Second most read for today, but no comments. :( I hope someone does have an opinion; and maybe even some supportive opinions too. :)

One thing I should have emphasised more: The superannuation decision is absolutely massive - it involves tens of billions - and there is no way Parliamentary Labor should have made that promise (for 5 years!) without consulting the National Conference.

So the question is: Where IS the money going to come for infrastructure? User Pays? Privatisation? GST? Regardless - none of those options are preferable. So why 'shut the gate' on Super Concessions, but not rule out a mix of privatisation/user pays/regressive tax? Revoking Superannuation Concessions could target the wealthy; Messing with the GST or pushing privatisation/user pays is likely to hurt the poor and average workers much more proportionately....

At the very least Concessions should be revokable for the top 5% income and wealth demographics. That on its own could save many billions according to Richard Denniss. This should be a critical issue at the next ALP National Conference...

Tristan
I agree with your sentiments. I do not know a great deal about policy around Superannuation, however can concur that Labor has long ceased to be a party of social democratic vision - other than being 'just better' than the LNP as you write. Although I could not see an LNP government introducing better supports for the disabled but certainly on econmic policy it is a race to the Right.

Politics has become a sport where winning at all costs overrides any ideological commitments. Leaving the Super tax break issues alone for the moment gives an electoral advantage and keeps a lid on dissent for a time. Strategy over ideology.

The shift to the Right in Australian politics is bound up in lots of factors such as globalisation and a declining working class. However I do think both parties underestimate the voters which is seen with responses to the changes to the MRRT. It was seen widely among Labor supporters (except the far Right of Labor) as running from the influence of big miners. If they had held their ground there may be more benefits of mining now being distributed to all Australians.

Modern Labor does not have the ticker of the Hawke era where Labor held out to the striking doctors groups protesting against the introduction of Medicare. Essentially Labor has been hijacked by the Right and now PM Rudd has ensured he cannot be kicked out of office after the election.

One Canberra Times article suggests Labor with have to learn to deal with Rudd all over again. I don't think Rudd is capable of starting with a clean slate, but that won't be known for some time. Things are already not looking like there is any change in the old dog yet.

Hi Tristan
Lack of comment often seems to mean that you've made your argument well, and as you didn't mention religion or asylum seekers you didn't press any of the usual buttons that attract a lot of attention.

I think you are raising issues that are starting to concern many of my contemporaries. We are old enough to have seen the widening of the gap between rich and poor in Australia and the switch from the economy serving society to the view of big business that we are all there to serve them. We have also seen the change from political parties that actually had different ideologies to the rush to the centre, and then the rush to the right. We now have the politics of contempt: you don't just disagree with your political opponents, you put them down. I happen to think that the well-off in Australia don't pay anywhere enough tax, because they have so many opportunities to minimise it that are not available to lower paid people. There will be people who would immediately say 'class warfare' and 'politics of envy' in relation to my previous sentence: Tony Abbot often says that sort of thing. It allows people to defend their selfishness with a slogan, to think of themselves as under attack and hard done by. We seem to have completely lost sight of the fact that if we want the government to provide a health system, a public education system etc everyone has to chip in.

There are several things that the author ignores in his attack on superannuation, which may explain Rudd's actions. These are:

1. Australia currently has a gross external debt of over 2.4 trillion dollars, and is largely at the mercy of foreign lenders. Admittedly most of this debt is private debt, and is earning an amount which partially services it, but it still could be called in at any time.

2. If we to avoid the debt abyss into which the countries of southern europe have fallen, we must increase our rate of SAVING, so that our foreign debt can be contained and eventually reduced.

3. This poses a major dilemma for a left wing government, as most saving is done by the rich, as they are the ones with the spare money, and they are not going to save unless it is worth their while. If you force them to save, this will just be regarded as another form of taxation.

4. For any person to save money outside superannuation is stupid, as they are taxed on nominal interest, not the real interest earned. For example investing at 4% when inflation is at 2.5% means a real return of 1.5% but tax on 4%, which means they would earn a negative real return. A ludicrous example of this is the calculation of the amount a person would have to amass in order to earn a real return equal to the age pension (which would be denied to him by the assets test). The answer is that there is no amount that would achieve this.

