Mark Latham's tax policy does not sit comfortably with Labor's heartland

While it is impossible to deny that a Crean Labor government would be fundamentally more progressive on a whole host of issues than the incumbent Conservatives, recent statements by Shadow Treasurer, Mark Latham will be close to providing “the straw that breaks the camel’s back” for many rank-and-file Labor activists, and disillusioned Labor voters.

Latham’s commitment to “tax relief” for those “struggling” on as much as $60,000-$80,000 a year has many shaking their heads in disbelief. It is enough to prompt one to consider the plight of the unemployed, the welfare-dependent, or the working poor, and their place in Latham’s “order of priorities”.

Those on Labor’s Left (and even some from its Right) will be searching their consciences in the face of proposals that can only serve to hasten the “Americanisation” of Australia’s social and economic systems. (i.e. obsession with small government and tax cuts, marginalization of the interests of workers and the poor and destruction of the welfare state).

It is not beyond imagination that at least some of those pragmatists who are advocating sweeping tax cuts actually conceive an ethical basis for their opportunism. For them, it is a matter of “harm minimization”. Organised labour and social democracy, by this reckoning, have lost the “culture war”. The only remaining option is to soften the reaction, by internalising certain of its key tenets.

For many “pragmatists”, however, opportunism has developed to such a point where even the ideological basis for “harm minimization” is totally absent. Politics is simply a matter of personal ambition, underlying interests, marketing, market-research and shallow “product differentiation”.

This, however, is to neglect a number of key concerns. To begin with, there is a growing body of evidence suggesting that Australians are willing to pay taxes that they can identify as being closely linked with spending initiatives and priorities that “are in the public interest”.

According to the Australian Council of Social Services (ACOSS): "A new analysis of Roy Morgan Research opinion poll data by ACOSS finds that the importance the public gives to taxation has halved over the past five years while concern over health and education has risen by 67 per cent and 89 per cent respectively."

Meanwhile, according to additional studies undertaken by Australian Research Consultants publicised in The Age on 17 August 2003, “75 per cent of voters, including 69 per cent of federal government supporters, would prefer more spent on hospitals and schools, rather than tax cuts.”

Where tax increases focus primarily upon “the high end of town”, therefore, Labor stands an even greater chance of building a solid constituency for reform: relentlessly pressing home the message that such reform is in the financial and social interests of the vast majority of Australian voters.

Abolition of dividend imputation, a modest carbon tax, an increase in the Medicare Levy for upper-income earners, introduction of a progressively scaled “education levy”, abolition of capital gains tax concessions, a marginal one per cent increase in company tax, the introduction of a wealth tax for millionaires, and the introduction of new PAYE tax brackets for the wealthy could, in of themselves, net more than $8 billion in new revenue.

This money could be used to:

• bring final closure to the hospital waiting-lists crisis, restoring faith in the public health system, and thus undercutting the cost of the private health insurance rebate;
• expand Medicare to include dental care, optical care, prosthetics, physio, and other vital areas of service provision;
• markedly increase support for carers to at least $120/fortnight, while providing the revenue base to provide for an aging population compassionately and equitably;
• restore equity, quality and participation in both secondary and higher education, with positive implications for investment and growth, also “heading off” the drift towards a “two-tiered”, class-based education system;
• allow boosts in pensions and the provision of targeted programs against unemployment, entrenched disadvantage and poverty;
• increase state grants, removing the impetus behind private provision of essential infrastructure such as roads, and the resultant imposition of tolls (i.e. regressive, privately-administered flat taxes); and/or
• expand quality public housing to address the generational poverty issues associated with rising property prices, and plummeting levels of home ownership.