What has Labor done?
After voting for the Coalition’s flagship tax cut bill, has the party laid down its sword on tax policy, adopting a cynical third way approach of strategic capitulation? Or is it pragmatically avoiding the optics of voting against lower- and middle-income tax cuts for progressive purity when their assent was rendered inconsequential after some piecemeal crossbench horse-trading anyway?
I’m not sure Labor knows itself, as its post-election policy recalibration is undoubtedly a work-in-progress. Asked whether Labor will repeal stage three of the tax cuts due in 2024-25 — in which workers earning over $180,000 would reap over a third of the benefits — Anthony Albanese has promised to let us know sometime before the next election, once party strategist have worked out What Went Wrong™.
However, his insistence on basing the eventual decision on macroeconomic conditions illustrates a hesitancy to explicitly pledge to repeal stage three on principle, because relatively well-off workers really don’t need the money. Labor has repeatedly raised concerns about fiscal responsibility, but remains muted on the moral rightness of these tax concessions to the relatively well-off.
Why? Since the election, the Australian left has been running scared of the upper-middle class. Much effort is being made to reassure those offended by Shorten’s modest de-feathering of reasonably well-made beds. Albo and Shadow Treasurer Jim Chalmers now feel the need to insist that workers earning $200,000 a year are not the “top end of town”, in a noted tempering of Shorten’s populist rhetoric. In a B-grade remake of the Howard years, we are back to kowtowing to the mythical “aspirational voter” who is battling hard for his second jet-ski and biannual trip to Thailand.
Accommodation of the petit-bourgeois is by no means limited to hard-headed pragmatists. Of all people, leader of the Victorian Socialists Stephen Jolly tweeted on election night that Labor had lost by attacking “upper-working class/middle-class” voters instead of hitting the millionaires harder. His contention was seemingly that instead of prioritising reforms that affected the top three or four rungs on the income ladder, Labor should have simply gouged the top rung harder.
Such a strategy is not meritless. Everyone hates billionaires; reforms that target the uber-rich are electorally palatable. If ScoMo had proposed tax cuts specifically for millionaires, there would be little electoral cost to opposition. Conversely, hitting Gina Rinehart with, say, a “Buffet tax” would likely be both popular and revenue raising. Such a strategy would alienate fewer voters than broader-based redistribution.
Yet there are compelling policy and strategic reasons for the left to not simply ask more of Toorak, but of Kew and East Ivanhoe too. The upper-middle class significantly outnumber the super-rich and thus removing their favourite cash-cows can raise considerable revenue. Their favoured concessions such as negative gearing also often distort markets, creating knock-on effects for ordinary consumers.
Bill Shorten, for all his faults, was the only Australian political leader in recent decades with the guts to propose stripping entitlements from the upper-middle class. By pioneering the elimination of tax concessions utilised by asset-rich superannuants and “mum and dad” investors, his election platform sought to modestly wind back the largess heaped upon the upper-middle class by Howard and Costello.
After a devastating loss for all who care about equity, decency and fairness in Australia, we must caution against panicking and throwing policy babies out with the unpopular bathwater. I, for one, doubt that a redistributive agenda that implicates the upper-middle class is electorally impossible.
The terrible confluence of an unpopular leader, messaging that failed to simplify complex policies, and scattergun, unremarkable rewards for taxation trade-offs all undercut the success of Shorten’s righteous strategy of unwinding unsustainable upper-middle class welfare. Real Shortenism hasn’t been tried.
We need only look to the US to see that bold “tax and spend” strategies can generate healthy polling numbers if voters are convinced the benefits will outweigh the constraints. In the first televised debate of the Democratic primaries, Bernie Sanders told middle-class Americans to their faces that they will pay more taxes if he is elected president. Yet the reward he offers — universal healthcare — elicits such ecstatic support that Trump should be nervous.
As economist Richard Denniss eloquently said, someone who is six-feet tall only looks short compared to a seven-foot giant. Workers on $200,000 earn more than three times the average Australian wage. If they are not residents of the top end of town, they are living comfortably in proximal suburbs a short tram ride away. Amidst growing inequality and wage stagnation, they are not worthy of our sympathy.
Makes me nostalgic for the Whinging Wendy ad of 1987 which skewered the Libs on which services would be reduced to pay for their proposed tax cuts.
Got to admit the Libs have got smarter this time. Pretty much aiming at an attack on the public sector the same as Abbott and Hockey tried, but doing it by stealth this time.
As to the aspirationals, I remember someone once telling me that one of the problems recruiting people to US unions is because they don’t see themselves as disadvantaged, but on the way to making it.
