The politics of tax
Howard govt - - Posted on October, 18 at 12:27 am by Ken L
The subprime minister has finally emerged from his sulk to stamp his authority on the Liberal re-election campaign.
It will be interesting to see what impact, if any, the proposed tax cuts have on the election result. Hopefully the majority of people will see the ‘plan’ for the con trick that it is and not allow it to influence their voting. I would also like to think that Labor would mount a reasoned critique of the ‘plan’ and present a genuine alternative, but I have no confidence that they will. It’s much more likely that even as I write, panic-stricken ALP apparatchiks are feverishly cobbling together a set of tax cuts for Kevin to announce by next Sunday.
The Howard Government has done many a disservice to the long-term interests of this country and one of the most damaging has been its obsession with short-termism. For Howard, tax revenue is mainly useful as a means of staying in power through judicious bribes. Sometimes these take the form of direct cash inducements like the baby bonus. Others take all sorts of forms: funding for a Tasmanian hospital, funding chaplains for schools, buying water rights from farmers and so on. They have one thing in common: they do not form part of any wider vision for the future of Australia. Every one is an expedient measure taken by Howard to buy votes.
After 11 years of this opportunistic, incoherent government, we have yet another election campaign in which Howard will try to blind the population to the awful state of public services by flying into the sun and scattering money. Incredibly, and no matter how often it is pointed out to them, large numbers of people will not understand that the cash being thrown in their direction is actually theirs, and that if the government has nothing better to do with it than give it back then why the fuck did it confiscate it in the first place??? But this rude analysis is apparently too sophisticated for Liberal supporters.
Howard and Costello’s smug complacency about how great Teh Economy is and how it’s just gonna keep going forever if only we don’t lose our nerve sits oddly beside the evidence we see every day of the collapse of basic government services. The family that died when their car fell into a hole in the road, for example, might not have agreed that the best thing to do with tax revenue was to hand it back as a bribe to vote Liberal. They might have pointed to the claim by the NSW Local Government Association that “Local councils do not have the money to maintain all of the roads that have now become their responsibility”.
Patients in the nation’s hospitals (or those in the long queues waiting to be patients) might likewise query the wisdom of handing back government revenue when the government health system is in such a dreadful condition. Likewise students in public schools and universities, passengers on public transport, citizens seeking the assistance of the police or the court system, people in trouble trying to contact Centrelink, low-income earners looking for somewhere to live or even an employer seeking advice about a proposed AWA. All these people and many more would say that public services are crying out for proper funding, and that in a rational world there would be no thought of tax cuts until essential public services were available to all.
At least the ALP is making vague noises that it wants to improve matters. The problem is that public services have been criminally run down thanks to an ideological obsession with letting the privater sector take over, plus a grubby desire to get a one-off advantage by selling public assets to provide vast amounts of cash for more short-term pork-barrelling. The task of bringing public services back to an acceptable level is therefore a very challenging one. It will take more than commitments to allocate money to the problems as short-term fixes (indeed Howard’s mob have demonstrated how hard it sometimes is even to find ways to spend the money allocated to worthwhile purposes unless there is some proper overall program).
An example is Labor’s promise to spend $2.5 billion on roads in South East Queensland. It sounds wonderful but exactly how do they propose to spend the money? The public sector no longer has the capacity to do this kind of work directly - governments of both political persuasions dismantled the old departments of main roads and public works years ago. All they can do now is invite the private sector to tender for projects. And as they will quickly learn, globalisation means that construction contractors will compare the potential profits from work in SE Queensland against the potential profits from work in Indonesia or China or the Middle East. Local government likewise will learn that it’s hard to find contractors willing to work for the local council when they could be making the big bucks doing a nice subdivision foir a private developer.
Another example is Labor’s intention to offer nurses who have left the profession a bribe to return. What is the sense in this? The transaction costs of recruiting and appointing these people will exceed the cost of the bribes, not to mention the costs incurred when they left (presumably to take up more rewarding jobs in the private sector). Would it not make more sense to pay nurses an attractive salary in the first place, so they were not inclined to leave? But this simple logic seems to escape both sides of politics; they are simultaneously terrified of appearing to pander to public servants and keen to save public sector wages so they’ve got money to devote to electoral bribes.
Wouldn’t it be nice to have an election campaign where a government ran on its record - not of record house prices and record consumer spending and record indebtedness, but its record of providing basic public services in an efficient and effective manner?
The late, great economist and diplomat John Kenneth Galbraith coined the expression ‘private wealth and public squalor’. He was writing about the United States of the 1950s, but nothing there has changed very much since. One has to look no further than the continuing nightmare of New Orleans to see that. It’s a description that is increasingly apt for Australia, helped along by Howard’s confessed aim to make Australia just like a little USA. This election’s discussion of tax and public spending offers Labor the opportunity to articulate a genuinely alternative vison for the future of our country, but I won’t hold my breath waiting for it to happen.
