"Those who have money and resources and opportunity are doing better and better, but those who struggle to make ends meet and whose lives are circumscribed by disadvantage, are doing worse and worse."

This is simply a lie. Statistics show that the poor in Australia are better off each year. Increasing inequality -- if it IS increasing, which is doubtful -- has nothing to do with absolute wealth. If everyone's real wealth doubled tomorrow, so would inequality -- would that be a reason to object to it?

My view is that some inequality is a necessary driver for economic growth to occur at all. Just how much, of course, is a reasonable matter for debate; but the knee-jerk leftist reaction that says 'Inequality BAD!' is responsible for some of the most daft and destructive political decisions ever made.

Strongly disagree. Since 1980 we have sold off 4 State Govt banks and the Commonwealth, that used to create from nothing some of the money to = growth + inflation. Our money supply grows at 6% pa or $90 billion. This is now created as debt by private banks and most of this money goes to private central banks. When the Commonwealth was sold off Howard had to bring in the GST.

Our ATO is really just a debt collector for private central banks. Increasing taxes feeds the parasites.

< Ensuring all Australians have the means and opportunity for a decent life requires a healthy economy delivering sustainable growth, government policies that put people at the centre, and effective and well-targeted revenue collection. Tax is the price we pay for a decent society. >

There are a couple of problems with this….

What would happen if there was an attempt to significant increase the tax base? It would politically untenable!

And secondly; what about the ever-rapidly-increasing demand for everything in Australia as a result of very high immigration. If we didn’t have this, we’d have a progressively much greater ability to spend more on the things that you would like us to improve, rather than on the constant duplication services and infrastructure for ever-more people and the upgrading of existing services and infrastructure that are being overburdened by ever-more people.

This factor is surely considerably bigger than the main thrust in this article of raising taxes.

< The sustainability and viability of community and social services is critical… >

Of course. So Lin, how about lobbying hard for a reduction in immigration down to net zero, and a stabilisation of our population, so that we can have a stable demand base instead one that is forever rapidly growing and demanding that a huge part of the national budget be spent on just to provide the basics for new residents.

Then, we might have a chance of developing sustainable and viable communities…. and to be able to do it without struggling to ever-rapidly grow the economy or significantly increase the tax base.

Boy there is a cognitive dissonance in regards to money concepts.We don't have to have all these taxes.

Just create Govt banks once again. By virtue of letting OS central banks create money to = growth + inflation, we are their debt slaves. Under this system the more growth we have, the more debt we incur. The debt can never be repaid unless we sell of our resources and energy for a song. We don't own Australia. The Corporate conglomerates do and poverty will continue to worsen no matter how much taxes will increase.

Say our big 4 banks borrow half of the $90 billion and create another $45 billion via fractional reserve banking. Our banks are 40% owned by HSBC,JP Morgan and Citi Bank. These profits just go back OS.

1% of the World's pop own 46% of the wealth and earn 40% of the income. The expression of our inflation + growth as debt,is the tool by which they steal this wealth.The other tool of theft is called the derivative market.

Raising taxes ? This seems to be the cure all for all problems. Perhaps, Lin, you could write an article to detail the actual amount of tax that is levied on the australian public at large?

1. Federal Govt. income tax.
2. Medicare levies.
3. Bank transaction taxes.
4. GST

5. State Govt. Taxes on gambling, resources, labour etc.etc, etc
6. tax on the water and electricity utilities which we pay.
7. State levies.
8. land tax.
9. Local council rates ( tax)
10. Local council levies collected on behalf of the state government.

I have left out Business taxes and compliance costs ... Perhaps these could be raised and distributed.

Housing? Please read the AHURI articles detailing the taxes levied on making land and housing unaffordable.

Pay more tax? OK. which ones can be raised then syphoned off and be used for redistribution?

Lyn if you think the average Ozzie is prepared to pay an extra $30.00 a week, so your hand out trained customers can eat sturgeon eggs, rather than chook eggs, why don't you ask them?

You have already trained every drop kick to expect a comfortable living from welfare, & the extra handouts they can cadge from NGO's like yours, but hell that doesn't yet include caviar, why not?

Could it be you damn well know we are sick of bludgers, & want less of our earnings wasted on them?

Why do you people continue with this destructive technique of making sure our bludgers want for nothing? The more comfortable you & other NGOs make them, the less likely they are to get off their fattening backsides & go work for a living.

I had the girl from one of our feral families in, wanting to use my phone, the other day. Mum & dad, 2 boys in their 20s, & a 20 year old daughter, already with 2 fatherless kids. They have over $2000 a week, $4000 a fortnight coming in from welfare, but their phone was cut off for no payment of the bill. Strange how I can pay my bill, on less than a quarter of that.