This is the sort of thinking that lost Labor the election.
The elites in the well off suburbs actually swung to greens and Labor.
The big end of town is the reason the government can affort to keep schools and hospitals running.
Venezuela tried this sort of reasoning and look where they ended up even with the largest oil reserves in the world.
People on average wages don’t contribute enough tax to pay anything close to covering their services.
All “free” education and health is off the back of these upper middle class you are trying to punish. Mao and friends showed clearly attacking this group is counter productive.
Even the Chinese communist have worked that out!
It is just old fashion envy politics.
I work hard and I’m happy to pay tax. I’m proud to pay tax. But fair is fair. Why should i pay more than 50% my income in tax when others pay nothing?
1 upper middle income person pays more than the bottom 30% on income earners.
It actually helps poor people if wealth people earn more.
Hence swings in electorates with lower incomes to coalition
Why should you pay 50% of your income when other pay nothing? Because you can effing afford it and those who pay nothing cannot. Very few people here believe in your trickle down bullshit and, indeed, the evidence proves it bullshit.
‘Why should I pay more than 50% my income in tax when others pay nothing?’ Because you’re getting more in the first place. And who decides that? Who decides that we should remunerate politicians, executives, money-shufflers, marketing liars, media types and other bullshit jobs more than teachers, nursing home carers and bus drivers. Wealth is socially, not individually created. Those who benefit unduly from a fanciful meritocracy should return more back to the community chest of society. Unless, like Margaret Thatcher, you believe ‘there is no such thing as society’ and it’s everyone for him/herself. If so, then don’t complain when the underclasses burgle your house or key your BMW or bash you senseless for your phone and wallet.
And don’t kid yourself with this ‘envy’ crap. We don’t envy people on $200,000 sobbing their little hearts out about how unfairly they’re being treated – we think they’re pathetic, selfish bastards who’ve never grown up enough to see the people around them really doing it tough – parents watching their little kids dying of cancer, pensioners with aching teeth, mentally-ill homeless people freezing in a doorway, childless people who can’t afford IVF, sleep-deprived mothers of kids with severe disabilities, etc. Get a life!
I see a lot of hate in your response. The fact remains someone on 200000 pays about 60000 in tax. Your should celebrate this!
Not only do they pay more of their income, they pay a greater percentage too!
Look at Venezuela that is what happens when envy takes over.
They pay for their kids to go to private school avoiding the government need to pay for them and they pay for your kids to go to public school too!
They also pay for hospital care they don’t use. (They use private).
I am not saying you should feel sorry for them. They worked hard and can stand up for themselves.
But why should they pay for pink batts electric cars ….insert last thought bubble? Money doesn’t grow on trees!
Don’t kill the golden goose!
By the way they already pay for publically funded IVF even for the socially infertile. (There some bulk billed IVF..btw kids are actually quite expensive!)
They pay for publical funded mental health.
What we should be asking is why are we spending so much more on education but our relative and ABSOLUTE standards are dropping?
60/200 is not 50%.
“They pay for their kids to go to private school avoiding the government need to pay for them and they pay for your kids to go to public school too!”
Which is subsidised by the government.
“They also pay for hospital care they don’t use. (They use private).”
Which is subsidised by the government. At least by the Private health rebate.
People on high incomes still use Medicare, still rely on Australia’s armed forces for defence, rely on the police to stop the great unwashed from taking their stuff, etc.
No hate in these responses bias detector. Just people calling out your bullshit. It is the people who can walk past the homeless on the streets, that can justify the growing inequality who have hate in their hearts. Where is your humanity, compassion, empathy?
Your obsession with Venezuela is perplexing.
What is happening in Venezuela has nothing at all to do with what is happening to Australia. Different histories, languages, cultures, politics….If you stop listening to the dribble emanating from Murdoch, Fox, Sky and American media outlets, you would realise this.
Not hate, mate, just anger that we spend so much time discussing the so-called problems of privileged, rich, selfish (sorry, ‘aspirational’) Westerners because they whinge and scream so much that we ignore the poor bastards I listed above who really have something to complain about – let alone the millions in the Third World who suffer because of rapacious Western corporations and military adventures.
If your $200,000 earner actually pays $60,000 in tax (and many don’t), he still takes home $140,000, which is almost 3x what someone on the median income takes home. How do you justify this? Is he contributing 3x as much to society as people on average incomes? And where do you think this money comes from? Magically created on a magic money tree by his labour? No, from other people’s pockets – every single dollar of it. He’s sucking more than his share out of society’s wealth, not contributing more.
