Like what you've read?

On Line Opinion is the only Australian site where you get all sides of the story. We don't
charge, but we need your support. Hereís how you can help.

  • Advertise

    We have a monthly audience of 70,000 and advertising packages from $200 a month.

  • Volunteer

    We always need commissioning editors and sub-editors.

  • Contribute

    Got something to say? Submit an essay.


 The National Forum   Donate   Your Account   On Line Opinion   Forum   Blogs   Polling   About   
On Line Opinion logo ON LINE OPINION - Australia's e-journal of social and political debate

Subscribe!
Subscribe





On Line Opinion is a not-for-profit publication and relies on the generosity of its sponsors, editors and contributors. If you would like to help, contact us.
___________

Syndicate
RSS/XML


RSS 2.0

Hard choices for Labor - social justice and inflation

By Tristan Ewins - posted Friday, 22 February 2008


One of the most notable aspects of the recent past Federal election campaign was Labor’s swift emulation of the Coalition’s tax policy. Labor promised $34 billion in tax breaks, with much of the largesse being transferred to those on higher incomes.

The deferral of $3 billion in cuts for those on incomes of over $180,000 a year, here, is best understood as an ineffective and empty gesture.

The “simplification” of PAYG tax, with a reduction in the number of tax brackets from four to three also promises to “flatten” the system, rendering it significantly less progressive.

Advertisement

Now, in the wake of the election campaign, Labor is facing a raft of hard choices. Economic forecasters are warning of the prospect of inflation, and already official interest rates have risen once this year. It is likely that this will be the first official interest rise of many in the year ahead for the fledgling Labor government.

High rates of inflation threaten uncertainty and economic instability: providing a disincentive for savings and investment.

What is neglected, though, in popular neo-liberal responses to inflation, is a balanced assessment that takes into consideration impacts on equity, wage justice and unemployment.

There are many possible responses to inflation: including wage restraint, tax reform and austerity. Labor is also looking to respond to “capacity constraints” which can feed into a vicious cycle of inflation. Particularly, the government is looking to fund education and training: to counter skills shortages, and to invest in infrastructure: removing “infrastructure bottlenecks”.

Australians are well-justified, however, to ask whether or not Labor has “backed itself into a corner” on the issues of tax reform and inflation.

According to The Age, Labor “is looking for another $3 billion to $4 billion in cuts for the May budget, on top of the $10 billion Labor identified before the election”.

Advertisement

But while Labor Finance Minister, Lindsay Tanner rightly belittles the Coalition for its economic irresponsibility, Labor’s own culpability in raising expectations of sweeping tax cuts must be admitted. Labor now faces the inpalatable prospect of wide-ranging austerity; and of struggling families being forced “to the wall” as a result of the housing bubble and continuing interest rate hikes.

At this point, there are a number of questions that are worthy of consideration.

If demand must be reduced in order to counter inflation, surely it is better to do so through a targeted expansion in taxation, and by more severe means testing of programs such as Family Tax Benefit B and the Private Health Insurance Rebate.

  1. Pages:
  2. Page 1
  3. 2
  4. 3
  5. All


Discuss in our Forums

See what other readers are saying about this article!

Click here to read & post comments.

48 posts so far.

Share this:
reddit this reddit thisbookmark with del.icio.us Del.icio.usdigg thisseed newsvineSeed NewsvineStumbleUpon StumbleUponsubmit to propellerkwoff it

About the Author

Tristan Ewins has a PhD and is a freelance writer, qualified teacher and social commentator based in Melbourne, Australia. He is also a long-time member of the Socialist Left of the Australian Labor Party (ALP). He blogs at Left Focus, ALP Socialist Left Forum and the Movement for a Democratic Mixed Economy.
.

Other articles by this Author

All articles by Tristan Ewins

Creative Commons LicenseThis work is licensed under a Creative Commons License.

Photo of Tristan Ewins
Article Tools
Comment 48 comments
Print Printable version
Subscribe Subscribe
Email Email a friend
Advertisement

About Us Search Discuss Feedback Legals Privacy