5. The unpalatable truth is that the people of Australia are going to have to live within their means, and that every dollar borrowed will have to be matched by a dollar saved.

6. 85% of superannuants receive part of the pension, which means that they are already taxed at 50% on their super earnings. If you tax them further they will quickly show you how fast they can blow their super money and go on the pension. Then the government will really be in trouble.

Well hello Tristran.

Since the Liberals are now more humane than Labor on asylum seekers, are not proposing the savage cuts to the public service (their's are focused on natural attricattion), are not attacking peoples jobs with introducing new taxes, haven't scrapped the carbon tax, are intent on taking is back to the Hawke/ Keating inducstrial relations policies, are matching Gonski funding snd haven't recently committed us to an unwinable war, haven't been found by our courts to have caused the death of our working youth (those who have work) and haven't and don't intend to run up massive debt that causes cost of living rises, and since Labor is a good government that had lost it's way I guess you will now be voting Liberal.

IJN: The bank tax makes sense as its an 'insurance policy' against a future GFC.

The tobacco tax will hit lower income people, and to be fair should be combined with tax cuts and pension increases elsewhere for low income people.

Plerdsus: Re: encouraging personal savings: I think if people understood that THEY were subsidising the very rich and their savings - and that the cost of this was run down services and welfare, and run down infrastructure - that they might support removing some concessions. And to the extent that this affected private savings - it could be rectified with public savings - for example in a public pension or sovereign wealth fund... Also - investment in infrastructure and to mitigate cost of living pressures would deliver productivity, and encourage private savings from the less-well-off.

The alternative - what you're arguing for - sounds an awful lot like Thatcher's 'trickle-down'. But maybe that's ok for you. Not for me. I don't think it works that way. :)

You really are tenasciously clinging to your communisistic idealogy aren't youTristran?

Look what that belief system has done for you?
It produced Hitler, Stalin, Mao and Deng as well as the Socialist Baath parties of the mid east. Egypt as well. And in Ausstralia it has led to the debasement of the party of working people, the Labour Party with its despised Gillard and Rudd and their personality politics with the attendent disregard of it's true base
A nd yet you still think they are the best for everyone.

Mate the rest of us look at the Obeids, the Thompsons, the Macdonalds, the Willuamsens and all the others of their ilk and at those who knew and did nothing and we shake our heafs in disgust.

You try to suggest it's all ok and a little tweaking of policy will change things.

Mate you are delusional.

Tristran:

The central economic problem of the age was summed up very well by Niall Ferguson in the 2012 Reith Lectures as follows:

"Governments can no longer provide to the welfare community the standard of living to which they feel entitled from the revenue the government can gain from the taxes that people are willing to pay".

In other words, rapidly rising medical costs, coupled with the ageing of the population, means that the current welfare budget is unsustainable. Superannuation was introduced by Keating to alleviate this by making people save enough so they would disqualify themselves from the pension.

Stupid governments on the US and Europe have attempted to put off the evil day by borrowing, and we can all see the result. Unfortunately this now means that the living standard of those here on welfare will have to be lowered. This can be done gradually, or suddenly in a crisis, such as in Greece and Cyprus.

This is why economics is called the miserable science. Some governments try to solve the problem in the short term by confiscating the assets of the wealthy. The only problem with this is that it can only be done once, and that a lot of the most productive people in the country will then leave (as in East Germany). To counter this you then need Berlin Walls, etc.

Australia went through this in the last depression, when our loans were called in, and I don't think many people thought it much fun. I can only hope we have seen the light in time.

The only sustainable future for Australia that I can see for the rest of this century is a neo-Victorian age with a much greater gap between rich and poor, considerable social turmoil (but hopefully not too many people shot by the police), and older folks going on about the "golden age".

Plerdsus - You suggest there is no option but a new "Victorian Age" with massive inequality as a consequence of a ageing population and increased health costs.