She wanted to ring lifeline, to get some food. At the finish of a whining phone call the girl had the hide to say, "don't send any mince or sausages, we don't eat that crap".

Lyn I don't know how you can sleep at night, knowing you are using the taxes of hard working, & often struggling Ozzies, to keep this kind of garbage in the comfort they most definitely don't deserve.

Interesting article, in addition to ethical considerations, societies with relatively high measures of equality are usually more stable.

Kilmouski,

As a percentage of GDP, Australia is, and has been for years, one of the lowest taxing countries in the OECD. The myth that Australia has a high tax economy is promoted by our third rate business sector, the Coalition and its allies in the Murdoch media. Here's a comparison.

http://stats.oecd.org/Index.aspx?DataSetCode=REV

Jon J.

"if everyone's real wealth doubled tomorrow, so would inequality"

Eh? by which measure?

Nice response Jon J.

But calculate the proportion of all tax paid by an individual as a proportion of the individuals income ( say the median income) and one gets a view as to the effect of taxes on an individual - a different view. Why do you think that the tax minimizing industry flourishes? If taxes were " so low" then why does the cash economy flourish to the extent that it does?

Come off it mac.

When I bought my first house in the 60s, I was paying 7.25% tax on my $50 a week, [a little under average wage for the time], & only 3.5% interest on my home loan.

Of course unemployment benefits were so low, that welfare dependence had not become an alternate life style, so we were not supporting a cast of millions from our earnings.

Has been,

I'm old enough to remember the 1960s, different times, the country had an industrial base and 2% unemployment was regarded as high, people could easily find employment.

You might argue on technical or ideological grounds, that some taxes are inappropriate or counter productive, however, It's clear from the data that Australia doesn't have a high tax economy compared to most other OECD countries.

You regard welfare dependence as a "life style". I don't agree with middle class welfare such as government support for private schools, or completely cynical pork barrelling grants to first home buyers or baby bonuses and other popular, but hare-brained schemes that governments have inflicted on the taxpayers.

I find much of the article, less than cogent.
Look, put ten economist in the same room and you're almost guaranteed to evoke 30 different opinions?
The problem with our tax system is!
Too much of it is diverted into private pockets as compliance costs, and as such, increases the necessary tax burden by as much as 7%!
Without which the demand on the GNP could be as low as 17%?
We also have the problem of over-servicing/duplication/overlapping incredibly inefficient and entirely unnecessary administration costs, further compounded by cascading inputs, and even more so, by very powerful self interest, which all but compels them to defend it!
If we could reform or remove this factor, we would release up to 30% of consolidated revenue from admin costs and onto the coal face as services!
And the end of avoidance, would quite massively increase the total tax receipts, as well as quite massively reduce the tax burdens of honest tax payers.
As would quite massive simplification of the system and the removal of all the inefficient taxes, which currently, for all practical purposes, is all of the above, along with a forty thousand page tax act, with a virtual loophole on every page!?
All that's required, is a vastly simplified broad based, single, stand alone, unavoidable tax, free of this or that special interest exclusion, would not only collect more tax, but as a much smaller demand from the GNP.
Which would quite massively stimulate the non mining economy.
Even then, we can make a case for special tax zones, but only for a limited time, say a max of 10-15 years?
Enough time to create the necessary scales of economy, to have the growth, become a self sustaining snowball!
All that then remains, is to stop relying on population growth to stimulate, grow the economy, and instead, use the progressive and planned reduction of poverty, in all its forms and guises, to quite dramatically grow the domestic economy!
And, by far greater growth numbers, than would've been traditional in the past!
Rhrosty.

Mac don't forger that 2% unemployment in the 60s did not include aboriginal unemployment. They were not considered citizens back then. Add them into the figures, & they might not be too dissimilar.

As for getting work, there are turf farmers, equestrian people, dairy farms & produce growers around here always looking for workers. The local bludgers will put in an occasional day for cash in hand, but will not take a job.

My youngest daughter, a similar age to our feral single mother took 3 days to find a well paying job on the Gold Coast, on her recent return from Darwin, there everywhere.

You can hear some of the locals discussing whether to breed or work for a living.

Just out of interest, has it ever occurred that many of those high tax high welfare countries are the ones in most trouble with debt. Not too interest in comparing with oil rich states, but the Mediterranean states are now in desperate straits due to huge government welfare. It is a road we should avoid like the plague.

Lin’s article concludes with the question ”what matters to you”?

One thing that matters to me is truth. And Lyn’s article is based on two whopping untruths – “inequality is on the rise”, and “those who struggle to make ends meet and whose lives are circumscribed by disadvantage, are doing worse and worse” – in other words, the rich are getting richer and the poor are getting poorer.

