By Denis Bright
For the first time in generations, issues about social class are intruding into the 2016 election agenda. Barnaby Joyce made an unintended contribution to the politics of class in his assessment of Bill Shorten in a RN Breakfast interview with Fran Kelly:
People are going to have a clear choice between someone who’s actually made a quid in their life, made a success in their life, which is Malcolm Turnbull, or the nation being run by Bill Shorten (RN Breakfast 19 April 2016).
Class is a most sensitive issue on both sides of the Australian political divide. LNP insiders promote the notion that the income divide is of very little significance. Labor strategists fear that greater proactive support for lower income voters might produce a backlash from more middle income sections of the electorate.
More of the electorate still wants to incur higher private debt to sample middle income consumer and modernist values. Further up the social ladder, wealthy parents might always assist with their children’s first home according to Prime Minister Turnbull as a market solution to the old problem of housing affordability.
Dennis Shanahan of The Australian is aggrieved by the return of the class divide in political discussion.
Shorten further pursued the comments Turnbull made on the program about wealthy parents buying homes for their children by asking: “Can the Prime Minister confirm that in the past two weeks his advice to young Australians struggling to buy their first home is to have rich parents or to have parents who buy you a home when you turn one? Prime Minister, just how out of touch are you?”
Realising Labor’s basic attack would be over fairness and the lack of tax relief for those earning under $80,000 while those earning more — including MPs — would get $6 a week, Turnbull tried to deflate the attacks on him and the budget by declaring Labor was using the politics of envy.
“Labor is setting itself up for a war on business; they are setting themselves up for some kind of class war,” he told ABC Radio National. “They are arguing that people who earn $80,000 a year are rich. Labor doesn’t want them to benefit from a tax cut. Labor presumably would like them to go into the second-top tax bracket. Now that’s the type of war of envy, the politics of envy, which absolutely stands in the way of aspiration and enterprise and growth.”
After being asked twice in parliament about being out of touch, Turnbull picked up his earlier theme and said Labor was “sneering at aspiration” and conducting “a political war they wanted to foment against aspiration” (The Australian Online 5 May 2016).
Similar remarks are made by Treasurer Scott Morrison in criticism of the politics of envy.
Such protocols against discussion of the income divide within Australia are now a feature of the communication spin of conservative parties around the world. There is a universal commitment within Thatcherite ideology to the possibility that wealth generated by privileged sections of the population will trickle down in a more equitable manner to enable everyone to enjoy the political participation of quiet consumption.
Research commissioned by the ILO shows that this trickle down dream does not occur without proactive government policies and trade union campaigns for greater social justice.
In Australia’s now largely non-unionized workforce, annual wages growth of 2.1 per cent is the lowest since the ABS commenced systematically recording the trends in 1998. However, cost of living increases for big ticket items such as housing repayment costs and rents have rising exponentially.
A tamer trade union movement would of course moderate wages growth in the future and the social wage which has assisted with child-care and access to health and medical services.
Fears about job security force many middle income workers to extend their working days until the day’s jobs are completed. There is always the hope of future career rewards from this workplace loyalty.
Only in the unionized segments of the workforce retain genuine bargaining rights on both industrial and social issues.
With income divides on the increase, ANUpoll (2015) on social class shows that Australians are increasingly aware of the income divide in society despite social pressures to identify with mainstream values. On the Gini Coefficient of income inequality, Australia is still well short of the US income divide although the federal LNP has its sights on that social model.
Surprisingly, over 40 per cent of Australians identify as working class in the ANUpoll. Many LNP federal members represent electorates with disadvantaged postcodes. Like conservative parties worldwide, the LNP had replaced commitment to social market values with social conservatism that is linked to populist appears against welfare recipients, trade union power and border protection.
The proposed Prepare-Trial-Hire (PATH) Programme is a fundamental challenge to the remnants of Australia’s social market traditions and it offers interns wage rates of $4 per hour during their internship period.
Coyness about discussing the growing income divide in Australian society has also been lessened by blatant discrimination in the federal budget about income tax relief for lower and middle income families.
Bill Shorten’s blunt assessment of this situation was well covered in his Address in Reply Speech on 5 May 2016:
A working Mum on $65,000 with two kids in high-school will be over $4,700 worse off, every year.
And someone on a million dollars, will be almost $17,000 better off every year.
Three quarters of Australian workers won’t receive any tax relief from this Budget but will disproportionately suffer from cuts to schools, hospitals, Medicare and family support they count on.
The most entrenched forms of discrimination against lower income families is embedded in the rise of middle and higher income welfare which became a feature of the Howard Years. Enough taxation was generated by the economic growth from the resources boom to fund these excesses.
Forecasting revenue from the mining boom would increase for decades, the Coalition Government, from the early 2000s, created this second welfare system which involves a range of transfer payments, tax concessions and subsidies which have tended to enhance artificial markets in housing, superannuation, healthcare and education.
The second welfare system now costs more than the traditional welfare system and it is growing quickly, through a double compounding process, as both the number of recipients and the cost per recipient has increased.
Following the GFC and the collapse of the mining boom, the Budget has fallen into deficit – revenue from income and company tax has continued to be constrained (as revenue from exports of unprocessed commodities have fallen short of forecasts) while the costs of the traditional and second welfare systems have risen.
The Abbott government failed to remedy the Budget deficit because its first budget, while placing a temporary levy on higher income groups, concentrated on trying to reduce expenditure on the traditional welfare system – while leaving the second welfare system untouched. There was a perception of unfairness that has been seized upon in Bill Shorten’s current election campaign strategies.
Favouritism by the LNP towards its own support base was qualified in 2016 by placing limits on transfers from taxable income to higher income superannuation. In return, there was some compensation in the 2016 budget for higher income earners.
It is reinforcement by quasi-legal income alienation mechanisms through the misuse of family trusts, formation of family companies and resort to offshore overseas management funds as identified in the Panama Papers.
In this week’s election campaign, the LNP has been desperately trying to shift its campaign agenda back to the populist issues of terrorism and asylum seekers which sustained the Howard Government in 2001 and 2004.
However, the mining boom is now over and the harsher realities of the income divide are being reflected in the polling from Research Polling over the fortnight to 17 May 2016.
Labor’s problem is still the drift of the protest vote to minor parties which still account for 20% of the intended voting preferences.
Political risks must be taken to open up Labor’s slender lead which is still dependent on the favourable drift of preferences from the minor parties including the Greens, the NXP Party in South Australia and Putting Tasmania First.
The most interesting feature of Essential Research is the strength of the class divide which parallels the income divide across Australian society after the resources boom.
While Malcolm Turnbull is perceived as an affable enough and thoughtful leader, his LNP Party is increasingly associated with political elitism by a vast majority of Labor, Green and Independent voters.
Bill Shorten’s commitment to the pragmatic renewal of the Labor Party as the consensus-builder from the progressive centre of Australian politics still needs to lift Labor’s primary vote to above 40 per cent. Having 20-25 per cent of the non-LNP vote, syphoned off to minor parties could easily produce a repeat of the 2010 result which denies the Labor Party a mandate to govern in its own right.
In the ANUpoll, the ALP still has a credibility problem in reaching out to progressive sections of the electorate although this situation has improved since April 2013.
With the ghosts of the 2001 and 2004 elections poised to be directed by the LNP against a resurgent Labor Party, it is worthwhile to emphasise the impact of LNP policies on the future income divide in Australia. Any lingering protest vote that puts the LNP ahead of Labor threatens the formation of a stable Shorten Government with a majority in the House of Representatives of 2007 proportions.
