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Can Labor accommodate an inclusive and open internal debate on Tax and the Social Wage?

I’ve been copping some criticism for my decision to publicly disagree with the Parliamentary Labor Party’s decision to waive through the Conservative Government’s tax cuts package – which includes some benefits for middle-income earners, but nothing for the working poor, and a massive windfall for the rich. ‘Phase 3’ – which focuses mainly on tax breaks for the rich – will cost $95 billion over only its first five years.

Many reasons have been given for the decision, including Labor’s desire not to be seen to be ‘getting in the way’ of a tax cut for middle-income and higher income workers. The rationale is that we pick our fights at a time and context of our own choosing. And don’t give the Coalition a bludgeon to beat us with in the meantime. And some are arguing we could move to rescind the Phase 3 cuts closer to the next election.

This is problematic for a number of reasons. Generally, it’s easier to legislate tax cuts than to repeal them. Various ‘pragmatists’ in the Party will point to the need to court ‘aspirationals’ (an ideological construction meant to promote capitulation on distributive justice) and some will ‘get cold feet’ on any rescission as the election approaches. Even some figures on the Left are arguing in favour of the tax cuts, not just as a tactical imperative, but on the basis they do not see the social wage as a priority. Though I’m sure there are many more who understand the place of the social wage in Labor’s mission and identity. Some are opposing ‘Laborism’ to ‘Social Democracy’ ; but when pressed I doubt these would implement reforms on pattern bargaining, labour market regulation, secondary boycott, and so on.

Also, Labor’s strategy is demoralising and disorienting for many members and supporters. Labor ‘didn’t have the numbers’ but ‘taking a stand’ would have been good for morale ; and would have left less ambiguity where we stand. Though that will be ameliorated should Labor commit to rescinding Phase 3 at a later date “if it proves to be fiscally irresponsible” and “a barrier to provision of front line services”. Which we know will be the case.

So can the Party tolerate debate on this issue ; and if so should it be ‘behind closed doors’, or should some of it be public?

Firstly, if most of the Left (and possibly significant parts of the Right) want to see Phase 3 withdrawn at the next election we need a discussion within the Party as to why this is so urgent. There must be grassroots pressure so even ‘pragmatic’ MPs understand it’s what the Party expects and demands. And activists and other members must be educated as to the consequences of the policy if it is not withdrawn. Debate within policy committees and so on is not good enough as it does not engage the majority of members. Public debate also gives cause for supporters to ‘take heart’ that there are significant forces in the Party fighting to rescind the appalling Phase 3 tax cuts later on. We need to be arguing that we will review the policy next election not only because it is fiscally irresponsible ; but also the distributional impacts, and impact on services.

And if Party figures think they cannot risk disunity ‘at the top’ ; surely at the least they can see the good of ongoing and permanent debate ‘at the grassroots’. And when the Coalition uses the old ‘class warfare’ label we need to respond that it is they who are waging class warfare ; imposing a greater proportional tax burden on  lower and middle income Australians, cutting services, removing penalty rates, seeking to smash unions, degrade conditions and so on.

There’s also a problem that if the Coalition gets away with this tactic once, they will try it again. That is: combining policy which is of some interest to workers in the short term with policies which will be very harmful to most over the long term with damage to the social wage, social insurance and collective consumption, welfare state, and funds for public infrastructure. And trying to pass them ‘as a package deal’.

The Aged Care and Mental Health Royal Commissions are developing their findings even as this is written. Action on mental health and aged care will require resources that simply won’t be there if the Coalition gets its way. We’re talking action on a similar scale to the NDIS. (National Disability Insurance Scheme). The ageing population makes action there especially urgent.

Labor’s strategy must be to demand action on these fronts, in the full knowledge that this puts fiscal pressure on the Conservatives to pull back on tax cuts. This is not necessarily because of some cynical partisanship or desire to ‘wreck’, but because the Aged and the mentally ill desperately require our support. More hospital beds, better pensions, psychological counselling and community support. Enshrined ratios (nurses and aged care workers) in Aged Care and the funds to make that possible. Better training – including dementia training – and better wages and conditions for Aged Care staff. Resources for ‘quality of life’ ; private rooms, quality food, access to internet, facilitated discussions and games, a life that is worth living – and more than sitting people down in front of televisions all day. Also more money for ‘ageing in place’ programs ; ensuring everyone who needs such a package can receive support quickly ; without onerous waiting lists that currently can go on over a year. And on the way begin winding back regressive user-pays.

In the meantime Labor must resist any austerity ‘brought forward’ to accommodate the Coalition’s tax cuts.

The bottom line is that Labor needs a debate which keeps distributive justice, progressive tax, social wage provision – front and centre of the Party’s agenda. Over the medium term we need to be moving towards the OECD average tax to GDP ratio.

