Towards a new social democracy

Big cuts in government spending as proposed by the Rudd Government with its 2 per cent spending rule and promise not to increase the tax burden as a percentage of gross domestic product above what it inherited in 2007 will certainly strain its claim to traditional social democracy in the next Parliament.

A better approach would be to accept that some increase in spending as a per cent of gross domestic product is needed above 2007 levels but that tax reform requires an efficient means for raising revenue and the most efficient means is to use consumption taxes.

However, unlike the failure of the Howard government, social democrats should accept that beneficial tax and wages policy reform can disadvantage low paid working families.

Better to accept this and use progressive taxation as compensation, than to devise workplace laws that might generate more income for those with work, but through cost pressures on business, then make it harder for those without work to get it.

There is a new social democrat waiting in the wings: one that has no strong ties to organised labour but is deeply committed to social mobility. That new social democrat will have its turn. It will be bold, new and different.

Let’s consign the shibboleths and move towards it.