Although the coming election campaign has only just been announced, a “phoney war” has been long brewing, with the ALP and Coalition seeking to match each other, especially in the portfolio of health. Despite this, however, it seems that both parties have seemed intent on “keeping their powder dry” in anticipation of the “real war”.
Rudd’s much vaunted “education revolution”, for instance, is yet to truly emerge, with little in the way of additional funding being allowed for to provide a “big picture” alternative vision for education and training.
The following survey of options is an attempt to sketch a policy blueprint that seeks to meaningfully expand social expenditure and reform taxation while maintaining Labor’s commitment to holding taxes down as a proportion of GDP - at least until the next ALP National Conference.
For a political party to move in contravention of its mandate would be a bad precedent to set - had the major parties not so flagrantly broken with their mandate so many times before. Tax cuts, for instance, are routinely embraced with abandon by both major parties regardless of any platform, and regardless of the consequences of austerity that follow.
To expand the overall tax base by approximately 1 per cent of GDP - or somewhere over $10 billion - following the next ALP National Conference could be seen as a modest and necessary measure in implementing vital and landmark health and welfare reform. This, we must remember, is in the broader context of an economy of well over $1 trillion. While this would move beyond Labor’s mandate, the demands of health and welfare reform are crucial and immediate.
Also, while there is only minimal scope to expand taxation as a proportion of GDP, this is not to say that the overall tax system cannot be radically restructured so as to render it far more progressive.
While bracket creep could be eliminated for those on lower incomes by indexing the bottom two tax scales, the process could be left in the case of those on higher incomes, with the revenue thus gained flowing through into progressive tax cuts. Proceeds from bracket creep, eliminating negative gearing and halving dividend imputation could thus be redirected.
The tax free threshold could be raised, while full pensions (Aged Pension, Disability Support Pension, Single Parents Pension, Carer’s Allowance, Newstart, Austudy) would be raised by about 5 per cent of average weekly earnings - or marginally over $100 a fortnight. In the same spirit, means tests on pensions could be further relaxed.
Such a move may seem radical, but petrol, transport, water and energy are all key fields where the cost of living for ordinary Australians has, for some time, been spiraling out of control.
The Disability Support Pension, in particular, ought to be expanded by at least an additional $50 a week: to counter previous austerity measures introduced by the conservatives.
Revenue gained through the abolition of negative gearing could also be redirected into rent assistance for those on lower incomes.
Increases in the basic cost of living for ordinary Australians also underline the need to more thoroughly regulate the lower end of the labour market. Labor’s “simplified” award system could do with more “muscle” - especially for the most vulnerable of workers.
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