Labor also has to head off the so called ‘ensuring integrity’ anti-unions laws ; and should be engaging the crossbenches on this now. We also need to prioritise the Senate for the next election.  If the anti-union legislation passes the industrial wing needs to be prepared for a fight to render the legislation ‘the dead letter of the law’.

Many Labor activists are now ‘falling into line’ because of the idea that ‘disunity is death’. And hence a desire from some to enforce conformity. The fight to oppose Phase Three outright from the outset has been lost. Many are bitter, but we need to plan ahead for the future. The next debate is whether we press for extended services on aged care and mental health we know are incompatible with the Coalition’s vision of ‘ever smaller government’. And following that: whether we are willing to rescind Phase Three after the next election ; and maybe even modestly raise taxes by around 1% to 1.5% of GDP on top of that to fund an expansion of the social wage which ‘takes us forwards’, not just a ‘rear-guard action’.

Negative Gearing reform and Franking Credits may be off the agenda for now, but the reality is we failed to sell our policies. Perhaps we should have imposed means tests in places, so our policies did not disadvantage any genuine ‘battlers’. Alternative policies could include a very big commitment on public housing. As well as a restructuring of income tax, and imposition of indexation at the lower brackets. Also, a progressive increase of the Medicare Levy to fund dental and mental health; and a National Aged Care Insurance Levy to fund Aged Care reform. We need a vision which ‘takes vulnerable and working Australians forwards’. Already-progressive forces need to ‘plan ahead’ for the next National Conference.

The election was close, and we should not succumb to despair. With reform re: ‘big money in politics’, and full preparedness for any future Conservative ‘scare campaigns’ we should be able to go into the next election ‘on the front foot’.

This article was originally published on ALP Socialist Left Forum.

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16 comments

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  1. Baby Jewels

    “The election was close, and we should not succumb to despair.” Good article, but it is hard not to despair when we’re faced with 3 more years of widening inequality, further environmental damage, more propping up of the very wealthy, the loss of Labor’s very good policies which seem to have been binned, and now, to add salt to the wound, Labor are rolling over to the Libs on tax cuts, no rise in Newstart and special dispensation to christians to enable them to hurt minorities. It’s too much!

  2. Jack Cade

    I cannot understand anybody who believes that Labor should support this measure. The whole point of it was to give corporate Australia tax cuts – those few who actually pay tax – and pretend to give the rest of us something: a bit like Abbott and his $660 electricity reduction.
    In my view, and I have been a Labor voter since 1972 – Albanese is a dead duck and so is the ALP. They should have opposed the measures, which the Independents would ensure passed anyway. Labor will gain nothing from waving it through, and may even lose votes when Morrison smirks and crows that the ALP supported it. Labor cannot mount a credible argument against any part of it now or ever.
    And Albanese laughing and joking with Dutton on TV the other day made me really angry. I was always suspicious of his mateship with ‘Mr Humphries’ Pyne, and being comfortable with Dutton, finally convinced me that they are all having a lend of us.

  3. Kaye Lee

    I mentioned an article by Brad Chilcott on David’s article. It is relevant to quote more from it here as it explains why the public debate is often so one-sided.

    “Towards the end of a recent gathering of key leaders from across the housing and homelessness, domestic violence, disability, First Nations, refugee, animal rights, mental health, anti-poverty, environmental, legal, education, gender equality, worker and LGBTIQA+ sectors a union official rose to speak. “After listening to you all for the last two days it seems to me that you all would’ve liked to see a Labor government. Perhaps some of you should’ve said so before May 18.”

    The reality is that in Australia a charity who states their opinion about what potential government will be better for the people, communities or environment they serve or represent risks deregistration – which means the people and organisations with the most insight, the closest relationships and the most accurate data being unable to clearly state which party they think will deliver the best outcomes in the area of their expertise.

    There are no such restrictions on corporations, industry groups, the Pharmacy Guild, the Minerals Council of Australia or the gambling industry who are able to influence public policy, voter intentions and donate to parties and candidates freely. While charities must pass a “public benefit” test to maintain their tax-deductible status – and maintain fierce non-partisanship, corporations can spend billions on lobbying for their vested self-interest, claim it as a tax deduction and freely donate to the candidates and party that will advance their interests.”

    https://www.theguardian.com/commentisfree/2019/jul/08/the-attempts-to-pressure-charities-into-political-silence-dont-happen-in-isolation

  4. Jack Cade

    Kaye.
    You’ve put your finger on the value of ‘pub talk’ in Australia. It’s all bullshit because Aussies are increasingly gutless and cowed. We all see ourselves as ‘aspirational middle class’ even though we own sod all but pretend we are above the hoi polloi. We got what we asked for 6 weeks ago, and it’s no more than we deserved.

