How to improve social wages with tax reform: Labor’s mission

Former NSW Labor Premier Kristina Keneally has argued recently that Labor needs to ‘get back to basics’. This doesn’t have to mean dropping a price on carbon or forgetting the rights of minorities. But to actually deliver on cost-of-living pressures before the 2013 federal election, as well as desperately-needed programs for the vulnerable, would require a significant ongoing public investment. The next two years offer the Labor Party the opportunity of delivering real reform, thus reviving Labor’s electoral and organisational fortunes.

The recent tax summit had all manner of people arguing that the wealthy ought pay more tax. Through tax reform, restructuring and the closing of loopholes (including unfair superannuation concessions for the rich) Labor should aim to expand annual social expenditure by at least 1.5 per cent of GDP over the next two years - a little short of  $20 billion in today’s terms (in the context of an economy valued at approximately $1.2 t rillion). But this would require a change in the ALP Platform at the Party’s next National Conference, due in December 2011.

Already Labor Senator Penny Wong has warned that with rising pension, health care and aged care demands the Australian government could be “tens of billions of dollars short by 2050”. Meanwhile the National Disability Insurance Scheme (NDIS), if implemented in the near future, in today’s terms would come at an annual $6.5 billion price tag. And yet legitimate demands for cost-of-living relief, for fairer pensions, higher quality aged care and improved disability support and services loom immediately ‘in the here and now’.

Speaking recently to Paul Versteege from the Combined Pensioners and Superannuants Association (CPSA) I was told that “nursing homes are like warehouses for old people.” Now I was already under this impression but I felt it to be a very powerful and accurate metaphor. Usually there is little to do for residents in nursing homes. Even in ‘common rooms’ residents are simply sat down to stare at walls hour after hour, day after day. There is no variety in life, no change of scenery.  Usually these facilties are stark, there are no gardens in which to find peace and comfort.

Many of our aged citizens spend years in these facilities, years of acute suffering admist death and awaiting death. Often there is a lack of qualified staff, especially nurses. This means residents can acquire bed sores if not turned at the necessary intervals, and sometimes residents can be left in soiled beds. Food is often of poor quality, and low staff-resident ratios mean that aged care workers do not always check to ensure residents have actually eaten their meals. Malnutrition and weight-loss can compound each other in a ‘downward spiral’. In the past lack of dental care has led to infections and even death. In the future access to information technology will be crucial. 

The indignity and suffering of the aged deserves much more attention than it is receiving. An ageing population will demand an increse in funding. But we also need to improve services now, not just ‘tread water’. Crucially, many of us that live to old age will one day need aged care. And so will our families and loved ones.

It is essential that we move away from user pays models in aged care. Despite claims to the contrary the Gillard Labor governemnt is still effectively demanding that aged Australians sell their homes in return for sub-standard care. The mechanism operates like a massive regressive tax. We need to ensure that all aged Australians receive the same very high quality of care on the basis of need and regardless of wealth. And such high-quality universal aged care must be funded progressively, not through what the Combined Pensioners and Superannuant’s Association calls a “pre-death death tax”.

Meanwhile there is some hope on the disability support and services front with Julia Gillard’s annoucement earlier this year of the government’s intent to implement the NDIS. Crikey reports that the scheme will offer “financial cover for services including for respite care, vehicle modification, accommodation support, therapies and prosthetics,” It is “expected to cost the government an extra $6.5 billion a year.”

And yet while the Productivity Commission suggested a 2014 implementation it is not certain that the government will meet this time-frame, with some suggesting a delay of seven to eight years. This simply is not good enough. Properly a NDIS should also involve construction of dedicated care facilities for the disabled who require intensive care so they are not left in aged care facilities in which they are isolated and do not ‘feel at home’.

But importantly the needs of the aged are just as desperate as those of the disabled and their carers. If there is $6.5 billion in additional funds that will be devoted to a NDIS then surely a similar amount must be devoted to improving the quality of Aged Care, supporting carers and removing user-pays mechanisms for poor and working class families. The government could begin with an annual $5 billion injection with more ‘in the works’ for the future.

Then, of course, there is the question: Where is the money coming from?

There could be progressive levies for the proposed NDIS and for aged care – or maybe some kind of single shared levy. And perhaps some of the funding gap could also be met with progressive reform and restructure of income tax. Venture capitalist Mark Carnegie thinks the wealthy (including himself) need to pay their ‘fair share’. Specifically he has suggested at the recent tax forum that 15 per cent extra in tax ought be levied from the wealthy top 15 per cent. Yet Assistant Treasurer Bill Shorten has dampened expectations claiming such measures would be unlikely to be implemented.