The pink batts helped save Australia from recession. Encouraging electric cars and their infrastructure is called investing in society’s future. We’re a society, for heaven’s sake – not some Wild West-style collection of competing individuals. You need a society to create wealth. Robinson Crusoe on a deserted island would never live as comfortably as you are.
And the reasons why our education standards are dropping are too complex to discuss here, but if you’re really interested in raising education standards, you might want to advocate for Finland’s system (consistently the best outcomes in the Western world), which has NO private schools – they ensure EVERY school is well-funded and up to standard – all paid for by progressive taxes – because they believe in a society and not this neoliberal BS about there being ‘no such thing as society’ (Margaret Thatcher).
“If your $200,000 earner actually pays $60,000 in tax (and many don’t), he still takes home $140,000, which is almost 3x what someone on the median income takes home.”
It’s actually 3x the gross wage (ie before tax) of the median income of people who file tax returns in Australia.
“Grattan Institute economist Danielle Wood told The New Daily the best way to get a picture of what ordinary Australians are earning is to look at what she calls the median “tax-filer” – that is, the median of everyone that submits a tax return.
She estimated the median tax-filer’s income in 2017-18 is just $44,527.”
That is from The NewDaily article “Revealed: How much Australians really earn”
Thanks, Wayne. I was working on a median full-time income of $65,000-odd, to compare it with his $200,000, which I would hope is a full-time income (is even more obscene if it’s a part-time income). But I take your point – many people don’t even have the luxury of a full-time job because of underemployment ++. And they’re not even counted in the unemployed.
@ Bias Detector
“Why should I pay more than 50% of my income in tax when others pay nothing?”
Since you are happy and proud to pay taxes it may be that we might actually agree on many things, but “50% of MY income” indicates a very substantive difference.
I don’t believe pre-tax income is “ours”? A proportion, to be decided by application of current laws, is owed in taxes. A trader’s gross turnover does not “belong” to the trader, the trader must pay suppliers and service providers. The same principle applies to taxes on income, whatever the sources of that income.
I have little faith in the justice of the labor-cum-contract market. I believe it undervalues the economic and social contributions of most people, including those with moderate to low real incomes who legally pay no tax under our laws. High earners invest their surplus, and the resultant additional incomes multiply the effect. This might be more tolerable, even justified, if the investments were productive, but today’s incentives seem merely to encourage rent-seeking.
Progressive tax systems are not a form of charity – they are the means by which a civilized society attempts to redress the crudities and injustices of market forces. The political system determines the legal nature and extent of that redress. It determines the final actual personal income, at all economic levels, until our earning circumstances and/or the laws change. But the moral-political arguments are never over, and must never be over.
So in my view, when I argue for a more progressive tax regime, I am not arguing to expropriate YOUR income or any one else’s.
You refer to Venezuela and China. Most left Australians look for their inspiration, if we look overseas at all, to the social democracies of Europe, to the USA of FDR’s New Deal, or LBJ’s Great Society (tragically torpedoed by the disastrous involvement in Vietnam), Great Britain’s efforts to build a country fit for heroes after WWII, from which the NHS remains the last jewel in the crown – and so on.
But we don’t need to look beyond our own shores. For most, it is sufficient to remember and hope to build on the progressive achievements of previous governments. Usually Labor, but not exclusively so. None of these achievements wrecked our country.
(btw I am wondering how you pay 50% when the 2018-9 top marginal rate is 45 cents in the dollar, and that only after $180,000. Are you including GST? If so, did you take that into account when calculating who pays net taxes?)
45 percent plus medicare levy plus flood levy plus budget repair levy or insert whatever the currrent government adds. Usually much closer to 50 percent than 45.
You aren’t paying 50% tax, not even marginally. Your emotive and inaccurate response shows a certain bias, BD.
Or you have just bought the neoliberal ideology hook, line and sinker.
$60k tax on $200k is 30% overall tax.
It wasn’t the tax wot lost it…it was the failure to come up with a coherent transition plan for jobs in the mining sector that were to be lost. The man on the Clapham omnibus wants to know that his fellow traveller isn’t going to be dumped on the scrap heap in the cause of climate reduction targets. Those who were set to lose the most in the tax reforms are now, quite naturally claiming that Shorten was rejected in order to preserve their middle class welfare…of course they would claim that. My message to the ALP is try again but this time focus more on jobs…after all you are meant to be the party of the workers.