John J has already pointed out the falsehood of the second statement. The poor are NOT in fact getting poorer – at least according to ABS statistics.

The real income of households at tenth percentile of household incomes (90% of households are better off) increased by 38% in the last 11 years. At the lowest quintile (80% of households are better off), real incomes rose by 42%. Real incomes have risen across the income spectrum in almost every survey since 2000-01.

Inequality is harder to define precisely, but the data do not show a widening chasm of inequality. The income shares of the top and bottom of the income spectrum have been pretty stable in the past 20 years or so, varying within a narrow band of about one percentage point. Inequality did increase marginally in the early and mid 2000s, but the trend in the past four years has been in the opposite direction.The Gini coefficient (another measure of inequality) shows the same thing.

Data from the ABS:
http://www.abs.gov.au/AUSSTATS/abs@.nsf/DetailsPage/6523.02011-12?OpenDocument (Table 1)

or
http://www.ausstats.abs.gov.au/ausstats/subscriber.nsf/0/B0530ECF7A48B909CA257BC80016E4D3/$File/65230_2011-12.pdf

Its noticeable how often arguments that begin will appeals to common knowledge - “we all know that …” - turn out to be based on falsehoods and misrepresentations.

Hasbeen,

"many of those high tax high welfare countries are the ones in most trouble with debt."

That's a generalisation, many high tax countries don't have debt problems and some low tax economies do.The crisis was produced by an imbalance between government expenditure and tax revenues, not necessarily high tax rates, the most notorious example of a low taxation country with massive debt problems is obviously the US.

I'd agree, that we have, to some extent a welfare dependent sub culture, however the labour market is not the smoothly flowing system that some neo-liberal fantasists claim.

"You can hear some of the locals discussing whether to breed or work for a living."

No argument there, my wife was a Maternal and Child Health Nurse, young unemployed/ unemployable(?) women told her that their only option was to get pregnant and get on the welfare rolls.

The real debt crisis in Australia is private debt, not public.

Perhaps if Lin and her compatriots paid tax rather than getting low wage plus high (untaxed) fringe benefits we would have the money for her improvements?
What am I saying, social workers and labour politicians wanting to pay? Never mind their fair share.

G'day Hasbeen,
more significant than Aboriginal employment stats would be women. In most of the sixties, we still had a very high proportion of “single income” families. Stay-at-home mums weren't factored into unemployment stats.
Today, 50.1% of employed are women.
Incidentally, “Since the late 1980s Australia's overall tax to GDP ratio has been relatively stable and is currently around 30 per cent of GDP. The majority of tax revenue, equivalent to 25 per cent of GDP, is raised by the Australian government with around 5 per cent raised by the state governments.” -Treasury.
FACT: no one likes paying taxes.
FACT: democratic governments are elected by POPULAR vote.
FACT: since 1951, the top rate of income tax has dropped from 75% to 47% and will no doubt continue to drop, as the majority are never going to vote for a party that threatens higher taxes (witness recent election).
FACT: To overcome this problem, successive govs have resorted to 'sneaky' (pigovian or 'sin') taxes; organising tax cuts or breaks for the majority (of voters) and taxing minorities (of voters). Such minorities have traditionally included smokers, drinkers and gamblers; taxing these can be claimed as “morally justifiable” (and loses fewer votes).
FACT: wage and salary increases are invariably calculated -and reported- on a percentage basis, eg. A 1% rise for the median worker (about 40k) = $8/week, for the 'average' worker about $13.80, and for a Fed back bencher, about $37.80 a week, or more than 4 times as much as 50% of voters -if they would deign to accept such a measly percentage
http://www.news.com.au/national/australian-mps-now-among-the-highest-paid-in-the-world/story-fncynjr2-1226681596923
In the sixties, the average CEO's income was around 30 times the average wage.
Now it's more like 300 times.
It has always been cheaper to pay more for a supervisor with a bigger whip than pay the workers.