Well the wealthy would like us to THINK there's no alternative. That's what Thatcher tried to do.

But we could rake in almost $100 billion from removing superannuation concessions and past income tax cuts alone. And there's another lot of more than $20 billion if we got rid of Dividend Imputation.

And maybe consider more robust economic rent taxes for mining and the banks.

I'm not saying do it all at once. But I am saying we have CHOICES.

If middle class and upper middle class households could upgrade their car less often; travel overseas every second year and not every year; and if the genuinely wealthy - millionaires and multi-millionaires - were taxed at a fair rate; THEN we could afford to pay for Aged Care and broader Health Costs; All the while maintaining equality of opportunity in education. And maintaining a fair retirement age, and a fair working week without excessive (often unpaid) overtime.

If there's a choice between this and an overseas trip and updated car every year for the middle class; Or a choice between this and multi-millionaires enjoying a 'self-funded retirement' (actually paid for through tax breaks paid for by the rest of us - and more generous than a great proportion of full time workers manage) what would we choose?

There's no need for 'a new Victorian Age' - because regardless of an ageing population we live in an era of material abundance - with massively increased productivity as a consequence of technology.

But the wealthy and their allies in the upper middle class want us to believe there's no choice; We need the clarity to understand our own material interests; the choices we have before us; and the decency to stand in solidarity with the most disadvantaged and vulnerable.

Plerdsus; You make out as is there's no choice except between two extremes - between Stalinism and a brutal, barbaric neo-liberalism.

In fact there is a Social Democratic tradition - which originally took its inspiration from Marxism - which was the first to promote equal and universal suffrage; the rights of women, and indigenous and colonised peoples; and most of the civil liberties we enjoy today.

Stalinism perverted that Marxist tradition and was seen to discredit it in the minds of many. But Social Democracy - including Marxist Social Democracy - was ALWAYS the most robust opponent of Stalinist Terror and atrocities. Think Karl Kautsky, Julius Martov, Otto Bauer. And on the far Left think Rosa Luxemburg - and her prophetic critique of Leninism.

So as against Stalinism there is a democratic Marxist and social democratic tradition - which included the peace activists from World War I, and the anti-fascists and democratic forces in interwar Czechslovakia, Austria, and France. And also the reformers from within the USSR and Eastern bloc. Including Dubceck and Gorbachev.

And there is a largely non-Marxist tradition which developed in areas of northern and central Europe - the most modern day robust examples include Denmark, Sweden, Holland... There is a robust (non-Marxist) social democratic tradition which is at the heart of many European nations and has nothing to do with Stalinism.

Tristan:

We would all love to live in the perfect world you envisage - the only problem is that it does not, and cannot exist. For example, countries such as France are discovering that they have reached the peak of the Laffer Curve, and increasing taxation results in less revenue, together with the much publicised emigration of accomplised French men and women. This is the core of the dilemma, and why Europe is now is a state of economic paralysis. The Americans are almost as badly off, with all sectors of their society riddled with vast amounts of unrepayable debt. However their recent discovery of massive new energy resources, together with their tradition of self reliance, may just see them pull through (and I certainly hope they do). However the only future I see for Europe is for southern Europe to revert to the military governments they had 40 years ago, which will only serve to speed their demise. When you talk of ever higher taxes remember that our major trading partners to the north have tax rates closer to 15% than the european level of 60%, and after all, this is set to be the Asian century. The illusion of paradise in countries such as Sweden has recently been swept aside by ugly race riots, which set an ominous precedent for the future. I am sorry if I upset you with my outlook, but the obvious fact is that the world cannot cope with 7 billion people and when it gets to 10 billion things will be very much worse.

Regardless of what you say about Sweden today, you have to account for the fact that they had high progressive taxes and high levels of social expenditure for decades; and at the same time had close to full employment and low inflation. If higher taxes and higher social spending mean 'declining revenue' as a rule, then how do you account for Sweden? BTW - I'm not arguing for something I view as an 'extreme'. Rather I think progressive tax could potentially rise by about 4%-4.5% of GDP over three terms of Labor Government. This would bring us close to Canada, and still well short of the Nordics.

