Albanese needs to ‘Step up to the Plate’ and not avoid debate on Aged Care, Health and Welfare Reform

 

Dr Tristan Ewins

Labor Opposition Leader Anthony Albanese has come under fire from the Conservative Coalition Government for suggesting on the ABC’s ‘Insiders’ program that extra funding may be made available for Aged Care, Health, and perhaps welfare reform. This in a context where billions of subsidies have been provided to businesses due to Covid, and yet many businesses who managed to remain profitable regardless of Covid have simply kept these subsidies provided for them in the form of pure profit.  While the Federal Government ruthlessly pursues welfare recipients over any debts incurred (and even some that have turned out to be unreal), corporations enjoy public money without accountability.

The simple fact is that public spending commitments in social services and infrastructure are not necessarily ‘irresponsible’ or ‘wasteful’.  Often Government needs to invest in the health and happiness of the people to ensure the best outcomes.  What needs to be understood is that social spending is a form of ‘collective consumption’ where we gain a better deal in areas like health by purchasing crucial services more efficiently and collectively as taxpayers, rather than being isolated and fleeced as private consumers.  Medicare and the Pharmaceutical Benefits Scheme are important examples of collective consumption.

Albanese has spoken of the “habitual buck passing” of the Morrison Government on Aged Care.  Failure to attract new workers into the field with fair wages and conditions, and respect for workers ; and failure to ensure necessary staffing levels including the presence of Registered Nurses – remain sore points even after the Conservatives’ response to the Aged Care Royal Commission.  The training, wages and conditions of Personal Care workers who help many elderly remain in the community are also in need of further funding ; and packages must be available to all with the need upon demand ; and without cruel waiting queues.

The reality also is that Aged Care reform needs to go beyond the bare essentials to address broader quality of life issues ; so that in the future Aged Australians with have access to social engagement ; and where those in residential care will enjoy privacy, access to information technology, access to gardens and pleasant surrounds.  They must not just be locked in their rooms or sat down in front of TVs in common rooms all day.  Our vulnerable elderly need social engagement.  Everything from discussing their lives to enjoying games, listening to music, or discussing the issues of the day.  Dementia training is also essential to ensure the best quality of life to those affected ; and those around them.  Quality of food also needs to be monitored closely ; and without meeting staff quota targets, Aged Care workers will remain rushed in the business of helping to dress and shower residents daily ; or may not be able to respond in a timely manner to situations such as where sheets are soiled.  The consequences of under-resourcing have been trauma and suffering for vulnerable aged Australians. 

Yes this will cost billions on top of those limited initiatives already announced.  But most of us will grow elderly and frail one day ; and even if ourselves we do not experience this, surely we will have family who are affected by a neglected Aged Care sector.  Rather than backing down, Albanese needs to ‘step up to the plate’ and confidently put the case for progressive collective consumption of Aged Care ; and a much better deal for both ‘consumers’ and for workers in the broader Health sector.

There will also be a significant backlog in waiting lists for supposedly ‘elective’ hospital procedures thanks to the pressure Covid has placed the health system under.  This was already a crisis ; but has been significantly magnified with Covid.  Medicare needs to be extended into dental, optical and prosthetics ; but the broader health system needs to be expanded to ensure timely care, breadth of coverage and quality of care.

Australian of the Year, tennis star Dylan Alcott has also highlighted the high unemployment levels (over 50 per cent) for disabled Australians.  The focus here was mainly on those with physical disability ; but exclusion from the labour market also applies to those with psycho-social disabilities.  Exclusion is a vicious circle which needs to be broken.  Sometimes it goes on for years. Often it is permanent.  Government needs to intervene directly to provide opportunity for all ; and employment needs to be made more viable by lessening means tests for Pensioners in the workforce.  Also there need to be viable career paths, and not merely ‘dead end jobs’.

Importantly, Labor needs to pitch to ‘average’ workers as well.  Labor needs to pitch to the majority to enjoy electoral success ; and provision for equity groups alone will not win government.  Delivering wage gains and improving the bargaining position of average workers in the labour market is important here.  As is a restructuring of the broader tax system: delivering distributive justice outcomes not only for the most vulnerable, but also the majority of workers.  Further ; improvement of the Aged Pension could act as a ‘bridge’ which enhances the case for reform of other pensions. Labor needs to build a ‘bloc’ based on solidarity and mutual recognition rather than allowing the Coalition to ‘Divide and Rule’ – which so often has been the case.

So come on Albo, ‘step up to the plate’.  A ‘small target’ can take us so far ; but as the campaign progresses voters will want a clearer sense of what Labor is going to do.  Labor will need to have answers.  And it must not ‘back itself into a corner’ where it cannot deliver significantly to its constituents.  Early signs suggest some hope.

Labor Must Ask Serious Questions on Policy and Values

Above:  Albanese corrrectly indentifies the need for policy review and good policy ; But 'root and branch' rejection of Labor's 2019 Platform would be a mistake.  New policies and 'new angles' are necessary.  But let's not jettison our values and abandon our interests on the way.  Labor's problems were largely 'tactical' ; and this also needs recognition.

Dr Tristan Ewins

Labor has been saying relatively little on policy since its defeat at the hands of the Morrison Government.   Many are saying Labor’s ‘move to the Left’ was the problem.  In that process other problems are being neglected.  The Coalition tax scare campaign (including on a non-existent 'death tax'); Shorten’s wooden performance in the final days ;  failure to build a strong enough ‘central narrative’ ; confusion on Dividend Imputation franking credits – and the failure to means test any measures there instead of applying the same rules to everyone.  Also Clive Palmer's $60 million intervention - dwarfing the monetary resources of both parties - changed everything and channeled preferences to the Conservatives.  Shorten also failed to sell the progressive tax reform message ; and avoided the issue when given the opportunity to ‘take it up to Morrison’ in a Leader’s Debate.  (here I'm thinking of Shorten's refusal to engage on Morrison's example of a very-high-wage workers' tax rising by 2%(!) under Labor)  

Expanding social goods and services necessitates progressive tax ; asking more of high income earners ; and that definitely includes the top 10 per cent.  Maybe even the top 20 per cent. Those in lower brackets need to contribute too based on ability to pay, but would receive much more in return.  Those in the lowest brackets may even receive indexed tax cuts.  (Income Tax needs to be radically restructured overall ; and then the lower brackets indexed – to prevent the erosive effect of bracket creep)  Tax indexation can prevent 'a flat tax by  stealth' via such selective exploitation of bracket creep.