Posted in Howard govt |
October 18th, 2007 at 7:23 am
Beautifully written, heartfelt, cogent piece. Every word truer than true. Thanks.
October 18th, 2007 at 7:37 am
Great post Ken, nailed it in a couple of paras.
“Would it not make more sense to pay nurses an attractive salary in the first place, so they were not inclined to leave?”
The $6000 bribe to return to work is disgusting. The same degrading ploy as paying mothers to have children. If I were a trained professional nurse I would be insulted by this base bribery (why 6K, why not 3K, how about 10K?).
Why not just offer to pay nurses a decent salary with decent work hours? Because the Liberal Party would point and scream Unions Boo! Or even Communists, be very afraid! Tragic really, but we have to accept that Howard has set the rules and Rudd must play, however puerile and pathetic.
However, the ALP should also consider running some ads with a bunch of ordinary people standing up and saying one after the other: I’m a nurse, and I am a trade unionist. I am a teacher, and I am trade unionist. I am a firefighter, and I am a trade unionist. etc etc. The Spartacus defence.
BTW, Julia Gillard put on a stunning performance on Lateline last night. Go Julia.
October 18th, 2007 at 8:38 am
Yes and he was elected each time.
Let’s hope that if elected K. Rudd has the will and intentions of setting us back in the direction we should be in. That is, that the government is allowed to spend our taxes for infrastructure required and necessary, also continue to maintain that infrastructure.
October 18th, 2007 at 9:07 am
Ken Davidson wrote a good piece in the Age this morning re the fakery involved in the tax cuts.
October 18th, 2007 at 10:20 am
It’s all a very short-sighted vision, isn’t it? Let’s throw money at politically popular highway upgrades without looking at the fact that transport is responsible for around 30% of GHG emissions. The Coalition and Labor’s promises to fund highway upgrades and new tunnels in Queensland runs counter to just about any claim they could make about how serious they are about climate change.
A fraction of that $34 billion could go to each capital city in Australia to help fund brand new public transport infrastructure. Light rail in Brisbane, new heavy rail and ticketing integration (and rationalisation) in Sydney, an extension of Melbourne’s tram network. Putting the money in to a long term solution which fights not only congestion but climate change is surely the responsible thing to do.
Then there’s also the case of the broadband network which the Howard government wants the private sector to build and control. What ever happened to the idea that the government owns and provides a service while contracting out the maintenance and other small details? Privatisation and Public-Private Partnerships have led companies like Macquarie to make an absolute killing providing infrastructure that should be provided by the government.
October 18th, 2007 at 11:01 am
There is no need for any government to waste money on infrastructure. We have in our midst an admirable mechanism for our infrastructure needs. It’s called “big business”, and the Libs know just how to ensure that “big business” makes money out of it. Ever heard if such icons as “Macquarie Infrastructure Fund”, a division of Macquarie Bank.
It makes us wonder what our taxes actually get spent on.
October 18th, 2007 at 2:18 pm
“why the fuck did it confiscate it in the first place???”
Elementary my dear Ken. Progressive income tax scales coupled with a profligate Reserve Bank. What are you suggesting? An LDP 30/30 flat tax?
October 18th, 2007 at 2:41 pm
What I’d like to see the ALP do is introduce indexation on the tax brackets to eliminate CPI related bracket creep and then look at removing some of the stupid inefficiencies we have in the tax system.
October 18th, 2007 at 3:53 pm
I think you are being unfair to JWH.
His taxation policy is part of a wider vision for the future of Australia-
Making sure the right kind of people do well.
October 18th, 2007 at 4:22 pm
“..introduce indexation on the tax brackets to eliminate CPI related bracket creep”
Aint gunna happen Dave. The Fraser (Razor?) govt introduced indexation after the Whitlam period and record inflation, but quickly abandoned it again (after only a couple of Budgets as I recall) because it imposed too much fiscal discipline and you never got any grudging kudos from the punters for handing out tax cuts…err bracket creep. That is one task pollies will never give up now. Can you blame them?
October 18th, 2007 at 10:10 pm
btw, that’s a truly scarifying photo. Who took it and where was it published? I can’t say I’ve ever paid very close attention to Herr Costello. He gives me nightmares even in broad daylight. And with the most cursory glance.
October 18th, 2007 at 10:15 pm
Is his name Peter or Damian?
October 18th, 2007 at 11:56 pm
Could not have said it better myself - great stuff Ken.
October 19th, 2007 at 12:41 am
You’ve come up w/ the goods Ken, unlike Costello…brilliant piece.
Whenever we get a tax cut from this fella we always firmly secure the house, triple check the locks, tell the cats to “be ever vigilant, watch out for intruders!”…
but no matter how seriously we take our security, ‘SantaGrinch’ Costello always manages to find a way in & pinch the money back he handed out via the budget. With this sneaky ‘compassionate conservative’ Treasurer it’s “give w/ one hand & take back w/ the other.”
You know you’ve been robbed when you hear Sleigh bells ringing in the black void of the night, accompanied by insane cackling, as he races off w/ your treasure, up to the chilly heights of Corporate Welfare Mountain.