  5. Stephen Tardrew

    We can afford all of our welfare obligations as we as a nation can decide what we spend our currency on and as currency creators are not constrained by taxation which does not fund expenditure. While they get you to panic about age care affordability they can afford huge corporate welfare, tax breaks for the wealthy and endless larges to those at the top.

    Can’t you see people Labor are as ignorant of a modern fiat economy as the right. Neoliberalism is a fabricated set of artificial economic postulates to take from the low income, poor and marginalised and give to the already rich.

    Stop being conned into believing we cannot afford aged care and tell governments they are our employees and must stop pillaging the low income poor an marginalised just to transfer wealth upwards.

    You folks are your own worst enemy and articles like this are equally as foolish. Unless there is a frontal attack upon the lies of neo-liberalism ordinary folk are simply going to get poorer and more in debt.

    Ever wondered why in the land of a surplus budget private debt is the second highest in the world. They get you to focus upon a wholly irrelevant government debt while sending you into debt servitude.

    People of Australia you are your own worst enemy when you let these liars control you with fear and threats. The one thing most of you lack is courage to stand for what is ethically right and demand justice and equity.

  6. Patricia

    Those who voted for PHON and AUP don’t care about the poor, even though many of them are poor themselves.

    Many Australians have forgotten about egalitarianism and community and their focus is solely on what is in it for them.

    This started with Fraser and was made an art form with the Howard government which convinced people that living in a country where support was available for those who needed it was a mugs game and that every one should be out for themselves alone.

    These people do not care about providing government services for those who need them. They don’t care about whether what the government says is true or not, they only care that they see that LNP governments call them aspirationals and that they can aspire to be another Gina Rhinehart or Twiggy Forest (although the chances are slim to none of this happening at all), they drink the Kool Aid and swallow the lies.

    The ALP is now just a branch of the LNP and they have lost my vote until they start standing up and being a proper opposition. This rot started with the Hawke and Keating governments and the ALP has not gone back to its roots since.

    The fact that most politicians are now “career” politicians says a lot about the state of the country. Most of them have no idea how the majority of the people live, work or play, nor do they care, no manner of protestation from them at election time can cover the fact that the are all so out of touch that they might as well be on another planet.

  7. totaram

    Kaye Lee: You need to tell us how and when these restrictions (on charities) came into force. If they were brought in before 2007, did the Labor government do anything to unroll them?

  8. Kaye Lee

    Stephen,

    I do not think the article is foolish or that people here are unaware of the consequences of reduced government spending and increasing private debt.

    We have to deal with reality – with how our government/Treasury/Finance Dept/RBA operate. As things stand, deficit spending is matched by bond issuance and the RBA is precluded from buying them direct. I am not saying this is a problem necessarily though it would be far better if, to satisfy the accounting, the RBA ‘bought’ zero interest bonds.

    The thrust of the article is about keeping faith with Labor plans to create a more equitable society rather than one that facilitates wealth for the minority. The focus for government should be on helping those who need it, not those who already have the choices that wealth offers.

    “Rewarding aspiration” is a nasty phrase from a class that has never been on the treadmill of struggling to pay the bills. Does someone who is in the top few per cent of income earners need $10,000 more than a family where dad has been retrenched? Remember, they cut family payment and pension eligibility. They don’t understand the ignominy of spending your sixties applying for jobs you know you won’t get, just to satisfy the rules for Newstart. Or having to get medical confirmation that your adult child has not recovered from having Downs Syndrome and yes, they still should receive support. Or the crippling poverty of young people living in Sydney to work if they don’t live with their parents.

    The government should not be about wealth creation for the few in the hope that they will magnanimously then share the wealth. They want more for less – always. They call it productivity which can translate to cutting costs, cutting jobs, cutting workplace entitlements, and fighting tooth and nail against any increase in wages. Making them go backwards by cutting penalty rates has been a particularly successful coup for the Coalition.

    “The best welfare is a job” they say. Great. Employ the excess workforce as the RBA are pleading with you to do.

  9. Kaye Lee

    totaram,

    quoting again from Chilcott….

    “the Coalition has shown a determination to further silence the charity sector and their allies throughout their time in power. Gag clauses have appeared in social services agreements; a well-known critic of charities and opponent of charity-funded advocacy, Gary Johns, was appointed as the head of Australian Charities and Not-for-profits Commission (ACNC); when drafting the Electoral Legislation Amendment (Electoral Funding and Disclosure Reform) Bill 2017 the Coalition included language that would have significantly limited “political expenditure” including “the public expression of views on an issue in an election by any means” – in other words, advocating for change – and threatened to classify charities as “political campaigners” or “third party campaigners” if they spent more than $100,000 over four years in this way.