In the big picture, though, Shorten led a united team and developed some very  good policy during his years in the leadership.   His modestly reformist policies have widely been portrayed as a ‘lurch to the Left’ ; and that illustrates well the relative right-wards shift in Australian politics where anything in the way of meaningful reform faces that kind of accusation.

But the Coalition’s massively irresponsible policy of tax cuts ($160 billion over the first 10 years, and much more proportionately over the longer term as ‘phase three’ kicks in) for the well-off put the onus on Labor to mount a response.  

We know we have an ageing population.  For the Left at least, we know tougher means tests, a higher age of retirement, failure of benefits to keep up with a rising cost of living and respond to the need to extend pensions more broadly – should be unacceptable.  Undermining the tax base is the road to a US-Style and strongly class-divided economy and welfare state.   An ageing population will also mean more stress on the health system ; and the correct response is to support citizens on need rather than adhering to some arbitrary ‘tax ceiling’ which can only respond with harmful austerity.  Medicare Dental remains an essential policy for Labor to embrace and campaign on vigorously.

To his credit, Albanese has come out against attacks and stigma against the unemployed.  But we need more.  Raise Newstart by at least $75 a week.  Apply active industry policies aimed at creating job opportunities for ‘at risk’ and vulnerable groups.  Not only the young unemployed, but especially the older unemployed ; and the disabled – including the mentally ill.   Highly educated older job-seekers are being forced to drop their qualifications from their resumes to be ‘more attractive’ for cleaning jobs and the like.  Meanwhile, while many look down on the cleaning profession it does involve skills, and it is hard work.  There is cause to reform the Award in these and other fields – for example Aged Care and Child Care. But where the market will not bear this we need government subsidies. Importantly, many of these areas are highly feminised.

Denmark provides an example in a sense.  That is with their active industry policies which seek development of ‘sunrise industries’ that make use of the skill sets from ‘sunset industries’, mixed with retraining. The policies are expensive: but the gains from labour market participation more than make up for that. 

In that process we need to review the  NAIRU – or non-accelerating inflation rate of unemployment – which supports a ‘buffer of unemployment’ (commonly in the vicinity of 5 per cent) to contain the bargaining power of workers and avoid wage inflation.  Hence there are always many more people looking for work than there are jobs – and yet still the unemployed face stigma. Instead we need to look to fiscal policy to contain inflation ; and co-operation with trade unions (eg: accepting higher taxes on high wage workers) in return for expansion of social goods and services and defence of industrial rights.  This would be applied after the Swedish model rather than the Accord – which at the end of the day failed to deliver to workers sufficiently in return for wage restraint.  Full employment makes a massive difference to the Budget and the broader economy if it can be sustained.

In short, Labor needs to take action to raise the status of some of our most exploited professions – while reforming the tax base and making social wage, social insurance, collective consumption, and welfare state expansion possible.   

Let’s explain these one by one to get some sense of what is meant.

‘Social Wage’ refers to the recognition that not everyone receives wage justice. And sometimes it is more effective to receive the proceeds of wages collectively to maximise the collective (and individual) benefit.  Think public health and education.  Corporate Taxation also factors in here as the corporates benefit from a healthy and skilled workforce.

‘Social Insurance’ refers to public-funded insurance against contingencies like unemployment, ill-health or disability via the tax system – which covers everyone.  After all – it could happen to any one of us – or our loved ones.

‘Collective consumption’ refers to when ‘the people’ get a better deal by consuming collectively via tax rather than as isolated consumers.  Leaving individuals with more money to spend at their discretion in other areas at the end of the day.  

It is appreciated that people need a reasonable degree of discretion in terms of determining personal needs structures.  But ‘collective consumption’ delivers massively in the area of pharmaceuticals consumption (think the Pharmaceutical Benefits Scheme or ‘PBS’) ; and could deliver in other areas as well – eg: infrastructure and goods like water and energy – which are becoming more unaffordable following effective privatisation.  Also think public infrastructure like ports, roads, public transport. communications: which should flow from the public purse where the state’s superior rate of borrowing and not-for-profit stance can deliver a better deal.  (water, ports, communications, transport infrastructure - should be re-socialised - reducing overall cost-structures; Though in some areas (eg: energy) some kind of 'market' should still exist ; But in the context of a public monopoly provider ; much more affordable, but still an incentive to regulate usage)

The “Welfare State’” is often taken in a catch-all sense which covers all of this, but for now think of the tax-transfer system and the need to support vulnerable Australians.  Newstart is the area of the most dire need ; but a 15% increase in other pensions can also be justified ; as well as support for the National Disability Insurance Scheme and the implementation of a National Aged Care Insurance Scheme (in response to the Royal Commission) which provides high quality services both for at-home and residential care on demand, and without onerous user-pays policies which send ‘consumers’ broke.  That also includes high quality food, quotas , a registered nurse on-site always , training in the handling of dementia , at-home packages on demand , rehabilitation and exercise on-demand , regular GP visits , private rooms , and meaningful (often facilitated) every-day interaction and outings (where possible) instead of just seating people down in-front of TVs all day.  For those ‘at home’ action to combat loneliness is crucial.

More public housing – perhaps interspersed with private housing to avoid stigma – is necessary too in order to tackle homelessness and housing stress.  But large scale public housing projects should also be considered – also providing quality amenities: laundries, pools, common rooms, internet connectivity – which people can respect and appreciate.  Austria manages a high level of public housing well – with very positive results.  Indeed, over 60% of Vienna’s population live in public or social housing.  It is the legacy of the interwar revolutionary Social Democrats (at the time officially of  a Marxist – but not Bolshevist -  disposition)– who prevailed in Vienna in the 1917-1934 period ; and who took government with a more modest agenda in the post-war period.

