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Labor must ask serious questions on policy and values

By Tristan Ewins - posted Tuesday, 22 October 2019

Labor has been saying relatively little on policy since its defeat at the hands of the Morrison Government. Many are saying Labor's 'move to the Left' was the problem. In that process other problems are being neglected. The Coalition tax scare campaign, including on a non-existent 'death tax'; Shorten's wooden performance in the final days; failure to build a strong enough 'central narrative'; confusion on Dividend Imputation franking credits and the failure to means test any measures there instead of applying the same rules to everyone.

Also Clive Palmer's $60 million intervention - dwarfing the monetary resources of both parties - changed everything and channelled preferences to the Conservatives. Shorten also failed to sell the progressive tax reform message and avoided the issue when given the opportunity to 'take it up to Morrison' in a Leader's Debate - for example refusing to engage on Morrison's example of a very-high-wage workers' tax rising by 2%(!) under Labor.

Expanding social goods and services necessitates progressive tax - asking more of high income earners - and that definitely includes the top 10 per cent, maybe even the top 20 per cent.


Those in lower brackets need to contribute too based on ability to pay, but would receive much more in return. Those in the lowest brackets may even receive indexed tax cuts. Overall, Income Tax needs to be radically restructured overall and then the lower brackets indexed to prevent the erosive effect of bracket creep. Tax indexation can prevent 'a flat tax by stealth' via such selective exploitation of bracket creep.

In the big picture, though, Shorten led a united team and developed some very good policy during his years in the leadership. His modestly reformist policies have widely been portrayed as a 'lurch to the Left', that illustrating well the relative right-wards shift in Australian politics where anything in the way of meaningful reform faces that kind of accusation.

But the Coalition's massively irresponsible policy of tax cuts for the well-off, amounting to $160 billion over the first 10 yearsand much more proportionately over the longer term as 'phase three' kicks in, puts the onus on Labor to mount a response.

We know we have an ageing population. For the Left at least, we know tougher means tests, a higher age of retirement, failure of benefits to keep up with a rising cost of living and respond to the need to extend pensions more broadly should be unacceptable. Undermining the tax base is the road to a US-Style and strongly class-divided economy and welfare state.

An ageing population will also mean more stress on the health system and the correct response is to support citizens in need rather than adhering to some arbitrary 'tax ceiling' which can only respond with harmful austerity. Medicare Dental remains an essential policy for Labor to embrace and campaign on vigorously.

To his credit, Albanese has come out against attacks and stigma against the unemployed. But we need more. Raise Newstart by at least $75 a week. Apply active industry policies aimed at creating job opportunities for 'at risk' and vulnerable groups, not only the young unemployed, but especially the older unemployed and the disabled – including the mentally ill.

Highly educated older job-seekers are being forced to drop their qualifications from their resumes to be 'more attractive' for cleaning jobs and the like. Meanwhile, while many look down on the cleaning profession it does involve skills, and it is hard work. There is cause to reform the Award in these and other fields – for example Aged Care and Child Care. But where the market will not bear this we need government subsidies. Importantly, many of these areas are highly feminised.

Denmarkprovides an example in a sense. That is with their active industry policies which seek development of 'sunrise industries' that make use of the skill sets from 'sunset industries', mixed with retraining. The policies are expensive: but the gains from labour market participation more than make up for that.


In that process we need to review the NAIRU – or non-accelerating inflation rate of unemployment – which supports a 'buffer of unemployment', commonly in the vicinity of 5 per cent, to contain the bargaining power of workers and avoid wage inflation. Hence there are always many more people looking for work than there are jobs – and yet still the unemployed face stigma.

Instead we need to look to fiscal policy to contain inflation and to seek co-operation with trade unions in, for example, accepting higher taxes on high wage workers in return for expansion of social goods and services and defence of industrial rights. This would be applied after the Swedish model rather than the Accord – which at the end of the day failed to deliver to workers sufficiently in return for wage restraint. Full employment makes a massive difference to the Budget and the broader economy if it can be sustained.

In short, Labor needs to take action to raise the status of some of our most exploited professions – while reforming the tax base and making social wage, social insurance, collective consumption, and welfare state expansion possible.

Let's explain these one by one to get some sense of what is meant.

'Social Wage' refers to the recognition that not everyone receives wage justice. And sometimes it is more effective to receive the proceeds of wages collectively to maximise the collective, and individual, benefit. as in the cases of public health and education. Corporate Taxation also factors in here as the corporates benefit from a healthy and skilled workforce.

'Social Insurance' refers to public-funded insurance against contingencies like unemployment, ill-health or disability via the tax system – which covers everyone. After all, it could happen to any one of us or our loved ones.

'Collective consumption' refers to when 'the people' get a better deal by consuming collectively via tax rather than as isolated consumers, so leaving individuals with more money to spend at their discretion in other areas at the end of the day.

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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.

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