    The relentless attacks on human rights commissioners Gillian Triggs and Tim Soutphommasane for telling inconvenient truths; the introduction of laws to limit unions’ ability to advocate for better wages and more secure jobs; raids on journalists; cuts to environmental research funding; political pressure exerted on the ABC accompanied by debilitating cuts; attempts to destroy and demonise GetUp, the noisy Australians’ advocacy group of choice; attacking whistleblowers such as Save the Children; the consistent attempts to further pressure charities into political silence – none of these happen in isolation.”

  10. wam

    the tax cut debate was due last year and I missed it?.
    Labor, shorten and plibersek were pathetic for ignoring the fact that every PAYE worker gets a tax cut when the threshold is raised. But the greedy labor pollies with $200k plus tens of thousands extra cash from unspent allowances chose to take the cash and bugger the workers earning less than $95k.
    Albo cannot back away and has little choice but to keep wading until he can see a place to circle the wagons and fight.

    The disingenuous use of ‘pensioner’ in redeeming may be a chink and the franking credits may arise?????

    ”’

  11. Claudio Pompili

    Jack Cade: I’ve been a Labor voter since the late 60s but bipartisanship support for the LNP stage 3 tax cuts was a red line.

    I’ve been watching with increasing concern over the decades as Labor either shifted or capitulated completely to the Right. Labor’s obsession to small-target strategy is a cowardly and lazy capitulation in place of tough policy development and concerted argument. The rot went up a quantum with the Hawke/Keating embrace of neo-liberalism and the Accords. So too they began mandatory detention, moving on to bipartisanship on foreign affairs and all-things national security, to name just a few. And the constant appeasement and accommodations to the ALP Right and the LNP with the ready caveat that ‘once we’re in power, we’ll rescind the worst bits’. Yeah, right, like the ALP rescinded the NT Intervention and cashless welfare card, or raising the age pension or Newstart. I call it BS. The light on the hill went out long ago and many like me have been deluding ourselves. This is not the workers’ party that I grew up with of Caldwell and Whitlam.

    I’ve resigned my Labor membership and joined the Greens. I will not be secondary preferencing the ALP any longer. They are dead to me. Australia has become a fascist, US vassal state, with the most draconian security legislation in the world, aided and abetted by the ALP. Policy wise there’s very little difference to me at this end of life. At least I’ll head into the sunset voting for a party that better reflects my values. Good luck and thanks for all the fish.

  12. Geoff Andrews

    Stephen Tardrew,
    I empathise with your frustration, which is ill- directed at the majority of readers of AIMN (“You folks are your own worst enemy and articles like this are equally as foolish”).
    I have trouble trying to explain what I consider to be the principles of MMT to disbelieving friends (it is, after all, a counter intuitive concept).
    On the other hand, you imply you have achieved success; allowing you to sneer at our foolish irrelevance; keyboard warriors in a frenzied Brownian Movement bouncing off the walls of the echo chamber.
    What’s the secret? Letters to the editors? Trolling right wing sites? Simultaneous membership of all political parties? Trolling left wing sites!!?

  13. Matters Not

    Claudio Pompili, while I agree with much of what you say, could you unpack the statement that you:

    will not be secondary preferencing the ALP any longer.

    Given that valid votes, ultimately, flow to either of two major parties (in the vast majority of instances) – have you decided where your effective vote will eventually reside? And why?

    Thanking you in anticipation.

  14. Nedi

    Ive voted greens state and fed since 2003. The only opposition left is the two greens senate seats Vs Libour Goliath who are one of the same on tax cuts. Gillard had a chance to end Work for the dole and mutual ob but didnt so lost my swing vote.

    The fact that the majority of Australians have been taught to hate Aistralians who are have to volunteer 15 hours a week for 6 months of the year just to live 40 percent below poverty line on Newstart shows how evil Australian society has become all pronoted by Camberra. Yet none of theae so called hard working Australians would do Hard work free volunteering for six months of the year every year as the mean and grasping for themselves types who vote LNP.

  15. Blair

    until we fix the Media ownership laws, the Australian public will be lied to by the Conservative press and every lie the Librats come up with will be embraced and promoted
    Death Tax anyone?

  16. wam

    hahaha what a giggle from the loonies.
    Neddy Tthe seagoon the swinging swinger remembers gillard, with a minority in both houses and the green boys blackmailing and threatening to vote for no confidence, on one side and rudd’s nasties on the other with the bobby brown’s rabbott up her arse, for NOT doing something rather than the 100s of things she accomplished with the help of two CONSERVATIVES.

    The meridionale thinks we should be a caldwell, born in the 19 century and like shorten led for 6 years defeating nobody
    or
    a whitlam, born 1916 did wonders in a three years then was unjustly dumped and cruelly vilified ever since. His name is a rallying point for conservative success. Gillard’s name has suffered the same cruel vilification but labor people are too frightened to laud a woman.

    Sorry boys all you are doing is falling for the three card trick and giving your cash to a boy’s band. Might be too harsh as it is only a couple of months since the election too early for the women just dibrankim?

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