Eugene Quinn argues the following ; outlining the difference in culture re: public housing in Vienna which could be promoted in Australia as well:

“People here are used to the communal spaces of the social housing estates and are very comfortable living next to someone from a different background,”  Quinn says. “And because people are not crushed by their rents like in other major cities, they have a bit more time to be creative, to study, to get involved in community work.”

Apart from these areas, Labor also needs to take a strong line against the Coalition's ‘Ensuring Integrity’ union-busting laws.  Some in the Left dislike John Setka.  But more is at stake here than one man.  We are talking about the strategic position of the entire movement.  Which the Coalition well knows.  And Labor must acknowledge that as well.

In short, inevitably there must be a policy review.  But let’s be careful about dumping good policy.  Sure, let’s hone our message and our central focus.  Though we need a tactical campaigning review also: perhaps more so than a ‘root and branch’ policy review overall. If we cannot at least reverse Morrison’s overall tax cuts in a progressive way – focusing on tax cuts for the well-off – then we concede defeat.  That would mean conceding an Australia which retreated from anything recognisably social-democratic , and headed towards the divisions and insecurity we see in the US for example.

Importantly we must embrace the message of progressive tax and its implications rather than running away from that debate.  Trying to be ‘everything to everyone’ and not increase the tax burden on virtually anyone – means we have no way of funding reform at the end of the day.  But an openly progressive agenda would give the vast majority an incentive to vote Labor.

It is nonetheless appreciated that ‘middle income’ is not the same as ‘middle ground’, and some disillusioned voters are embracing a ‘centrism’ which is largely right-wing in practice.  Labor’s response must be tactical: appealing not only to interests but also to values.  A liberal response on social values, and stronger action on climate change can also detract from any ‘small ‘l’ constituency’ for the Liberals ; and pressure the Liberals to reform their own outlook ; shifting ‘the relative political centre’.  Labor must contest values in the economy as well as the 'culture wars' ; and its relative neglect here has marked a defeat for Social Democracy and Democratic Socialism in this country.

One thing is certain. Nothing is gained from a ‘culture of policy defeat’.  Labor must find a way to effectively campaign for government without compromising its values and reason-for-being.  

Conservatives’ Budget puts the wealthy first. Services and Infrastructure to suffer in the End Analysis

above: Frydenberg and Morrison: desperately trying to win support with tax cuts ; 

hoping voters won't 'look to the small print'

Dr Tristan Ewins

Most of the Australian media is trumpeting the Morrison Governments' tax cuts for “low and middle income” Australians.   But does this stack up under analysis?  Ross Gittins at The Age dared to buck the trend and pointed out that this is overwhelmingly a Budget for higher income Australians.  He observes that the real cost of the tax cuts over ten years will skyrocket to “a staggering $302 billion”.   That will inevitably lead to austerity: with a potential hit to Health, Education, Aged Care, infrastructure and so on.  It will mean neglect and user pays ; and that will also hit genuine low to middle income Australians hardest. Those on $925 or less a week will receive nothing, while those on $3485 or more a week will receive $75/week.   These people (the wealthy) are less likely to spend, also, as compared with lower income Australians. That could also be bad for the economy.  (‘The Age’, 3/4/19, p 7) 

The biggest culprit, here, is the tax cut for the $45,000 to $200,000 bracket from 32.5% to 30%.  (‘The Age’, 3/4/19, p 2)  The fact of the matter here is that the tax scales have been unfairly flattened. There should be a stronger rate for those on higher incomes.

To further illustrate the point, the Herald-Sun observed that those individuals on $200,000/year will receive tax cuts amounting to over $11,000/year, while individuals on $30,000 will receive $255/year.  Meanwhile, hypothetically a dual income family with both partners on $200,000/year will receive over $23,000/year ; compared with $510/year for a dual income family with both partners on $30,000/year. (Herald-Sun, 3/4/19, p 2)

On the other hand, there’s $724 million for the elderly “over five years”.  (Herald-Sun 3/4/19, p 13)

It sounds like a lot. But it won’t go anywhere near addressing waiting lists for ‘at home’ services ; or improvements in residential services: such as subsidizing the sector to pay for aged care worker ratios and a registered nurse on-site 24/7.  There’s mandatory reporting for neglect leading to starvation. (which is common)  But that cannot be policed without extra aged care workers.  And aged care workers need better pay and conditions as an incentive to remain in the sector.  There’s also a need to emphasize ‘quality of life’ for those at home or in care – with programs to keep people socially and mentally engaged.  Something more than being sat in common rooms all day in front of a television. 

There’s a projected surplus of $7.1 billion over the next financial year.  (‘The Age’, 3/4/19, p 2)   At least $1 billion of this could have been redirected into Aged Care – where it is desperately needed.

Ian Yates of the Council of the Ageing argued that:  "Up to 125,000 older Australians are waiting up to two years for home care, [leaving] many dying while they wait”.

The blunt fact of the matter is that the Coalition is trying to buy votes with tax cuts: but the consequence will inevitably mean a hit to the social wage and welfare state ; and probably more privatised infrastructure.

While Labor does not oppose all tax cuts per se, Chris Bowen rebuked the Government, arguing the emphasis should have been on those on “less than $40,000.”

That said, there are some sensible measures: such as $3 billion of investments in “suburban rail station car parks” in an attempt to bust urban traffic congestion.   As well as an emphasis on transport infrastructure in outer suburban Victoria. (‘The Age’, 3/4/19)

There’s also money supporting apprenticeships and supporting scholarships to rural universities, and close on half a billion for pre-school education.  Hundreds of millions on mental health and Medicare sound significant: but they’re staggered over several years ; disguising a reality of neglect: which will become clearer as the shrinking revenue base leads to austerity.

The bottom line is that there are a host of priorities demanding our attention: but we end up with neglect in order to conform to small government Ideology ; and to prioritise the higher income Liberal core base.   

There’s a need to ‘fix Medicare’ and further expand into dental.  An extra billion a year could easily go into providing more mental health capacity and cutting hospital waiting lists.  As already observed: there’s a drastic need for more resources in Aged Care.  Again: nothing short of several billions would ‘make a scratch’ on these problems.  

A $75/week increase to Newstart is very much overdue:  such that people are left homeless, or without the resources to effectively search for work in the first place. 

