The following is an edited extract from the new book Northern Lights: The Positive Policy Example of Sweden, Finland, Denmark and Norway, by Andrew Scott. The book has just been published by Monash University Publishing. Andrew will be in Sydney this Wednesday, 3 December to discuss his book. The event details are here: http://cpd.org.au/2014/11/book-launch-northern-lights/
Sydney academic Dr Shaun Wilson, in an incisive recent article which fully faces the electoral difficulties of seeking increased taxation in the realities of Australian politics, nevertheless shows clearly that the ‘low-tax social democracy’ approach which the ALP has endeavoured to take since the time of the Whitlam Government ‘has limited redistributive potential’ and ‘has reached its fiscal and political limits’. He also reports on ‘research into public opinion’ in order ‘to identify opportunities…available to governments as they attempt to finance welfare’ in Australia. He finds that, when asked to choose between reducing taxes or spending more on social services, 60 per cent of voters prefer spending, compared with 37 per cent who prefer tax cuts. This reflects concerns about the way Australia’s social infrastructure has been running down, to the detriment of future generations. The data indicates ‘strong support (60 per cent) for greater taxation of all three types of large businesses: carbon polluters, mining companies and banks’, as part of a ‘voter inclination to tax super profits.
Norway’s Labour Party when elected to government in the early 1970s, with support from public servants, established substantial taxation of the international oil companies which came to drill in Norway’s new North Sea oilfields. It also successfully created Statoil, a national, publicly owned oil company which took a 50 per cent ownership share of all new oilfields. These policies were similar to the visionary policies which Gough Whitlam’s Labor government pursued in Australia then. In Norway, however, these policies were continued, rather than interrupted: and they have helped Norway to become one of the wealthiest and most equal nations in the world.
Today, the still majority government-owned Statoil continues to play a crucial and efficient part in Norway’s participation in the international energy industry, in a way that brings rewards to Norwegian society. The proceeds from Norway’s taxation and regulation of resource wealth contribute to the continuation of another visionary Whitlam Government policy which too many people in Australia have come to regard as unrealistic and needing to be discarded since the 1970s but which in Norway remains entirely affordable: free university education.
Former Treasury Secretary Ken Henry has made clear the need to now increase taxation in Australia. He has said that both major political parties in Australia need to face up to the fact that they cannot deliver new services, and a budget surplus, without any increased taxes. If they do not face up to this reality, he says, then governments will have to keep cutting spending as a ‘permanent process’. Australia instead needs to ‘improve the tax system so it’s capable of producing more revenue with minimal economic damage’, he says; and, as part of that, it will still ‘need to find ways to apply higher rates of tax to natural resources including mineral resources.'
Australian political leaders must therefore stop focusing on cutting government spending and start focusing on fair ways to increase government revenue to fund vitally needed new social programs. These include both expanded public childcare AND more extensive, broadly-based paid parental leave like there is in the Nordic nations.
It is essential in Australia that discussions of current policy proposals for paid parental leave are based on the merits of the proposals, and are not side-tracked by the personalities involved or by easy, inaccurate prejudices about the proposed beneficiaries of the policy (parents and children) being undeserving unless they are very poor. It was precisely prejudices like these which led to the disastrous reversal from 1988 of Gough Whitlam’s visionary, universalist policy for free university education. We must not miss the unique opportunity there now is in Australia to extend paid parental leave in a way which will give as many parents as possible the time they need in the vital first six months and more of their children’s lives, to give those children the best possible start in life.