BTW - We don't know how far we can go with collective capital mobilisation either. And cuts to superannuation concessions could see substantial funds diverted into a Sovereign Wealth Fund or public pension funds - to be invested locally; and supporting investment in infrastructure and welfare.

Perhaps very high Company Tax would produce a disincentive. But where we are now is not acceptable - whereby we have an infrastructure deficit - and to the extent it is made up for that is through effective 'corporate welfare'. Increasing consumer taxes would also affect consumer confidence. But collective consumption counts for something as well; and infrastructure bottlenecks will hurt the economy and productivity as well.

Those bottlenecks can't be corrected most efficiently without public investment; and public investment would have to mean higher taxes to service and pay off the debt.

Also if there are 'diminishing returns' from certain forms of higher taxation - that only increases the need for international co-ordination on the Left - to contain capital flight - which undermines democracy.

Tristan:

Sweden has had very high rates of taxation for centuries, not decades, and is very much the exception among western nations. The provision of a sovereign wealth fund, (which I would support), is not politically possible at present as no party wants to endure the odium of building up the fund so it could be squandered by its successors. I would imagine that a constitutional amendment would be necessary to prevent politicians getting their hands on it, and even then the restriction could well be ignored. The chances of getting the referendum approved would be minimal (the only referendum I would vote for is one reducing politicians' salaries).
Your thought of international co-ordination to prevent emigration is a pipe dream, as evidenced by Ireland, which still has a company tax rate half its fellow EU members.
The only time high taxes worked was during the second world war, when everyone felt they had to contribute. The regulated, high tax Australian economic model fell apart in the 1970's as our trade partners got back on their feet and we could not compete. This was made worse because we have an economy with a high percentage of imports and exports, which means we must stay competitive. Countries like the US don't have this, and could get by banning all imports and exports.
Surely be best way to meet the infrastructure deficit is the way the Snowy Hydro Scheme was handled. Infrastructure that generates enough cash flow to service its debt and contribute to its sinking fund would be fine by me. The problem is that people want the infrastructure, but don't want to pay for it. An excellent example of this is the NBN, whic is a a classic rural rort (farmers always believe in capitalising their assets and socialising their liabilities). The freight line proposed by the Nationals from Brisbane to Melbourne via Narromine is what should be built.

Hi Plerdsus; You say that Sweden is "very much the exception"; but that doesn't explain how there COULD be ANY exception if what you assume re: "the Laffer Curve' was generally true. And in any case it's not ONLY Sweden; It's ALL the Nordics - Sweden, Norway, Finland. And to a significant degree it's true with the Netherlands and Denmark as well.

What you call "high tax" regimes survived throughout Europe for *decades* following WWII. Those regimes were put under pressure with the Oil Shocks in the 1970s - and new attempts to subsidise big business with all manner of corporate welfare. (eg: social programs being cut back to provide the room for corporate tax cuts)

But in 2013 Sweden, Finland, Norway, Denmark, the Natherlands - all have very substantial welfare states and robust progressive tax systems.

I'm not saying my approach is the ONLY approach. But I am saying it is a CHOICE. Whereas it seems to be you are arguing 'there is no alternative'. That's not borne out by the facts.

Hi, Tristan,

Sorry for the break but I have been away for a few days. Your loyalty to the principle of high taxes and government spending is admirable, but, I believe, based on a fallacy. The continuing ageing of the population, coupled with medical cost increases well above inflation, indicate that if a government is to balance its books it will have to increase taxes without limit. This will never work, due to the high percentage of the population who mainly work in order to earn money (just like the Beatles song). Another thing militating against a high tax economy is the high and rising number of self-employed, who now outnumber trade unionists. The self-employed only work to earn money, and can scale their effort up or down as the conditions prescribe. Of course a government in the short term can just borrow, and we have seen in Europe where that leads to. So in the long term any economy based on high taxation will collapse as so many have in the last 50 years.

Tristan the only vision Rudd had this time is to be Tony Abbott lite.

And the polls are showing what most Australian think lf that.