Pensioners could do with a minimum $25/week boost (fully indexed) – which means a great deal for someone living in poverty. Disability Pensioners could also do with more flexibility in supplementing their income with casual work.  Students could also do with more financial support. Taking on part time work can provide experience ; but it can also make it impossible to keep up with studies. That’s bad for students ; but also for the government which is contributing to the investment in the event that people end up ‘dropping out’.

It’s also true that State Governments are running out of assets to privatise. For a long time this was treated like some ‘magic pudding’ to fund newer infrastructure. ‘Asset Recycling’.  But that cannot go on forever.  And there are associated costs.  For instance the privatisation of the Port of Melbourne will see greater cost structures ‘flowing through’ all through the economy.   This (lack of funds for infrastructure) can only be rectified with higher taxes overall (preferably progressive) ; or through regressive user pays which hurts citizens more in the end than higher taxes.  Still: state governments’ tax options are limited ; and those privatisations should never have happened in the first place.

Many of Labor’s projected tax reforms are very welcome.  Negative gearing cuts which exclude new properties will lead to more home construction and more jobs.  It could also end with better housing affordability. Meanwhile ; cracking down on concessions for excess dividend imputation credits will overwhelmingly hit the wealthy. It is not ‘a new tax’ ; but rather Labor is closing a costly loophole ; one which could soon cost as much as  “$11.4 billion over the forward estimates from 2018-19, and removing it could improve the budget bottom line by $59 billion over the medium term.”    Bowen argues that: “More than 92 per cent of taxpayers do not receive a cash refund for excess imputation credits, and won’t be affected at all by this change.”

He concludes that:

Under Labor’s plan:

o No one will pay a single cent more tax
o No one will lose a single cent from their super contributions
o No one will lose a single cent from their pension
o No one will lose a single cent from their share dividends.

Labor’s recalibration of the tax system will benefit a lot of Australian families, citizens and workers.  Its press for ‘a living wage’ could also make a huge difference for the working poor: though we have to hope that Shorten will heed the ACTU’s call  for a “10.7% increase – or $72.80 per week.”  Which is what is really necessary.  

But at the end of the day refusing to consider raising other taxes limits Labor’s room to move.

To fix Aged Care, Health, Infrastructure, Welfare, Education: a very significant amount of money is needed.   Australia’s GDP is now in the vicinity of  $1.7 Trillion/year. Even a modest 1 per cent increase – aimed largely at those on upper incomes – would mean $17 billion/year to invest in services, infrastructure and social security.  This should be the bare minimum for a Labor Government aspiring to improve the social wage and welfare state ; and provide infrastructure. (from fixing NBN, to paying for roads and public transport to bust congestion) 

Over the long term (several terms of government) Labor should be aiming to raise the tax rate by 5 per cent of GDP ; or $85 billion a year in the context of a $1.7 billion economy. (that will have to be adjusted for growth, inflation etc also)   The wealthy should pay their fair share. And corporate tax evasion needs vigorous, tough action. But ‘ordinary taxpayers’ benefit from ‘collective consumption’ and ‘social insurance’ as well. Labor just needs to be brave and articulate, ‘cutting through to the electorate’.  Labor’s come a long way ; but there’s also a long way to go.

As for the Coalition Government: Labor needs to hammer home the line that this is not a Budget for low to middle income earners.  It disproportionately assists the wealthy ; and those on lower incomes will pay through the austerity and inevitable user pays that follows in its wake.

Left-Wing Letters to 'The Age' and the 'Herald-Sun'

What follows are another series of Left-inclined 'Letters to the Editor' I have sent  to 'The Age' and 'The Herald-Sun' between July and November 2017.  Subjects include everything from 'Cultural Marxism' to 'Bracket Creep' and the Australian Welfare System. 

PLS feel welcome to discuss.

Only a few of the Letters were Published ; but I'm hoping consideration of the content here will justify the effort put in to writing the material

Capitalism and the Threat of Destitution

David Penberthy writes as if homelessness and destitution have nothing to do with capitalism. (Activists no help to the homeless, 13/8/17)  Unfortunately this is not the reality. Under capitalism most people do not own significant stakes in businesses themselves.  They have no choice but to sell their labour power to capitalists in order to survive.  In this system average workers can be ‘disciplined’ (kept in line) by the threat of sinking into a class of working poor.  And the working poor in turn are ‘disciplined’ by the threat of destitution ; sinking into an underclass of destitute and homeless.  This is actually functional for capitalists seeking to depress wages and conditions.  The situation is further worsened by ‘punitive welfare’. Benefits are low ; often below that sufficient for subsistence. (scraping by)  Savings must be exhausted to acquire Newstart. Workers’ bargaining power evaporates under these circumstances.  Also emergency housing, welfare and so on cost money. But even Labor governments are continually under pressure to deal harshly with the unemployed ; to cut spending in order to make room for corporate tax cuts and so on.  And attempts to ameliorate the condition of those affected is branded “class warfare”.

What are Shorten’s Tax Plans in Reality?

The Herald-Sun is waging a campaign against what it argues will be an increased tax regime under Bill Shorten. But so far Shorten’s proposals are in fact too modest. Reform of Trusts will bring in maybe one sixteenth of one per cent of GDP. (approximately $1 billion a year out of $1.6 trillion)  Negative gearing reforms will bring in a similar amount.  Contra the Herald-Sun, these reforms will tend to bypass low to middle income earners. Apart from this the Herald-Sun is emphasising Shorten’s resolve not to deliver Turnbull’s $65 billion corporate tax cut over 10 years.  The problem is that when you cut taxes this way it has to be made up for somewhere.  So corporations get a windfall – but Medicare might be ransacked for cash. To get a sense of proportion – it would take perhaps $400 billion in new taxes to bring in enough money to pay for a Swedish-style welfare state!  But if Shorten devoted an additional 2% of the economy ($32 billion) in a first term to reform of Health, Aged Care, Education and Social Security – surely that  would be a reasonable measure from which most people would benefit.

