that in itself will not make up for the distributive consequences of this policy. It will be a case of ‘one step forwards, two steps back’ for Labor where nothing can make up for capitulation on the principles of progressive taxation and redistribution in the most basic sense.  Nonetheless if reform of labour market regulation is strong enough it could still make a difference. Specifically minimum wage rates need to increase significantly ; as well as Award rates for struggling workers – many of whom work in feminised professions such as Aged Care.  Teachers – many of whom also already work unacceptable levels of unpaid overtime – could also do with improved wages and conditions ; and this is essential to attract and maintain the most capable practitioners in the system.

Talk of ‘aspiration’ clouds the fact that Labor’s new tax policy will favour the top ten per cent at the expense of everyone else.  There was a time when radicals would have seen talk of ‘aspiration’ as a kind of ‘false consciousness’. But today Labor is so afraid of the ‘class warfare’ label that it shuns policies that impact even modestly on the top 10 per cent and in favour of everyone else.  Yet ‘flat taxation’ itself is in fact a kind of ‘class warfare’ against the vast majority of working people.

The fact is that in the last election Labor had strong but reasonable tax policies ; but failed to sell and explain those measures at crucial conjunctures. Chris Bowen said those who didn’t like Labor’s tax policies shouldn’t vote Labor. And when many voters failed to grasp Labor’s policies that is exactly what they did.  Furthermore, in the final days of the election campaign – with Bob Hawke’s death – Bill Shorten came across as flat, unconvincing and unemotional.  Despite his commendable work on the NDIS ; and the credit for embracing progressive tax policies in the first place – this fact remains.

Conclusions to the effect ‘it is impossible to sell tax reform’ neglect the fact that Labor failed tactically in mobilising public opinion.  Some Labor figures are reacting defensively to criticisms from the Greens to the effect that Labor is supporting a drift towards flat taxation.  But while the Greens can afford to be more radical because they depend on a narrower electoral base, that does not change the fact that Labor is capitulating on the most basic social democratic principles.  It does not change the fact that we are failing to sell policies that are objectively in the interests of the majority of Australians.

Again: where a bipartisan consensus on radically-regressive tax restructure is conceded, even where Labor does win with such a Platform it is probably a case of ‘one step forward, two steps back’.   Progressives have to actually deliver progress if they are to be seen as credible.  At the moment the best hope is a National Aged Care Insurance Levy, and strong labour market reform. Here’s hoping Labor ‘finds its way’ between now and the election.

Albanese: Take a Stand on Tax for our Supporters' Sakes

above:  Anthony Albanese must take a stand for Labor Constituents, opposing effectively flatter and lower tax which would end up with austerity and inequality down the track...

A letter to Anthony Albanese:

Albo! : Don't pass phases 2 and 3 of the Tory Tax Plan

Abbott blocked good policy ; Now Labor has a right to block sweeping tax cuts that will indirectly hurt millions of its constituents. And many will be very disillusioned or angry if you let phases 2 and 3 pass.

The Government's plans include the following for phases two and three:  (from Treasury)

"For 2022–23 and 2023–24, the top threshold of
the 19% tax bracket will increase from $37,000 to $41,000
the 32.5% bracket will increase from $90,000 to $120,000.

For 2024–25 income year onwards, the top threshold of the 32.5% tax bracket will increase from $120,000 to $200,000."

This represents an effective 'flattening' of the tax scales ; with higher income individuals on effectively lower rates of tax.

It will also cost the Budget $160 billion over 10 years. This when we're likely heading for a recession. It will fuel austerity.  Especially if the government prioritises the surplus even in time of economic downturn.

Finally: remember that the median wage in Australia is only approx $53,000/year. The Conservatives talk about people on $120,000/year as if they're 'battlers'. If we don't stand up and fight only the Conservatives will eventually win with their long term agenda of a flat income tax.

They also want to legislate ahead for the next term of government which is totally unreasonable.

The Conservatives claim a mandate. Yet they won through a fear campaign based on lies ; Clive Palmer's Money ; and preferences from Palmer and One Nation.  And in Opposition under Abbott they never respected Labor’s mandate.

Labor needs to restructure income tax for fairness ; and index the lower brackets to avoid a vicious cycle of bracket creep and regressive tax cuts which flatten the scales.  This must be a priority for Labor upon re-election.