I know traumatised public hospital staff who walk around in a daze, wondering what hit them…”one moment we had the equipment we needed, doctors & nurses in abundance…the next this…this…grinning freak dressed in a Santa outfit…on a cheap & nasty sleigh…all covered in Corporate advertising…it raced thru the corridors like a bat outa Hell…leaving ‘negligence’ & ‘chaos’ in its wake”.
Everytime these Federal Government ministers open their gobs, they give away their Extreme Right-Wing roots…and create an atmosphere that sends chills up & down my spine.
A sane young woman said the same on ‘Insight’ the other night. I hope she checked her purse…& on-line savings acct. when she got home. Or maybe they’ll pounce by way of an AWA in her job. Or they’ll strangle her w/ Uni fees. She better watch out…
cause “Santa Grinch is coming to town”.
October 19th, 2007 at 1:00 am
Seems to me this progressive income tax and inevitable tax bracket creep is a double edged sword. At first glance it seems great for the tax and spend fans to have access to taxation by stealth. However it eschews serious fiscal discipline and allows access to a bucket of money, which we see being thrown indiscriminately from the balconies now, not to mention disgraceful advertising budgets by incumbent govts, in proportion to their length of stay in office. We also wear the election cycle of no bracket creep compensation in the first budget, half a years worth in the second and two and a half years at election time. We all need to demand annual indexation of tax scales to enforce fiscal discipline and proper and careful allocation of our taxes between competing policy ends. It’s about bloody time we demanded bipartisanship on this.
October 19th, 2007 at 1:02 am
And as well we need to heed the Austrians and demand zero or slightly defaltionary monetary policy.
October 19th, 2007 at 1:08 am
Actually it’s more like 1.5 - 2 years worth at election time since we get screwed over for the real amount owing every 3 years.
October 19th, 2007 at 3:11 pm
We need to demand NO further tax cuts for the well off.
Look what tax cuts for the rich has done for America? Cost shifting from the Federal Govt. to the States has led to a great deal of pain for many people over there. Whilst the Rich have been served extremely well. You only have to look at the increase in luxury yachts, golf courses, top end of town restaurants, private hospitals w/ gourmet meals & offshore tax havens to get a sense of what’s going on.
Furthermore, by putting money into the hands of the already well off, this did not lead to a high level of investment in job creation, particularly quality jobs…but in fact fueled speculators who took America down the path of the Sub-Prime Mortgage Crisis…which has led to the ‘credit crunch’…& now ‘economic crunch’…also, it is these same speculators who are driving up the costs of oil/petrol.
The rich are doing us no favors whatsoever. In fact, tax cuts for the wealthy only lead to them giving the average Worker the middle finger…again. It’s essential we invest in aged carers, education & health services & the like…so we can create more jobs in these essential sectors of our society.
It’s enough in Australia that they keep our interest rates high so the money makers from overseas can park their money in Australia.
When are our Governments going to say to the wealthy speculators & new aristocracy…”ENOUGH IS ENOUGH!!!”.
October 19th, 2007 at 11:47 pm
hmmm…i didn’t know Peter Costello was a musician…check it out:
http://www.youtube.com/watch?v=WtrmbfS_Vuc
(Primus - Mr. Krinkle)
The music captures the mood of how he was feelin’ today after Labor put out their tax package.
October 21st, 2007 at 6:55 pm
Election campaign article on On Line Opinion and Leftwrites
Dear friends,
On the website ‘On Line Opinion’ an article of mine has been published considering progressive policy options for the election -
including $24 million in new health funding over four years, and an increase in pensions by approx 5% of Average Weekly Earnings. (AWE)
This stands in stark contrast to the overwhelming array of tax cuts being offered by both Labor and the Coalition. Labor has even gone so far as to outdo the conservatives - promising a ‘flatter’ tax system. It seems that the Greens remain isolated in their commitment to a broadly progressive tax system.
It is unclear what is to happen with the ‘tax credits’ scheme previously mooted by Labor. In the article I am drawing your attention to, I promote an alternative strategy based on modest tax reform and expansion of the social wage.
I thought you might be very interested in commentating on my ideas thorugh
the participatory channels on the On Line Opinion website.
A slightly edited version has also been published on the left-wing blog, ‘Leftwrites’.
http://www.leftwrites.net/2007/10/18/a-blueprint-for-real-reform-%e2%80%93-it%e2%80%99s-time/#more-1144
My article will also be a feature in OLO for the month of November.
The OLO version of the article can be found at this URL:
http://www.onlineopinion.com.au/view.asp?article=6520
I really would welcome your comments, and I think that this is a good opportinity to get progressive political ideas ‘out there’.
Feel free to leave comments on ‘On Line Opinion’ or ‘Leftwrites’. The title of the article is, “A blueprint for real reform - it’s time”.
Take care - I look forward to any comments you might like to make in order
to fuel debate.
sincerely,
Tristan Ewins