Bolt’s Double Standards on Liberties

Andrew Bolt (August 24^th) argues against what he says is a ‘totalitarian’ Left.  But if Bolt is to adopt the cause of liberal rights let him do so without hypocrisy.  Let’s see if Bolt is willing to support rights of speech, association and assembly - without punitive laws, and without the dispersion, vilification and criminalisation of protest movements such as that once associated with the “We are the 99 per cent” cause, occupations against homelessness and so on.  Once the consensus on liberal rights breaks down everyone is potentially at risk.  Both Left and Right need to avoid double standards on liberal rights ; and that includes “celebrities” such as Andrew Bolt. Meanwhile attempts to shut down councils wanting to change the date of Australia Day celebrations – suggests a Federal Government which is not serious about reconciliation with Indigenous Australia.

Refuting Bolt on Welfare

The Herald-Sun (27/8) editorialises that “Welfare is Not a Right” and advocates a crackdown against the unemployed especially.  But at the same time provides scant room for the expression of the contrary view: that Australia already has one of the most punitive and austere unemployment regimes in the developed world.  Instead, the Herald-Sun ought argue for the kind of labour market and industry policy regimes that exist in Denmark.  This requires many billions to work ; but the returns in terms of the creation of more high-wage jobs – pitched to workers’ skill sets – makes it a price worth paying.  Meanwhile Newstart could do to be increased by a minimum $1000/year, indexed.  Job-seekers who cannot even afford transport, decent clothes or internet already have little chance of finding work.  Newstart provisions (introduced under the Turnbull Liberals) forcing job-seekers to exhaust much if not all of their savings before receiving support also need reconsideration. Where’s the incentive to save when losing your job could cost you everything?

Labor’s Modest Tax Agenda

Chris Bowen is laughing off claims by Scott Morrison that Bill Shorten is promoting a ‘socialist’ agenda.  In reality, Bill Shorten is talking about very moderate tax reforms that so-far will struggle to raise $4 billion a year. Or roughly one quarter of one per cent of GDP.  But there's a problem with such suggestions being “laughable” as well.  And that Labor has come to depend on such claims being laughable. Cert...ainly Labor are not outwardly democratic socialists. That applies probably to most Labor MPs 'internally' as well. But the Libs win by default if Labor is too scared to talk about democratic socialism, redistribution, economic democracy, social wage and welfare reform, industrial rights, public ownership and so on. For instance, Labor should be aiming to match the OECD average on tax (roughly 34% of GDP)  and associated social expenditure over several terms. In order to fund reform of education, health, aged care, infrastructure, welfare and so forth.  If Labor 'wins' on the Liberals' terms then the Liberals win anyway - through Labor’s internalisation of their economic and social assumptions and values. Even if Labor achieves government, under those circumstances Labor (and the people Labor represent) lose.

The Truth about the ‘Luddites’ has Lessons for us Today

Rosemary Tyler (Letters, 10/9) mentions the ‘Luddites’ and their response to the Industrial Revolution, comparing them to those who resist Clean Energy today.  But there are important differences.  The Luddites were not just ‘mindless wreckers of Progress’. They were largely skilled crafts-people who were resisting ‘proletarianisation’ and the de-skilling of their industries.  They were forced from their homes ; compelled to be wage slaves in dangerous factories ; reduced to bare material subsistence; compelled to suffer 12 hour days and worse.  They lost creative control over their labours and their labour’s products. The capitalism of the Industrial Revolution created a foundation for economic and scientific progress ; but it often came at a terrible cost.  Today, also, modern capitalism rests upon the brutal exploitation of ‘peripheral’ economies such as in Bangladesh ; but also often the exploitation of working poor within the ‘first world’ itself.  Privatisation is arguably the main driver of the current energy-affordability crisis ; But if re-socialisation is not considered an option (it should be!), other measures must be taken to ‘immunise’ low income workers and pensioners during the transition to renewables and beyond.

Turnbull ‘Asleep at the Wheel’ on Energy

David Ingliss (Letters, 25/9) writes that the “electricity crisis” is the result of “rabid Green ideology”. Let’s get some things straight, though.  The current Conservative Government has had years to prepare for the closure of coal-fired plants such as Hazelwood. It’s Turnbull who has been “asleep at the wheel”. Also global warming is not an “Ideology” ; it’s a scientifically-verified environmental crisis and not necessarily to do with political values. Hence our response SHOULD be bipartisan. Further, if energy had not already been privatised the decision on what to do with the old energy infrastructure (and when) would have been the choice of governments.  Instead it’s out of our hands. If we had kept the old SECV which Ingliss refers to in public ownership arguably energy would be cheaper, and battlers would receive cross-subsidies.  Instead privatised or corporatized energy production and distribution – combined with shrinking economies of scale (as those who can afford to switch to micro-renewables) – means  ‘battlers’ are left with a spiralling cost of living.

Privatisation and Tax Cuts a ‘Two Edged Sword’ at Best

The Herald-Sun (27/9) proclaims the headline “Budget Repair: Nation $4.4 billion better off”.   And Scott Morrison has been boasting the Coalition Governments ‘success’ in bringing government spending down to 25% of GDP.  But do lower levels of government expenditure on services, infrastructure, and social security really improve our ‘national well-being’?   By contrast government spending in Sweden is at approximately 52% of GDP.  (A $400 billion difference if translated proportionately to the Australian context)  The difference is that in this country we have User Pays in everything from Aged Care to Higher Education – which hits those on lower incomes especially hard.  While the Conservatives provide ‘corporate welfare’ with tax cuts valued at about $60 billion over a decade, we treat the unemployed like criminals and allow barely enough (or not enough) for them to subsist and effective search for work.  We neglect state education by comparison ; and we are forced to opt for private provision of infrastructure – which ends up costing consumers AND business more in the end.

Coal Seam Gas a Risk

The Herald-Sun (27/9)  editorialises “Drop ideology and drill” : directing its attention squarely at Victorian Labor Premier Daniel Andrews.   But Coal Seam Gas drilling has extreme risks – such as water contamination and contamination of land.  These risks have nothing to do with “ideology” ; and neither does the need to reduce carbon emissions in the face of a virtual scientific consensus on global warming. Also energy plants like Hazelwood have shut down – increasing the risks of an energy shortage - something governments were left with no control over as a consequence of past privatisations.  Hazelwood had to close sooner or later : but under public ownership could have continued until the State was ready for the transition.  Finally, Australia has ample reserves of gas without resort to coal seam gas (fracking) but the Conservative Government has not properly regulated the industry ; meaning this gas could be exported while at home we experience black-outs. Knowing all this it is Malcolm Turnbull who has been “asleep at the wheel on energy policy” for years ; and now is interested in blame shifting.