We don't need to capitulate on progressive policy. Labor needs a strategy to nullify the fear and disinformation campaigns.  Capitulation is not a strategy.

Raise progressive taxes by somewhere in the vicinity of 1% to 1.5% of GDP upon retaking government. Exclude lower and middle income earners from higher taxes. Be thorough in this. Point out the moderate scale of the reform ; and explain where the money is going. (eg: Aged Care Social Insurance, Medicare Dental)  If Labor must tax a broader base then consider the Medicare Levy as well. It’s the closest thing in this country to “a popular tax” because of the clear connection with medical services, and the universal coverage most Australians value.

The Coalition is fond of arguing about "great big new  taxes" - even where there are no new taxes; Labor HAS to fight them on this.  Again: Insist on a figure in the vicinity of 1% to 1.5% of GDP in the first term of a new Labor Government.  Point to our low tax rates in Australia compared with the OECD average.    (approx. 27% of GDP compared with approx. 34% of GDP)  Australian tax overall is approximately seven percentage points lower in Australia compared with the OECD average.  That’s a difference of approximately $119 billion Australian dollars a year.

If we give in we get an Americanisation of the discourse which gradually flattens tax scales, and makes meaningful social democratic reform on social wage, social insurance, public infrastructure and welfare impossible.

Take a stand, Albo.  That’s what ordinary Labor members and voters want and expect from you.

Dr Tristan Ewins  (Labor member of over 25 years)

Labor must draw lessons from Electoral Defeat - But not Compromise its Values

Sco-Mo ; supposedly 'the every-man's politician'

Dr Tristan Ewins

Labor has lost what had been seen as an unlosable election. How could everything go so wrong? How could the polls have got it all so wrong?

Firstly, here, is the United Australia Party vote and Clive Palmer’s money. Regardless of whether he achieves a Senate seat, Palmer is channeling roughly 3.5% of the vote in the form of Liberal preferences.   What can Labor do about ‘big money’ in politics?   Nothing straight away ; but over the long term the rules must be changed so billionaires cannot ‘buy their way into parliament’. Or otherwise 'harvest preferences' for the Conservatives.  Labor needs to run hard on this over the long term.

Secondly, there was the re-invention of Scott Morrison – as ‘Sco-Mo’.  ‘Sco-Mo’ was supposed to be ‘an everyman’s politician’.  With his baseball cap ; at various sporting events ; a dad and a Christian. 

This may have been clearly shallow for many of us ; but obviously it gelled with a great number of people. The Liberals chose to focus on ‘the character of Sco-Mo’ and to distract from the dysfunction within ‘the Liberal Team’.  The strategy was reinforced in Newscorp media over months.  Labor failed to smash this invented idea of ‘Sco-Mo the every-man's politician’ when it should have tackled it head on.

Thirdly: the Liberals turned to all the usual prejudices against Labor. The propaganda asserted ‘Labor can’t handle money’ ; and warned of  ‘the Bill Australia can’t afford’.  The fear campaign was not sufficiently interrogated in the media ; and ultimately it worked.  Labor failed to establish that deficits have continued under the Liberals – and much more than necessary because of measures enhancing the incomes of the –already-rich; and that a deficit was in fact necessary under Rudd in order to stimulate the economy and avoid recession.

In fact there was a narrow base to much of Labor’s tax reform.  Measures on franking credits affected less than 5% of the population.  But Labor did not establish this in the public consciousness  either.

Further, there is the melding of neo-liberal Ideology and the legacy of 80s ‘reconciliation politics’.   

The Hawke-Keating governments delivered Medicare, superannuation and various tax reforms.  But they also consolidated in the public consciousness that class conflict was ‘bad’.  And it was up to unions to ‘take a hit’ with wage restraint for the sake of the economy ; but without the delivery of anything ‘Nordic’ in return.  The problem was that once the unions traded away a general right to withdraw labour, and conceded to enterprise bargaining – as its position further weakened it had little else to bargain with.  And ‘reconciliation’ was seen as organised labour’s responsibility to be flexible in response to ‘employer needs’.

The ALP started talking about reducing the number of days lost to strikes as a virtue in of itself ; when in fact it was also a signal of a weakening movement.  Where the legitimacy of industrial action itself had been reduced to an impression of ‘disruption, thuggery, and unnecessary inconvenience to the public’.    Here all redistribution is also reduced to ‘the politics of envy’. 

