The end of the Greens?

It would be simplistic to dismiss the Australian Greens as a dangerous political force, as suggested by Janet Albrechtsen when declaring the party to be “anti-free trade, anti-capitalism, anti-wealth and anti-growth”?

After all, nearly 12 per cent of Australian voters gave their primary vote to the Greens in the House of Representatives election in 2010, along with 13 per cent in the Senate.

Further, despite the Greens barely increasing its primary vote at the recent Victorian state election (just over 10 per cent), a recent Morgan Poll of four Victorian state seats (Richmond, Brunswick, Northcote and Melbourne) indicates reasons for that party’s significant support in inner Melbourne. The Greens were perceived to be most likely to do more about public transport (40.5 per cent), water conservation (58.5 per cent), and make decisions based on honesty, principle, openness and integrity (about 44 per cent). And the Greens were also challenging the major parties on important social welfare issues scoring about 20-22 per cent as the best party for health, education and living costs (including utility bills).

The Greens may have significant future appeal for good reasons, although two to three years of Coalition government in Victoria and New South Wales may be enough to reinvigorate Labor’s appeal federally, depending on just how savage budget cuts are at the state level.

First, while Treasury estimates that the mining industry is planning an extra $55 billion of investment in 2011-12 mainly in liquefied natural gas and iron ore, five times the pre-boom level, such a development is galvanising new political opportunities as co-operation emerges between farmers, scientists, environmentalists and even industry representatives. With a possible 40,000 gas wells in the Surat and Bowen Basins of Queensland over the next few decades, many are concerned about the long-term impact on the environment of the extraction process upon water and soil through salinity and chemical contamination.

Second, despite some economic commentators expressing concern at rising wages, with Fair Work Australia's 4.8 per cent minimum award wage rise from July 1 contributing to an accelerated 1.4 per cent September quarter rise in the wage price index, political opportunity could be created by government trying to keep wages low at a time when a growing minority is struggling. Again, Reserve Bank data indicates that the non-farm wages share of factor income again decreased to 53.2 per cent by June 2010 after being 55.1 per cent in March 2008 (67.3 per cent in September 1974).

When it comes to many issues, a substantial minority may have ample reason to lodge their protest vote via the Greens.

In regards to taxation reform, Gary Johns offers some sound reasons why Labor should adopt a flatter income tax proposal, despite 5.5 million people earning between $40,000 and $90,000 being worse off by about $200 to $500 a year and those earning about $80,000 losing about $500. If implemented, fewer Australians would need a tax agent (presently 75 per cent use a tax agent which is one of the highest levels in the OECD). Lower effective marginal tax rates would also reduce the proportion of income lost to taxes through the withdrawal of welfare transfers, which could help boost the workforce participation rate of Australian men aged 25 to 54 (currently below the OECD average).

But again, at a time when considerable attention is given to the need for more public resources for Australia’s mental and dental health systems alone, it remains to be seen just how enough revenue can be raised to meet a variety of old and new policy needs.

Hence, those inclined to look to higher taxation levels may indeed find their best hope in the Greens. The Greens propose to reduce tax breaks for high income earners; abolish the 30 per cent Private Health Insurance Rebate; tax family trusts in the same way as companies; introduce a top marginal tax rate of 50 per cent on incomes of $1 million or over; implement an estate tax with full provisions to protect the family farm, the family home and small business with a threshold of $5 million as indexed from the year 2010; return the company tax rate to 33 per cent; and limit the tax deductibility for salaries and salary-related expenses for any individual employee to $1million per year.

Some of the ideas, although appearing extreme, are not that out of touch with concerns by other national governments. For instance, while federal Labor has continued to lower company taxation levels to maintain international competitiveness, besides adopting an additional mining tax, it is worth noting the efforts of various European governments in asking the Irish government lift its company tax rate from 12.5 per cent (the lowest in the developed world).

While the Greens already appeal to those adamant that an extensive emissions trading scheme or carbon tax is needed, the party will also attract significant support should a greater push come for uranium mining. This is despite Janet Albrechtsen suggesting that Labor should adopt a nuclear energy policy that “will drive a wedge between the two strands of Green voters without sacrificing support from the centre”.