The Truth about ‘Cultural Marxism’

In response  to Dr Andrew P.Retsas (3/10/17) : while it’s true that Marx has nothing to do with many modern discourses on sexuality, some interpretations (eg: from Engels on ‘The Origin of Family, Private Property and the State) emphasise the potential of communal social solidarity and organisation compared with dependence on the monogamous nuclear family.  But the reality is that the vast majority of Marx’s work is to do with the struggles of workers to overcome exploitation and oppressive working conditions ; and enjoy opportunities for personal growth through engagement with philosophy, science, art, music and so on.  Critiques of ‘cultural Marxism’ ignore this, and try and use Marx as a ‘bogey’. Marx wants workers’ freed from the oppressive conditions of existence and labour – which in certain ways still prevail today.  Some seeing themselves in the Marxist tradition (eg: some from the ‘Frankfurt School’) lost faith in the working class, so instead looked to racial and sexual minorities, students and women. (for instance Herbert Marcuse in ‘One Dimensional Man’ (1964) But the Heart of the original Marxism is still the self-liberation of working people ; and “From each according to ability, to each according to need” as a doctrine of liberation, human solidarity and justice.

Education must Support Democracy

Anthony Gilchrist complains that “the socialist left has…infiltrated the education system” (Herald-Sun, 12/10) . A few points in response.  Firstly, education should support democracy.  That ought mean political literacy and support for active citizenship. That does not mean ‘indoctrinating’ with one doctrine or another ; but preparing students to make their own free decisions in a democracy in keeping with their interests and their adopted value systems.  Socialism has a place here, as do liberalism and conservatism.  A strong democracy means pluralism (ie: real choices) and not just ‘convergence politics’.  What Gilchrist calls “victim” politics might simply be citizens speaking up for their rights and interests in a democracy.  If we never questioned injustices, indigenous Australians and women would never have gained the vote.  And workers would never have achieved the 8 hour day.

Stop Vilifying Vulnerable People on Welfare

The Herald-Sun (23/10 ‘Trillion Dollar Handout’) is developing a pattern of effectively vilifying vulnerable people in the context of attacks on Australia’s already threadbare welfare system.  In reality the lion’s share of the welfare system is taken by the Aged Pension. (which funnily enough the Herald-Sun rarely talks about) Meanwhile for the vast majority unemployment benefits, disability payments and so on are ‘social insurance’ which ALL of us pay for via our taxes. Instead of vilifying the vulnerable we need an industry policy which actually facilitates the creation of decent jobs.  (as opposed to driving the car industry out of the country as the Coalition Government has done) And given activity tests already exist for Newstart there is no excuse not to raise the payment significantly: in part to support people as they search for work ; during which they need access to decent clothes, transport, internet access and so on.  Further, if the Herald-Sun wants to break the ‘dependency cycle’ and ‘poverty cycle’ it should agree to greater support for sole parents and low-income families ; and provide greater scope for Disability Pensioners to escape poverty traps by engaging in flexible work without losing a very significant part of their payments via means tests.   When those with a serious mental illness are dying on average 25 years younger than other Australians they are not ‘having us on’ or ‘rorting the system’.  See:  http://www.abc.net.au/news/2013-05-09/schizophrenia-lowers-life-expectancy-by-25-years/4680580

All the Usual Complaints from the Right on Socialism

Tom Elliot (27/10)  makes all the usual complaints about socialism that you hear from the Right. But what is socialism really meant to be? I wrote my PhD on this topic so I have a clue.  The totally-reasonable principle underpinning Marx’s philosophy was ‘from each according to ability, to each according to need’.  What is more Marx believed in achieving abundance and recasting the division of labour so every individual had the opportunity to engage in science, art, philosophy, popular culture and so on.  Everyone has the right to personal growth and fulfilment. This – and Marx’s passion for extending democracy across the political and into the economy – is what distinguishes him so clearly from those who abused his name ; using it to justify totalitarian regimes.  Countries – such as Sweden and Denmark – who have advanced socialist principles to some extent – have also enjoyed prosperity, equality, full employment and happiness.  We need a genuine pluralism in this country where democratic socialism is part of the debate.

More on ‘Cultural Marxism’

Chris Zappone (The Age, 13/11)  is right to be critical of the widespread condemnation of ‘cultural Marxism’ by people who don’t really even know what Marxism is.  In fact many Marxists were extremely concerned about ‘the cultural turn’ from the 1970s onwards ; with the embrace of ‘identity politics’ and the abandonment of themes of class struggle, economic justice and of the promotion of a democratic socialist economy. On the other hand the intellectual movement began by Adorno, Horkheimer and others was real, and is still real.  But it is very diverse ; and attempts to brand it as some ‘homogenous’ entity comprise something of a moral panic.  Adorno and Horkheimer especially were despairing of the prospects for socialism in an era of totalitarianism ; but they also critiqued popular culture in the West as a medium of social control.  Later critical theorists like Jurgen Habermas were more hopeful ; and Habermas promoted a theory of ‘communicative action’ which supposed a progressive consensus may be possible through dialogue. Contrary to right-wing assumptions about ‘critical theory’ Habermas was decidedly within the Enlightenment tradition.

Kevin Donnelly is Wrong on the English Curriculum

Kevin Donnelly (HS, 16/11) again takes the English curriculum to task, accusing it once more of left-wing bias.  But the modern English curriculum is about more than spelling and grammar. It is about communication life skills which empower students, including the critical analysis of texts.  This need not involve a bias towards the Left or Right.  It is about comprehending and criticising the assumptions beneath texts of both a Left or Right-wing inclination ; and also those which don’t fit within that framework.   The modern English curriculum is also about encouraging students to develop and express opinions. Again, this need not involve a prejudice towards the Left or the Right.  But it does empower students to make informed commitments on social issues , and to express their associated beliefs effectively. There are some Conservatives (but not all I’d argue) who feel threatened by this.