The Liberals speak of “a fair go for those who have a go”.  But was Morrison arguing that cleaners, nurses, child care workers, aged care workers, teachers – do not ‘have a go’?  This is the same kind of warped take on ‘meritocracy’ which ‘naturalises’ privilege and inequality.   But Gina Rinehart did not ‘work her way to prosperity’.  And yet inheritance taxation is still stigmatised as a ‘death tax’ ; and this also featured in Liberal disinformation and scare campaigns.

Morrison tried to ‘shame’ Shorten for ‘not looking a man on a $200,000 income in the eye’ that he was increasing his tax by 2 per cent. (!)  Shorten should have responded strongly that the flattening of the tax system had to stop ; and everyone else was paying the price.  But he did not confront Morrison directly on this.  This was a wasted opportunity that let Morrison off the hook in constructing his ‘meritocratic mythology’. 

For decades the ALP was also complicit in the politics of ‘small government’.  Breaking that consensus was always going to be difficult after all this time.   As things are reform here has to be slow, deliberate and cautious.  But without such a plan Labor cannot achieve any significant reform agenda.

Also there was the question of Morrison’s alleged Christianity and the case of Israel Folau.  Themes of ‘freedom of religion’ could have been a real sleeper issue which influenced a significant number of votes.  Labor needs to balance freedom of religion with anti-discrimination measures. Much scripture in many faiths contains elements which grate against the grain of modern liberal society.  But effectively repressing the expression of the contents of scripture might simply consolidate a significant portion of ‘the Christian vote’ in the Conservative camp.  There’s a clash of liberties and rights which simply cannot be resolved: it can only be negotiated.  But even accepting religious freedoms, there will be no ‘turning back the clock’ on minority rights when it comes to issues like  equal marriage.   At the same time we cannot make it easy for the Conservatives to 'divide and conquer'.

This is a devastating loss for Labor. It amounts to a victory of fear over hope and vision.  But Labor cannot give in.  It needs to draw tactical and strategic lessons without abandoning its values.  Labor cannot give in on the project of re-structuring the tax mix to pay for social wage and social insurance measures.   Next time Labor needs to look at tax reform in the vicinity of 1% to 1.5% of GDP: but squarely aimed at the top 10% demographic.   And Labor needs to establish that the remainder will not be adversely affected.   With the exception that superannuation tax concessions still need to be tackled ; and may cost the Budget tens of billions into the future if this is not done. And perhaps with the additional exception of a dedicated progressive levy to fund a National Aged Care Insurance Scheme.  The Aged Care Royal Commission should provide momentum.

Labor also needs to establish that a ‘flattening of the tax system’ means that most of us pay proportionately more: not just through the tax system itself ; but also as a consequence of the user pays which ensues.

The coming term will be marked most likely by economic crisis – intensified by the trade war between the US and China.  And by the moral imperative of responding to the Royal Commission on Aged Care.  If the Liberals take Australia into recession Labor needs to punish them on this relentlessly.  And ‘burst the bubble’ of ‘Liberal economic management’.  In addition to pressing hard for a full implementation of Royal Commission recommendations on Aged Care, Labor needs to continue focusing on restoration of funding for the NDIS and Gonski education recommendations.  Next time we need to provide certainty that we will legislate for a higher minimum wage ; and also address the income of low-wage workers more broadly.  (that includes through the social wage)

Most importantly Labor needs to debunk the Liberals’ warped construction of ‘meritocratic Ideology’.   Labor needs to establish that all kinds of people work hard ; and we should not be naturalising privilege.  This is a core Ideological battleground which Labor must contest if it wants to embrace policies involving distributive justice.  And to make sure the public is fully aware of the arguments next time the entire movement needs to begin campaigning on these principles and issues immediately.  We have three to four years and we cannot afford to waste a single day.

Finally there is the question of the labour movement and broader social movements’ response to inevitable Conservative austerity.   Progressive social forces need to prepare for a defensive fight against austerity ; and continue the fight for wage justice at the industrial level.

The danger is that Labor will retreat into a conservative ‘small target’ strategy.  Instead Labor needs to draw tactical and strategic lessons while remaining true to its values.

