Boost tax take to deliver social contract


The arguments being mounted for more austerity and less regulation, most conspicuously in Europe and the US but with increasing volume in Australia, say more about where the real battle lines are being drawn, writes Senator Doug Cameron.


THE CONSERVATIVE'S ATTACK on the May federal budget was remarkable. Lacking either self-awareness or irony, journalists, commentators and opposition hacks waded in with the charge that Labor is engaged in ‘class warfare’.

In the worst budget reply speech in memory, Tony Abbott said with phoney earnestness, ‘the fundamental problem with this budget is that it deliberately, coldly, calculatedly plays the class war card’. He repeated the myth of a classless Australia when he said, ‘our country has normally been free from the class struggle that’s waged elsewhere to other countries’ terrible cost’. News Limited journalists came to the same conclusion. The Business Council of Australia chief executive complained that Labor had used the budget to redistribute wealth. If only it were true!

A small redistributive nod in the direction of working people in the form of increased family tax benefits, some marginal changes to the tax scales, some early money for the NDIS and a delay to a 1 percent cut in the company tax rate hardly heralds the commencement of hostilities against the privileged elite. Particularly when these measures are accompanied by a pretty savage cut to single parent benefits.

Meanwhile, the real class war being waged against working people continues unabated. Since the onset of the global financial crisis, the frontline of the class war has been the struggle over who will pay for the failures of the market and the moral and intellectual failings of the financiers, the business elite and the political right. 

The fundamental political question for the left is whether the working class will pay with their jobs, their livelihoods, their homes, their communities and their social safety net while the ruling class responsible for the crisis keep obscene salaries, fat bonuses, tax rorts and holiday mansions. The arguments being mounted for more austerity and less regulation, most conspicuously in Europe and the US but with increasing volume in Australia, say more about where the real battle lines of class war are being drawn than Tony Abbott’s rhetoric.

The principal pressure the globalisers have brought to bear on working people has been the transfer of risk away from capital onto labour. The historic shift away from secure employment represents such a transfer. The casual worker, the part-timer who wants more work, and the dependent contractor now carry the risk when business goes bad.

The business community loves ‘small government’. As governments reduce their tax take as a proportion of GDP we are told that we should celebrate. But what we should be doing is worrying about what happens when GDP shrinks, as from time to time it inevitably does. If we tie our ability to build a good society to the delusion of unending growth, we are gambling the welfare of the most vulnerable people in our society on the risky bet that growth won’t end. A shrinking proportion of a shrinking pie won’t make ends meet. It won’t make a good society; one in which the unemployed, single parents, the sick and the disabled are free from the daily grind of poverty and social exclusion. Labor must resist transferring the risk of business incompetence onto those for whom daily life is a battle to make ends meet.

With further economic uncertainty in Europe and the US, there are calls from the ruling class for more working class austerity. The calls for a rush back to Howard era policy settings are getting louder. The Business Council wants more labour market deregulation and a lower social safety net. The big miners backed by their ‘brains trust’ at the Institute of Public Affairs want the creation of a special economic zone in the north-west – unencumbered by labour and migration laws, taxation or any of the social obligations that come with doing business in a developed, civilised, democratic nation.

What is passing for public debate on these issues is completely missing the point. Australia is the fifth lowest taxing country in the OECD and getting lower, with a tax to GDP ratio of 22 percent. The OECD average is around 30 percent. A mere 0.1 percent increase in the ratio would yield an additional $13 billion in revenue with which to build a good society. Slightly more again will fund the Gonski education reforms, the National Disability Insurance Scheme, aged care reform, childcare and the long overdue increase to Newstart to relieve the poverty of the unemployed. Labor can do these important things but first we must resolve to challenge and resist the unceasing demands for fiscal austerity. A modest increase in the tax base can deliver historic gains for working people in government services.

Labor’s best chance of winning back the votes of the 1.7 million people who have abandoned us since 2007 lies in reclaiming the political ground on which we have historically stood – that there is an important, legitimate role for government in building a good society.

The left – and I include all of the labour movement in the left – should face this challenge with the confidence that progressive politics is not a marginal concern. Progressive politics with the interests of working people at its core is mainstream politics. It is political suicide for the left to respond to challenges from the right by pitching to the right.

A majority of Australians believe we are materially better off than we were 20 years ago, but only about one in eight believe that emotional wellbeing and happiness has improved. We might be richer than ever but we are also grumpier. This is borne out in the tenor of contemporary public discussion of politics and politicians.

We need to respond to this discontent by acknowledging people’s discomfort over material prosperity having not brought universal happiness and the fact that communities and families are feeling isolated and exposed. We can do this using the tools that we have available, as well as reclaiming some of the tools of Labor’s past. 

For a start, I believe we need a new social contract built on a stable, prosperous, broad-based economy; one with full employment, decent living wages, rights at work, and a strong safety net. It would offer the promise of affordable housing and a comprehensive health system accessible by everyone. It would offer an education system underpinned by world-class public schools staffed by education professionals whose contribution to society’s wellbeing is recognised and rewarded. It would offer free higher education and vocational training for any qualified applicant. It would be about creating generous provision for disability, unemployment and retirement.

What would it say about us as a Labor Party if we fail in this task? If with all of our wealth we cannot deliver quality education, provide quality care for our elderly, provide first-class health care for all and adequate support for those who fall on hard times – then how can we pretend to provide advice to our political opponents on how they should solve these problems? The simple truth is that we can’t. They won’t solve them so we must.

Author: Doug Cameron

Doug Cameron is a Labor Senator for New South Wales.

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