Tax Cuts, Corporate Welfare and Bracket Creep

The Herald-Sun (20/11) editorialises in favour of tax cuts to compensate for bracket creep. A few points in response.   Bracket creep tends to flatten the income tax system over time ; to make it less progressive.   But tax cuts emphasising the upper end can also exacerbate this.  The most equitable way of dealing with bracket creep is to INDEX the lower thresholds to ensure those on lower and middle incomes don’t end up paying proportionately more.  But progressively-sourced increases in tax should not be ruled out.  After all, tax is necessary to pay for Medicare, schooling, roads and so on ; and a National Aged Care Insurance Scheme could be funded via progressive tax ; providing for the health, happiness and dignity of older Australians.  Certainly sweeping Company Tax cuts amount to ‘corporate welfare’ ; where corporations fail to contribute fairly to the infrastructure and services they benefit from ; and hence everyday taxpayers are made to ‘pick up the tab’.

Treasury ‘White Paper on Tax’ seized upon by an Abbott Government Considering Regressive ‘Reforms’

 

The Abbott Government's 'White Paper' on Tax could see big changes to superannuation and the overall tax mix.  But the Paper seems oriented towards the Government's Ideological preference for 'small government', 'low tax' and 'simple/regressive tax' as opposed to a progressive tax system. Labor and the Greens need to enunciate a comprehensive alternative - also informed by a progressive ideology of equity and fairness.  Tristan Ewins looks at the alternatives.

Tristan Ewins

31/3/2015

The Federal Australian Treasury’s White Paper on tax reform seems to have been received well by the Abbott Conservative Government. 

Amongst other suggestions, it urges slashing the Company Tax rate to make Australia a more attractive place for investment.   

But arguably decreased Company Tax is not the answer and will only lead to further ‘corporate welfare’. 

The white paper complains that 70 per cent of Commonwealth tax revenue is drawn from personal and company taxes.  But what is the alternative?  A higher GST?  More user pays?  More austerity in the context of an-already stunted social wage and welfare state? 

Dividend Imputation, Corporate Taxation, Corporate Welfare

On the good side, Gareth Hutchens of ‘The Age’  (30/3/2015) notes arguments have arisen for the potential rescission of Australia’s regime of Dividend Imputation. (tax breaks on share dividends; ostensibly to make up for ‘double taxation’)

For a start, lower Company Tax rates dilute arguments about the unfairness of ‘double taxation’.  Australia’s Company Tax rate has been reduced markedly since the Keating Government which introduced the dividend imputation system.  Countries such as the UK and France – which once had imputation – have now dropped the measure.  It no longer appears ‘necessary’ either for ‘fairness’ or ‘competitiveness’.

To clarify: Nicholas Gruen of ‘The Age’ pointed out in 2012 that the cost of Dividend Imputation to the Australian people (as represented in the Government) of over $20 billion a year!  

The result of falling Company Tax, dividend imputation and other pro-corporate measures has been much lower levels of tax paid by business, and the effective consequence of ‘corporate welfare’, in tandem with other effective corporate subsidies. 

For instance David Holmes  at ‘The Conversation’ has noted– “the fuel tax credit scheme to the mining industry”  which delivered $2 billion in corporate subsidies for mining corporate interests in 2011 alone; and a total of over $5 billion all up.

But it goes much further than this.  Corporate welfare can also be interpreted as taking the form of a falling minimum wage and a falling wage share of the economy. In Australia specifically the wage share fell by about ten percentage points since 1959.  (see the associated graph via the hyperlink above)  That means higher levels of exploitation of working people by business. That is, Australian workers are subsidising corporate profit through lower relative wages.

Further, there is an assault on welfare rights to ‘make room’ for effective corporate tax subsidies; and ‘punitive welfare’ , ‘work for the dole’ etc, effectively reduce the bargaining power of workers because of an insecure and desperate ‘reserve army of labour’.

Also consider the proliferation of ‘user pays’ measures. (for example for access to transport infrastructure;  school ‘levies’; a higher cost of living re: water and energy etc)  User pays mechanisms can only spread as a consequence of lower taxes.  What we do not pay for collectively as tax payers, we will pay for (and usually we will pay more) in our capacity as private consumers.   

Declining levels of corporate contributions (via tax) to the construction of infrastructure, and the development of skills which the corporates benefit from – means the burden is increasingly paid by workers, consumers and individual (private) tax payers.  More corporate welfare!

Privatisation of communications, energy and water utilities and assets such as state-owned banks also saw an end to progressive cross subsidies. At the same time – progressively from the 1980s and 1990s - a more regressive tax mix (including the GST) ‘began to bite’.

Importantly, the argument that rates of corporate and personal income tax must fall because of ‘competition’ does not apply to all companies and individuals.  Many companies cater to Australian markets and Australian consumers.   The threat of capital flight is not universally applicable; and contributing to a ‘race to the bottom’ on corporate tax will result in spiralling and out-of-control corporate welfare.  Global action is necessary to stop the existing ‘race to the bottom’ on tax. 

To get the situation in perspective: Company Tax (now 30 per cent)  has been reduced by approximately 20 percentage points since the time of the Hawke Labor Government. 

The cost to the Australian people of this is tens of billions in revenue annually - which might otherwise have been directed towards infrastructure and education (which the corporate world benefits from after all), as well as health, social services and welfare. 

Even though a return to the ‘high water mark’ of corporate tax may not be possible, an increase to levels enjoyed by other advanced economies might be doable, and would make a big difference.  (nb: US Company Tax goes as high as 39 per cent; Japan 37 per cent and France 34 per cent – see HERE)

Furthermore, arguably most Australians are not so ‘mobile’ as the proponents of lower income tax suggest either.  Taxes also contribute to the quality of infrastructure and services which underscore the desirability of living in particular country. This includes the professionals which some say are likely to ‘pack up and leave’ if progressive income taxes remain.   Indeed the quality of education, services and infrastructure also acts as a ‘pull factor’ for investment and skilled labour.