Left-Turn necessary for Labor at this year’s National Conference to end narrow ‘Policy Convergence’

by Dr Tristan Ewins ; ALP member of over 20 years

In 1998 radical American Leftist intellectual, Noam Chomsky made the telling observation that:

“The smart way to keep people passive and obedient is to strictly limit the spectrum of acceptable opinion, but allow very lively debate within that spectrum....” 

Another name for this phenomenon is ‘Convergence Politics’.

In Australia there is ‘Convergence’ on the economy, with debates focusing on relatively minor differences ; but where heated debate on the so-called ‘Culture Wars’ fills the vacuum.

Every day in the mass media we are subjected to the positions of ostensibly “Centre Right” and “Centre Left” political parties.  But in reality the ‘relative centre’ has shifted way-right on the economy since the 1970s.  And dissent against that orthodoxy is minimal. Where it occurs it is modest.

The Hawke-Keating years saw convergence on ‘economic neo-liberalism’  in Australia – and there has been no significant turning back since.  Kevin Rudd attempted a Mining Super Profits Tax but was quickly ‘disciplined’ by the mining industry, and removed in short order with a ‘palace coup’.  For a time Sam Dastyari focused attention on corporate tax evasion.  But while corporate tax evasion arguably costs the Australian people tens of billions annually, in reality Dastyari’s proposals were minimal. (in the hundreds of millions)  Julia Gillard delivered a National Disability Insurance Scheme, but it was argued that  ‘savings’ had to be made elsewhere to compensate; the  logic of which was thereafter embraced more enthusiastically by the Liberals.

Under Bill Shorten Labor has committed to reforming Superannuation Tax Concessions, making some cuts in the applicability of Negative Gearing, and reforming Capital Gains Tax Concessions. ‘The Guardian’ argued in 2016 that these measures would save $100 billion over ten years.  This is substantial in the relative scheme of things ; but less impressive when you consider inflation.  Perhaps after that is factored in we’re talking about around 0.5% of GDP in a $1.6 trillion economy.

Shorten received a lot of Kudos from the Australian liberal left (for instance Fairfax journalists) for these ‘bold’ policies. But the fact these measures are considered so remarkable only underscores the reality of ‘Convergence Politics’ in Australia on the economy.

Meanwhile vigorous debate rages in the context of ‘The Culture Wars’. The Equal Marriage debate has been won.  But at a cost whereby Australia’s economic and cultural Right-wing are attempting to claim substantial Christian strata as a ‘base’.  (But this should not be taken for granted; it should be fought ; socially-conservative should not necessarily mean economically-conservative  or economically-Liberal ; nor should ‘Christian’ necessarily mean ‘socially conservative’) 

And now debate turns to the date for ‘Australia Day’ and the content of the National Curriculum – or at least how it is applied in Victoria. 

These debates are truly important. They are more than ‘distractions’.

After the ‘Australia Day debate’ the next logical step is for a Treaty with indigenous peoples.  And Conservative attempts to promote a National Curriculum which mixes Ideological Liberalism with uncritical nationalism – are deeply concerning.  But Labor’s position on the National Curriculum is also arguably too-conservative.   Arguably the National Curriculum should promote  ‘active, informed and critical citizenship.’  Which means deep and inclusive pluralism when it comes to informing students of the interests, social movements and ideological perspectives that have comprised Australian society. Here I am thinking along the lines of ‘post-Marxist’, Chantal Mouffe’s ‘radical pluralism’ , or ‘Agonistic Democracy’ ; and how those principles might be reflected in curricula.

 Nonetheless these debates are more ‘tolerable’ for capitalists and the wealthy than debates which question neo-liberalism, labour market deregulation (but no right to strike),  and ‘small government’.  (Though perhaps the debate on Education is less ‘tolerable’, here, than the Equal Marriage debate.  There is the potential to detract from narrow emphasis on ‘labour market demands’ ; and to encourage critical thinking and active citizenship which may meaningfully strengthen our democracy).  

The debates are substantial ; are not ‘merely distractions’ ; but the way public debate is presented these debates do constantly and over-the-long-term deflect attention away from a substantial, more wide-ranging debate on the economy, and especially economic power and inequality.   