There is something very wrong with a system that taxes billionaires at half the rate of his/her employees!
There's something wrong with a system that concentrates more and more of our finite wealth in fewer and fewer hands.
Naturally, those whose hands are filling will argue for the status quo.
And do so, because they simply don't understand how flawed their thinking is!
You see, 70% of the economy is domestic, and relies therefore almost exclusively on discretionary spending!
And as more and more of our finite wealth finds its way into fewer and fewer hands, that discretionary spending contracts and contracts.
As it does so, the economic pie grows smaller and smaller.
More and more of the so called middle class are then forced to join the ranks of the have nots, taking the discretionary spend further down.
Similarly, when like a dog chasing its tail, wages and prices rise. Many a forced into new tax levels by bracket creep, which has the real effect of reducing their discretionary spending power!
Privatization of energy production, has ramped up prices by as much as 400%!
Again, as we spend more on energy and such, there is less for staples, which also become dearer, with higher costing energy inputs.
In Britain this has resulted in a million and a half homes being disconnected, due to the fact that energy is now a luxury far too many can not now afford.
Unfortunately, most of those homes are not owned by green advocates, who all but created power poverty. And all of the misery and deprivation that then flows from that.
And all so unnecessary, given some of the best and lowest carbon producing options, are far and away the least costly.
The way out, is by creating a bigger economic pie, and then giving everyone larger portions.
And that can only be done with trickle up economics, not the thoroughly disgraced and highly flawed trickle down economic rationalism.
Which has arguably placed us in the precarious position we find ourselves in today!
Rhrosty.

Grim,

"In the sixties, the average CEO's income was around 30 times the average wage.
Now it's more like 300 times.
It has always been cheaper to pay more for a supervisor with a bigger whip than pay the workers."

......Yes, indeed, and it's counterproductive and extremely short sighted, but regrettably, typical of Oz management.

During the early 90s I attended a course comparing the Japanese and Australian economies, one of the areas of study was management. At the time, the salaries of top Japanese executives were single figure multiples of the salaries of the lowest paid employee of the corporations they led. The Japanese idea of "enterprise" was totally different, there was recognition by management that all employees contributed to a company's success.

Now we have a government bought and paid for by big business.

Re: There is something very wrong with a system that taxes billionaires at half the rate of his/her employees!

That is the system! The employee gets paid in cash so there is no escape from income taxation. The Feds raise most of their cash by taxing the middle. The rich ( if they have any brains) will take their payment in kind and use it to generate even more wealth. The initial payment may be taxed but after that ? Who knows.

Re:
You see, 70% of the economy is domestic, and relies therefore almost exclusively on discretionary spending!

Right on !

Raise levies, taxes and charges enough and even the rich will be worse off. Its only a matter of proportion. Interest rate control is the RBA's blunt instrument to do just that ; remove discretionary spending.

Re: Rest of the post.

Yes, one cannot help but agree as the evidence is all around ut to see.

Do get some balance in this Kilmouski.

PAYE tax barely covers the welfare bill.

Most of the money to run the country has to be found elsewhere.

Cut the welfare bill in half, & a lot less money is required. WE might actually have some discretionary spending of our own money, rather than have the likes of our author giving it to some bludger to spend.

Hello Hasbeen,

What, Get some balance? Me? Lol!

I get a very modest income and am resigned to paying taxes until the grave. And find the way the tax dollar is spent is somewhat erratic.

Kilmouski ( my Russian Blue cat ).

Hasbeen "Cut the welfare bill in half, & a lot less money is required."

You do realise that welfare payments are *spent*, the money doesn't just vanish into the ether.

If you cut welfare, you increase crime, as more desperate people take desperate measures to survive.

Any "savings" must then be spent on more police, legal aid, courts and prisons.

As mentioned by others, simplifying the tax system and removing loopholes is a better plan than raising rates.

And instead of cutting needed services, cut all the fluff.
All that public funding, donations, awards, etc given to NGOs.

Public money for public services.
Private entities should fund themselves.

Hay Shockadelic, I reckon there are more than a few entrepreneurs who could make convicted criminals pay for their own incarceration running chain gangs, if we had enough sense to sentence the criminals to hard labour, & issue them to road work gangs.

We have failed with all the academic mumbo jumbo & rehabilitation, time now to see how much the fear of real hard labour could lower the crime rate.

People are Australia's greatest asset.
Lin,
I gather you mean the ones who work to pay taxes rather than the ones who use up our tax dollars.

Any "savings" must then be spent on more police, legal aid, courts and prisons.
Shockadelic,
I'd rather see it spent on a National Service which would produce more decent citizens & cut the number of criminals. I'd be a lot cheaper too. A flat tax would enable the lot.

Hasbeen, I'm talking about the people who aren't committing crimes *now* because they get welfare.

Without it, they will rob and steal to survive (and possibly assault or murder in the process).
What about the social "costs" of living in a more threatening environment?

Really.like the discussion thus far. About the disadvantaged in life, I have no solutions but I urge you to read the excellent book by Robert Hughs "The Fatal Shore" and notably the chapter " A Horse Foaled By an Acorn". They talk about the " swinish multitude" .

Quote:
" modern squalor is squalid but Georgian squalor is " Hogarthian" , an art form in itself "

What do we imagine?

My two bobs worth chaps.