Income Tax and GST

Treasury is also pressing for lower income taxes and a higher, less discriminate GST.  (eg: apply it also to education and food)

But because apparently an increase in GST is rejected by the Andrews Victorian Labor Government we might hope for a more equitable alternative.  

Unfortunately, though, it is more likely we will simply see further austerity.

The Treasury white paper apparently complains that only Denmark relies more on income and company taxation than Australia.   But ‘just because other people are doing something’ is not a strong argument to follow suit.  More appropriate would be to consider what –if anything – is wrong with the Danish tax system and economy.

Wikipedia states of Denmark that:

It has the world's lowest level of income inequality, according to the World Bank Gini (%),^[8] and the world's highest minimum wage, according to the IMF.^[9] As of January 2015 the unemployment rate is at 6.2%, which is below the Euro Area average of 11.2%.^[10] As of 28 February 2014 Denmark is among the countries with the highest credit rating.

So Denmark has a strong economy.  It has chosen ‘a different path’, say, compared with the Anglosphere. But its path of high, progressive taxes, labour market regulation and strong social welfare works! 

Finally the Treasury White Paper has considered the threat of bracket creep, and apparently the Abbott Conservatives are considering an increased GST as an alternative.

Bracket Creep refers to workers being pushed into higher tax brackets as a consequence of inflation, and (only nominally) increasing wages.  Both Labor and Liberal governments have a history of dealing with bracket creep by returning the proceeds to tax-payers through tax cuts.  Though even under Labor arguably this has sometimes been dealt with in a regressive way.   Higher brackets have been eliminated or cut - or raised so high as to minimise their progressive impact - and restrict strongly progressive taxation to only the most wealthy of all.  Arguably this is to the benefit of the upper middle class and the wealthy; and to the detriment of working people, including the working poor.  It means the working class and the poor pay more proportionately; and that those in need suffer with the constriction of the social wage and welfare.

But this is not an honest Liberal-National Federal Government.  Joe Hockey made the ingenuous claim, for instance, that Australians pay 50 per cent of their income in tax.  

As Ben Phillips explained at ‘The Conversation’:

“ Nobody in Australia pays 50% of their income as personal income taxation. According to NATSEM modelling, around 3.5% of those who have a tax liability actually face a top marginal tax rate of 49 cents in the dollar. Around 25% of taxpayers are paying a top marginal tax rate of at least 39 cents in the dollar.”

To summarise – Australia’s income tax system involves several brackets.  Higher brackets and rates only apply after specific thresholds are met. So as Phillips insists: NO-ONE is paying 50 per cent of their income in income tax! 

Hockey is not stupid.  Surely he understood this.  Apparently he was attempting to tap into populist anti-tax sentiment through a deceptive and false argument.

But depending on your notion of ‘the good society’ tax as a whole needs to go up; and the tax and spending mix also needs to be reformed.

Negative Gearing, for instance, benefits upper middle class investors; but does not create much in the way of new employment.  And important social programs demand higher levels of social expenditure.

Crucial priority areas which need substantial public funding include:

·         Full implementation of the National Disability Insurance Scheme as well as ‘lifting up’ the standards and resource base for state schools; Extend the NDIS to apply to aged disability pensioners

·         A big public investment in a National Aged Care Insurance Scheme: to provide for the needs of aged Australians both at home and in care

·         Investment in a comprehensive Medicare Dental Scheme

·         Implement Programs to ‘Close the Gap’ on both Indigenous Life Expectancy and Life Expectancy for the Mentally Ill

·         A big investment in new Public Housing stock – solving the housing affordability crisis by increasing supply

·         Fair Welfare and amelioration of Poverty – Raise all welfare payments by at least $35 a week on top of the current indexing arrangements; Thereafter implement fairer indexing arrangements for Newstart, Sole Parents and Student Allowance;  Relax criteria and significantly slow the withdrawal of payments for disability pensioners attempting to re-enter the work-force; Eliminate welfare poverty traps

·         Restructure the Higher Education Contribution Scheme (HECS); raise the repayment threshold and lower interest on debt; suspend all debt for former students who acquire a disability which interferes with or prevents work

·         Public investment in public infrastructure – Including the National Broadband Network – with Fibre to the Home Broadband

At a crude estimate these items would likely cost over $50 billion a year to implement in the context of an economy valued at around $1.6 Trillion.

Options to fund include Company and Income Tax reform, and withdrawal of Dividend Imputation;  but also the following

·          reform of Superannuation Concessions for the wealthy and the upper middle class*

·         cut Negative Gearing and plough the proceeds into Public Housing;

·         implement an Inheritance Tax;

·         Restore the original (Rudd-inspired) Mining Tax

·         Increase and progressively restructure the Medicare Levy

·         Implement a banking sector tax on super profits

·         Implement progressively-structured infrastructure levies on business and individual taxpayers– to provide for communications, transport, energy-related and water and sanitation related infrastructure – without regressive user pays mechanisms or inefficient/wasteful private finance

·          Implement a progressively structured Aged Care Levy

The Treasury ‘white paper’ on taxation seems to largely comprise a ‘wish list’ for Liberals pursuing an ideological ideal of small government, low taxes, and high levels of inequality. (which the Liberal ideologues put down to ‘merit’)   Labor and the Greens need to develop their own responses.  And hopefully this post will contribute meaningfully to that process.

 

*It should be noted, however, that even $1 million in accrued superannuation will  provide a relatively modest retirement income of $33,000 a year.  (compared with a Single Aged Pension of just over $22,000 and in the case of a couple roughly $17,000 each)  This is far from grandiose – though assuming the recipients’ home is owned it provides relative comfort compared with those fully dependent on the Aged Pension.   (more than $10,000/year additional income)  But The Australia Institute has suggested that cuts in Superannuation Concessions  - which cost taxpayers tens of billions annually – could instead be channelled into a more robust Aged Pension – lifting the full Single Rate to just over $26,000/year, and just under $40,000/year for couples.   The rate at which the Aged Pension is withdrawn could also be slowed, benefitting those with smaller superannuation accounts – and especially women – as a consequence of interrupted working lives and the devaluing of ‘feminised’ professions.