Debates are also framed in such a way as to divide Labor’s traditional constituencies ; with the decline of class as a central ‘reference point’, and erroneous assumptions of ‘essential working class conservatism’ and ‘aspirational’ mentality’. ‘Political correctness’ is also regularly beaten-up in order to weaken Labor’s base via attrition.  In response Labor needs policies and language which promote social solidarity.

But anything which truly questions ‘Convergence’ is summarily dismissed as ‘Hard Left’.   Outgoing Labor President Mark Butler has made welcome demands for internal democratisation . But his description of British Labour’s Jeremy Corbyn as ‘Hard Left’ is regrettable. Corbyn is trending towards something more ‘traditionally social-democratic’ ; and has plans for railroad and utility re-nationalisation  that would ‘set a precedent’ whereby decades of privatisation are not necessarily permanent.  The policies are progressive, but not radical ; and Butler’s dismissal of Corbyn shows that ‘Convergence thinking’ still has a strong grip even within the ALP Left.

What would a ‘break’ from Convergence Politics look like?  The author of this article has been working on an updated  (unofficial) “Model Platform” for Labor (currently in draft form) which is suggestive of a genuine reform footing for the ALP.  As a democratic socialist my long-term aim is the eventual surpassing of capitalism with a truly fair, rational and democratic economy. But even Marx understood that the transition from feudalism to capitalism took centuries. (though Marx did think socialist revolution a nearer prospect at the time)  And now there is the likely prospect ‘a clear and genuine break’ will not occur in our lifetimes.  Though the prospect of further crises and economic convulsions is nonetheless real.  Perhaps ‘barbarism’ is the more-likely prospect ; though we have to fight.

On the other hand, many on today’s Left still look to the Nordics for inspiration.  The Nordic model may not have ‘abolished’ capitalism ; but what some see as ‘the end goal’ is not everything. Billions of people will live in the context of historic compromises we fight for over the decades to come.  Their security, opportunities and happiness truly mean something with or without the over-arching capitalist context.  Yet sadly most in the Labor Party have not supported policies which meaningfully progress Australia towards something ‘Nordic-inspired’. 

The ‘ALP Model Platform’  (otherwise ‘For an Equal and Democratic Australia’) , suggests a short to medium term orientation, which breaks with ‘convergence thinking’, and has the meaningful aim of reaching the OECD average Tax to GDP ratio over as long as three terms of Labor Government.  That means raising progressive tax by $80 billion/year in today’s terms, or 5% of GDP.  (keep in mind the economy is worth over $1.6 Trillion)  It falls far short of the Nordics. (perhaps over $300 billion/year would be necessary) But it is suggestive of meaningful and substantial progress. (no more ‘one step forward, two steps back’ ; ‘the forward march of labour re-commences’)

What this means is substantial progressive restructure of Australia’s tax mix ; funding big improvements to the social wage, welfare, public provision of infrastructure.  It also means National Aged Care Insurance ; slashing hospital and public dental waiting lists ; industrial rights and liberties including a ‘re-regulation’ of the lower end of the labour market which delivers to the working poor ; strategies to improve life expectancy for indigenous Australians and the mentally ill ; progress towards free higher education ; support for mutuals and co-operative enterprise – with strategic public ‘co-investments’ which help these maintain the scale necessary to remain competitive ; an end to insufficient and ‘punitive’ welfare ; a big investment in public housing ; and much more.  These are central to the ‘ALP Model Platform’: a document intended to influence debate leading up to Labor’s National Conference this year in July 2018.

Those who want to support the Model Platform can ‘Like’ the ‘ALP Model Platform Supporters’ Page’ at Facebook and take part in debate there.

Labor has long been a ‘broad church’ with its own ‘internal pluralism’, and that is not likely to change.  But Labor should straddle the political ground across ‘traditional’ social democracy to democratic socialism ; and arguably there is also a place for what may be called ‘classical’ social democrats.  (radicals inspired by the original (largely Marxist) social democratic parties ; and those who followed in their wake)

Arguably a  strong radical-left can also contribute to the climate of culture and public opinion as well.  The Communist Party of Australia never had serious electoral success.  But it was a cultural and industrial power.  Ultimately it broke with Stalinism, also ; and in many ways that legacy is important and valid. 