It took only days after the election for Morrison to dredge up his two favourite stereotypes: ‘the politics of envy’ and ‘aspiration’. Why is that the media and others do not ‘call out’ these two pretenders for what they are The politics of envy- a term only ever used by the rich and powerful elite is a crude way to shut down any discussion on growing inequality in Australia. ‘The trickle- down effect’ and the growing income & wealth divide between the top 10% and the rest are to be uncritically accepted as truisms resulting from the natural order of things. In this way the wealthy and government may continue to exploit others through for example tax breaks to the wealthy for an example of this just look at Morrison’s recently passed tax structure changes. Aspiration is to covert what others have or to a higher station in life. Where would this stop? Could this in fact be termed a form of envy – naturally ‘healthy’ envy in this case. A far healthier goal may be to distinguish between what one needs to live a happy, fulfilled life rather than what one wants for status sake. This is sometimes referred to as to having a ‘balanced’ life where aspiration does not mean an unhealthy obsession on ‘things’ but on making time for important human relationships.
The inherent contradictions in all of this are conveniently overlooked. Aspiration if it must be a goal is best achieved in a truly egalitarian society yet this newly minted tax structure is inherently more regressive than the previous one making fair equality of opportunity (aspiration) harder to achieve. Ironically, at about the same time that Australians voted to turn their backs on the different path offered by the ALP the Danes following their Nordic neighbours voted against neo-liberalism philosophy and towards a higher taxing more caring and inclusive form of government providing high level services for all and as a consequence a more equal society. Australians can expect instead the diminution and dilution of services that will surely follow Morrison’s return to power.
Finally, I had no problem with an income of $200,000/year regarded as part of the top end of town. In 2018 at various times the average wage has been put at close to $100,000/year yet over 75% of workers earn less than this. Hence the median wage is a more realistic figure at approx $66,000/year and if one is to include all part-time and casual workers – of which Australia has the third highest proportion of in its workforce it sits at about $53,000/year. In light of these figures $200,000/year is pretty close to the top end of town. Hence, the ALP is either committed to greater equality or are they like many Australians who the famous political philosopher John Rawls would conclude find the self sacrifice necessary too great an ask.
This theory would seem plausible if the election voting patterns showed anything like support, but they don’t. The relatively-well-off (and well educated) supported Shorten’s tax policies, with swings to Labor of a few percent in most of those strongly-liberal seats. The seats labor lost, in Qld and WA were not populated by the people who would have been even marginally negatively affected.
Thanks for playing. Try again another time.
Fully agree. Although repeating myself (I put the following quote on the article about “Plots and Prayers”) I find Niki Savva’s final analysis much more pertinent.
Ben Phillips from the ANU Centre for Social Research and Methods: “At the electoral level, the main factors that correlated with a swing to the Coalition on a two-party-preferred basis were a low level of education, lower income, a higher share of persons who identify as Christians, and a larger share of blue-collar workers.” And “Those groups most impacted adversely by the Labor tax policies actually have swung to Labor.”
The ALP needs to stop reading the msm rubbish – how wrong were their predictions – and go to those who study our voting patterns and trends.
The ANU Centre for Social Research and Methods:
“At the electoral level, the main factors that correlated with a swing to the Coalition on a two-party-preferred basis were a low level of education, lower income, a higher share of persons who identify as Christians, and a larger share of blue-collar workers.”
Easily manipulated by wage thieves like Palmer and racists like Hanson. We see the same patter with those that vote for the mentally disturbed Trump.
As an aside to all this, I think progressives overlook Morrison’s marketing skills and experience at their peril. Most references I’ve seen in Crikey, for example, are dismissive of his background (“he’s the bloke who gave us the ‘Where the Hell are you?” campaign”), yet I think there is little doubt that, when in came to issues such as marketing self-image last election, he beat Shorten hands down.
He knows how to segment a market and he knows how to sell a message. Maybe he is hollow and maybe he can’t do much else, but when it comes to elections, selling is the only thing that matters.
We can expect the same from the Liberals next time around. Morrison has abilities that the likes of Turnbull, Abbott and even Howard never had. Beware lest the next election have an outcome similar to the last: that would just about finish this country off for good.
He seems to be reverting to type reasonably quickly to me; stop the boats, punish dole bludgers and refugees (especially black ones), religious pursuits. Ably helped by nasty pasties like Porter and Dutton, crooks like Taylor and Barnaby, and dills like Frydenberg.
He certainly had help on the marketing from the MSM.
Agree about the professional-level sales skills of Morrison, in stark contrast to Shorten.
Shorten’s pretty abysmal deficiency in this regard did not matter so much in the overall context, until Morrison appeared on the scene at the last minute. Hence the unexpected result.
IMO this issue is being greatly underrated.
Yep. Palmer knew who to target. And Morrison knows how to sell a PUP. There is one reason alone that gave us this government. Palmer and his 60 million dollar bag of lies.