In the US, Democratic Socialists of America (DSA) has been registering impressive gains in membership. They intervene within the Democratic Party ; but at the same time they are more broadly-based. They demonstrate how a Left movement can be a cultural, political and electoral force ; but not be restricted to a single electoral strategy.  DSA includes radical perspectives, but are not narrowly Leninst.  Perhaps a similar strategy could also ‘bear fruit’ in Australia ; with a strong challenge against ‘Convergence’ – which all progressives should agree has to end.

The ‘ALP Model Platform' Supporters’ Page can be found here: (PLS Join!)

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http://leftfocus.blogspot.com.au/2018/01/for-equal-and-democratic-australia.html

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'Class War' from Labor? Or more Liberal Lies?

It seems like we've heard it all before. (because we have) Liberal cries of 'Class Warfare' at even the mildest redistributive tax reform.  But in fact those with a sense of proportion and history will note that Shorten Labor's current commitments are mild at best. Labor needs stronger action on reforming the tax mix and funding new policies which improve the provision of everything from Aged Care to Health, and Welfare and Infrastructure. 

nb: This post will also appear at the Australian Independent Media Network starting on the morning of Tuesday August 8th.  Your comments and opinions would be very welcome there as well as here!

Dr Tristan Ewins


“Bill’s low-rent class war” is scrawled across the pages of the “Herald-Sun” (6/7/17). Liberal operator and Opinion columnist Peta Credlin in full flight: defending the rights of the very rich against unconscionable calls to contribute to the common good.

Defending the wealthy and corporations against the ungrateful masses – who in the face of a cost of living crisis are feeling inequality more acutely than before ; and who scandalously expect tax evasion loop-holes to be closed ; for affordable housing ; for an end to punitive welfare ; for a modern living wage ; high quality public Health and Education, and so on.

Credlin asserts that “the top one per cent pay nearly 20 per cent of all tax.” And: “there are nearly four million households that pay no net tax after transfer payments.”

Further, Credlin draws on Roger Wilkins to argue “Australia is more equal today than forty years ago.”

And so Credlin infers that any kind of redistribution: whether through welfare or the social wage will drive “businesses and people offshore”; and hence Shorten is “[pushing] a hard left agenda.”

How to respond to this?

To begin, ‘the top 1%’ comprise people on incomes of over $227,000 a year ; and these would still end up with post-income-tax incomes of over $150,000. (calculated according to the income tax scales) They are not ‘battlers’.

Joe Hockey made similar claims in 2015 when he argued that “50% of all income tax in Australia paid [was] by 10% of the working population”.

We will deal with Hockey’s claims as a way of responding obliquely to Credlin’s arguments.

‘The Conversation’ concluded that Hockey’s claims were accurate , but put it down to Australia’s progressive taxation system. Without progressive taxation distributive outcomes would be skewed even further towards the rich, and against everyone else, especially the poor.

Therefore these figures must be considered in the context of rising income and wealth inequality. That is – the rich (including the top one per cent) are paying more tax because they are bringing in much more money. (at other peoples’ expense ; it does not ‘trickle down’ ; exploitation is a reality)

As I have observed elsewhere: Professor Robert Wilkins conceded that the portion of national income going to the top 1 per cent has approximately doubled since the 1970s to over 8 per cent, and that inequality is “high by modern standards” (‘the Australian’ (22/7, pp 1, 8).

And if we include the GST in our calculations we might acknowledge the fact that the wealthy also pay more GST because they can indulge in so much more conspicuous consumption.

The Conservatives in this country have also been concerned at the possibility that Australia may develop a European-style welfare state. But when put in context we see (admittedly according to 2009 and 2013 figures) that in 2009 Australia devoted just over 7 per cent of GDP to cash payments (welfare) ; compared with roughly 17 per cent in France. And in 2013 France devoted roughly 34 per cent of GDP to “social expenditure” compared with roughly 19 per cent in Australia. Even with very significant reforms such as I project in this article – we are nowhere near a “European style welfare state”.

The Conservatives also say nothing with regard the fact the Aged Pension takes the lion’s share of the social security Budget. They take the ‘aged demographic’ for granted ; but ultimately want a retirement age of 70. And when a greater proportion of Australians start retiring on their superannuation savings we might expect a more “frontal assault” on pensioners.

At only about 26 per cent of GDP overall levels of tax in Australia are in fact very low. Australia’s $154 billion social security and welfare bill (2016 figures) is also low by international standards, despite an obvious tactic by the Liberals of cultivating ‘downwards envy’ – intended to create resentment against the vulnerable ; often involving the distortion and misrepresentation of statistics. In fact the cost of social security and welfare in 2016 (approximately $154 billion) was somewhat less than 10% of a total $1.6 trillion dollar economy ; but is larger proportionate to the total tax take only exactly because overall Australian tax levels are comparatively so-very-low.

So again ; when you factor in a dramatically rising cost of living – as well as levels of personal indebtedness for those on lower and average incomes, or with lower to average wealth – the problem of inequality is becoming far more urgent.

This personal indebtedness includes mortgage stress. Indeed while some banks have behaved in an irresponsible and predatory way, there is the danger that the unsustainable personal debt which fuelled the housing boom (and perhaps consumption levels more generally) may finally give way to bust ; flowing into overall consumer confidence as well.

Factoring the housing affordability crisis in, that makes a strong difference to those on average or lower incomes attempting to pay off a mortgage, or even to afford the rent in an established suburb with decent amenities and infrastructure. Indeed home ownership is down to 31% from 41% in 1991, reflecting the concentration of housing in the hands of investors – to the detriment of first home buyers. The plight of those forced to the urban margins ; or to forsake the ‘Australian Dream’ of their own home also cannot be grasped by mere considerations of income inequality. Again, because of a broader cost-of-living crisis inequality is more urgent than any time in decades.

So Wilkins talks at length about income, but not so much about wealth ; this in a context where home ownership (or the lack thereof) is becoming a crucial socio-economic fault line.

And yet the Sydney Morning Herald’s Paul Maloney observes research from ‘Credit Swisse’ to the effect “the top 1 per cent of Australians own more wealth than the bottom 70 per cent combined.” And that according to ACOSS research “someone in the highest wealth group had 70 times as much wealth as someone in the lowest.” Maloney further observes the selective nature of the statistics Wilkins draws upon. Had Wilkins began by observing inequality from 2004 onwards that would have revealed a radical increase in inequality during the 2003 to 2008 period. This applies to income as well. According to the OECD, for instance, “Real incomes for the top quintile of households [in Australia] grew by more than 40 per cent between 2004 and 2014 while those for the lowest quintile only grew by about 25 per cent.”

Also since the 1970s profit-share has risen from 16.5 per cent to 26.5 per cent ; but the wage share of the economy has fallen from 62.7% to 52.3 per cent. (2016 figures) It had been assumed that increasing the profit share was necessary to spur investment ; while a falling wage share (and a largely neutralised trade union movement) would prevent a ‘wage-price spiral’. But in fact workers have less capacity to consume ; have turned to private debt to maintain lifestyles ; and the whole arrangement is beginning to look very precarious.

Neither pre-tax or after-tax income is enough to grasp the growth of inequality. While taxes have grown ‘flatter’ (less progressive) but nonetheless lower, the ‘user pays principle’ has been applied less and less discriminately , to the point where it applies now to everything from education and energy to communications, transport infrastructure and water. This intensifies the impact of inequality. Appallingly, ‘user pays’ for residential Aged Care especially has become akin to a ’death tax’ . But unlike progressive inheritance taxes or ‘death duties’, this impacts disproportionately upon families with lower to middle incomes, including those for whom the family home is the only significant asset they have.

As opposed to the earlier post-war mixed economy, the user-pays element has been increasing proportionately, and privatised entities are no longer providing cross-subsidies for ‘battlers’. Also: arguably privatised entities are abusing their market power to reinforce their bottom line. Hence the cost of “essential items such as food, electricity and insurance” is rising at almost double the rate at which wages are rising. And the position of the poor and welfare-dependant is even more precarious. A look at Medibank Private’s increasing premiums is enough to hammer these points home ; along with soaring profits.

Meanwhile policies such as capital gains tax discounts, superannuation tax concessions, and negative gearing – overwhelmingly benefit the well off – to the detriment of social programs which may otherwise further social solidarity and the common good. According to Treasury in 2015 $10 billion out of $30 billion in superannuation tax concessions alone are lining the pockets of the wealthy. (the top 10%) With time the problem could worsen markedly.

Bill Shorten’s agenda is not ‘hard left’by any reckoning. Michael Pascoe of the Sydney Morning Herald has observed that Shorten’s reforms to family trusts only scratch the surface (saving less than a third of what may have been possible). And that Shorten is even using 10 year projections to make his reforms look more substantial.  Pascoe concludes that if this is ‘class war’ Shorten is “firing blanks”!

We need much stronger policies from Labor: reforms of the tax mix, and new progressive taxes to provide for significant new social policies. End inequitable superannuation tax concessions. Wind back user pays in Aged Care and Education for equity and fairness ; and improve the quality of service. Reform welfare to further ameliorate poverty (raise all full pensions by $1000/year). A big investment over time in public housing to increase supply, deflate the bubble, provide for the vulnerable. Consolidate and extend Medicare. Provide the necessary resources and apply the political will to maintain transport, communications and other infrastructure as natural public monopolies. Consider strategic re-socialisations ; maybe re-establish a public-owned savings bank. Properly fund mental health.

The lower end of the labour market needs re-regulation as well ; though this is not necessarily linked with tax.

Arguably decades of privatisation and austerity have resulted in inferior cost structures for areas of the economy properly the domain of natural public monopolies. Meanwhile in Australia a limited welfare state has restricted ‘collective consumption via tax’. That also has impacted upon cost structures ; and has given consumers worse value for money in the end analysis.

The consequence has been less consumer demand for the remainder of the economy. Capitalism is desperately striving to expand existing and new markets to stave off its contradictions. But ironically perhaps the best way it can do this is to transition to a ‘hybrid economy’ which cedes ground to socialisation (public and other democratic ownership). Efficiencies via socialisation (natural public monopolies, collective consumption, enforcement of competition in specific sectors, eg: banking, insurance – by government business enterprises with competitive charters) would mean more income left over for consumers to spend elsewhere (ie: in non-socialised sectors). Many capitalists would resist such a transition for political and Ideological reasons ; but many others still could stand to gain from such a compromise. As could the public at large.

Public investments in services and infrastructure can also comprise a ‘pull factor’ for investment (for instance an educated workforce). This gets forgotten in the constant push for more austerity and lower taxes. And it is one reason why the Nordics are so successful with their welfare states, mixed economies, industry policies and active labour market programs. The opposite of the catastrophe scenario suggested by Credlin in response to Labor’s modest policy agenda.

As things stand a Shorten government could ameliorate social injustices including economic inequality. But Labor’s existing policies are very mild. Shorten has time to develop a stronger policy profile ; though the modesty of past ALP policy is such that Labor’s recent announcements appear ‘radical’ to some.

Token reforms are not enough to deliver, even though they may convince those without a sense of proportion and history. Rather than reforms bringing in $1 billion Labor needs to think bigger ; perhaps in the vicinity of 2 per cent of GDP in a first term. (approximately $32 billion in a $1.6 trillion economy)  And gradually more in subsequent terms. Not because that is just some ‘silly’ arbitrary figure ; but because Labor needs to think of what is necessary for its policy ambitions ; but also what is politically ‘do-able’ – and over what timeframe.

Meanwhile those claiming a $1 billion tax reform (one sixteenth of 1% of GDP) is ‘class warfare’ are frankly kidding themselves.

References:

http://www.smh.com.au/business/the-economy/labors-war-on-the-rich-is-firing-blanks-20170730-gxlz6r.html

http://www.abc.net.au/news/factcheck/2015-10-14/do-eight-of-ten-taxpayers-fund-welfare-bill/6822840

http://theconversation.com/what-income-inequality-looks-like-across-australia-80069

http://www.smh.com.au/federal-politics/political-opinion/roger-wilkins-claims-about-inequality-at-economic-conference-should-be-tested-20170727-gxk9m6.html

http://www.abc.net.au/news/2015-07-07/denniss-abbotts-promise-not-to-solve-our-super-tax-problem/6601112

http://www.smh.com.au/federal-politics/political-news/private-health-insurance-premiums-to-rise-by-nearly-5-per-cent-20170209-gu9p8t.html

http://evatt.org.au/papers/northern-lights.html

Dr Tristan Ewins is a Social Sciences PhD, qualified teacher and social commentator based in Melbourne.  He also blogs at ‘ALP Socialist Left Forum’, ‘Left Focus’ and ‘The Movement for a Democratic Mixed Economy’.  He has been a member of the Socialist Left of the Labor Party for over 20 years.  The opinions he expresses here are his own only.