'Tax cuts, for instance, are routinely embraced with abandon by both major parties regardless of any platform, and regardless of the consequences of austerity that follow.

To expand the overall tax base by approximately 1 per cent of GDP - or somewhere over $10 billion - following the next ALP National Conference could be seen as a modest and necessary measure in implementing vital and landmark health and welfare reform. This, we must remember, is in the broader context of an economy of well over $1 trillion. While this would move beyond Labor’s mandate, the demands of health and welfare reform are crucial and immediate.'

Typical Labor to think it is ok to move beyond any mandate and raise taxes, increase spending and have the cheek to criticise the Coalition for promising and giving tax cuts...

but wait there's more

';While bracket creep could be eliminated for those on lower incomes by indexing the bottom two tax scales, the process could be left in the case of those on higher incomes, with the revenue thus gained flowing through into progressive tax cuts. Proceeds from bracket creep, eliminating negative gearing and halving dividend imputation could thus be redirected...'

and

'...also underline the need to more thoroughly regulate the lower end of the labour market. Labor’s “simplified” award system could do with more “muscle”'

So while we're at it we'll also change what we promised on IR. But hang on we'll also meddle with our health insurance promises...

'... means testing of the Private Health Insurance Rebate would prove a more popular measure than its immediate and outright abolition.'

And I'll bet Kevvy, Swan and Gillard cheer on these proposals ... after the election ... because sure as hell they won't endorse these beforehand.


Give us a break.

Keith - I appreciate any concern you may have re: Labor's mandate.

Perhaps Labor will not want to increase that tax take by 1% of GDP.
Even with such an eminently modest measure you could be certain there would be a campaign of panic and fear.

My point still stands, though. The Liberals introduced much more radical measures in IR, and in undermining our tax base than could my proposal.

Anyone supporting the conservatives, here, and condemning my proposal - would seem a tad hypocritical.

Normally I would be inflexible about Labor and it's mandate - but the double standard frustrates me - no-one worries about having a mandate for undermining our tax base and for introducing austerity.

At the very least, though, Labor should make savings of over $15 billion; including Defence cuts, a less adventurist defence policy, means testing the private health insurance rebate, a reduced surplus (say another $5 billion in today's terms)... This, in itself, could be enough to pay for welfare and health.

I welcome anyone, though, to state the case against slashing hospital waiting lists and keeping welfare pegged to changes in the cost of living as well as Average Weekly Earnings.

Many people face dire poverty without welfare reform, and surely resolving the waiting lists crisis is point imporant than an exercise in blatant pork barrelling. It would cost less than Costello's $34 billion in electoral bribery.

Hi Tristan,

You made this statement :

"As the real election campaign gathers steam, it is up to voters to hold governments, politicians and parties accountable."

Couldn't agree more.

How?

Surely you are not suggesting an election achieves that as we all know promises are meaningless and none of today's government's hold to their promises. Save Bolivia. Their newest leader is and has done what he promised. Where else?

Democracy is not defined by being able to vote. It is being governed by the people for the people. Not the oligarchies we have today.

You use the word mandate.

This is a word any winner of an election uses to justify everything they do while in power. A classic example? Iraq? No mandate given but certainly taken. Mandates do not exist except through referenda.

To me there is only one way to make government's accountable. That is to change the loyalty of MP's from Party to electorate. I suggest an AWA arrangement with the MP. Sackable on infringement. Negotiated with the electorate. Yes it would be chaotic initially but what have we now?

Add to that a major change in how Ministers functions work and we have a shot. Currently Minister's protect, cover up and lie about any problem in their portfolio when their job is the opposite.

So I say change the role so the Minister is actually an external auditor. Their role would be to ensure the department does what it is supposed to. Being inside that organisation compromises them and destroys the aims and goals of that organisation as they are subject to an individual Minister's daily whims.

What say you Tristan?

geez, pegasus, is there a second democrat in oz? at last?

the society we should be aiming for is this:

ministers directly elected on the strength of their published plan and budget. open administration of public functions, so the electorate can see they are getting what they voted for. citizens to set the constitution, and control ministers, through referenda.

it's called democracy.

how to get there from here? form a citizen's action group whose purpose is to mobilize support for these principles, and withdraw electoral support from all parties, only supporting individuals who will pass enabling legislation.

this is real reform, but better called non-violent revolution, since for the first time in british society, the people rule.

is it going to happen?

no. can't have democracy without citizen-quality people. ozzies are house-trained, bred for sheepishness. they are terrified of responsibility, never having had any. no matter, we have philospher-kings for politicians here, they'll take care of us. lucky, huh.

Hello Tristan

You suggest Labor should support a supply-side remedy of more public housing, which would provide a "much-needed correction in the market"

Yet Wayne Swan and the rest are totally paranoid about giving people an escape from eroding high house prices by providing more affordable housing and they have said as much.

Deflation is what needs to happen - but AS IF the ALP is going to redistribute wealth from homeowners to those who can't afford to buy!! I totally sympathise with your position but Labor is not going to help.

It would be nice if we didn't treat housing as speculation with negative gearing.

What I have concluded today after seeing the most recent housing affordability figures (at an all time low) is that no one is going to fix the problem and perhaps the credit situation will get out of control eventually. I am not an economist but Steve Keen (Debtwatch website) is worth reading.

37,000 new public housing units would be nice, but not enough. Ordinary full-time workers are not eligible in NSW and Vic. That is, your garbos, nurses, retial workers, apprentices, anyone earning $410 GROSS a week so it’s of no use to them. Can’t we debt finance broaden out eligibility and reinvest the surplus? Ooh no, Labor housing ministers say, couldn’t possibly borrow against our billions of assets and ‘crowd out’ the private market.

Rent assistance is a waste of money. There is no brake on upward rents so landlords are inclined to increase rents if a tenant's capacity to pay goes up. We need not-for-profit rental housing, long term, community-owned.

Since the revolution seems long overdue, even some Scandi-style social democracy in the housing realm would be nice. But I don't think Rudd Labor/two-thirds of Australia whose 'wealth' is their bloated housing value want to do it. They'd prefer to see us renters captured and paying off their overblown mortgages forever, because we are their cash cows.

I agree that the problem in housing is largely is one of supply, and I agree that there would be resistance from investors...

But when you consider how much there is to gain for renters and first time home buyers, I think investing $8 billion in new housing stock should certainly be considered. It is easily affordable, and any debt could easily be financed.

Unfortunately, I don't know what Labor's private polling is showing them on this issue. But the situation is desperate. (so desperate, in fact, that I think our politicians are failing us terribly by not coming to a bipartisam conesensus on the issue)

Perhaps if Labor fails to raise the issue then the Greens should run with it: put some pressure on both major parties from the relative Left.

Also - I'm unimpressed by moves to increase supply only on the urbam fringes. Urban consolidation - with increased expenditure on public transport infrastructure - and much more medium density housing - seems the way to go.

“expand the overall tax base by approximately 1 per cent of GDP…could be seen as a modest and necessary measure”

For what purpose “health and welfare reform”!

That is just an attempt to shelter the indolent and profligate from their folly whilst depriving the industrious of the right to discretionary income.

I will always be suspicious of a proposal which sees “virtue” in taxation.

“The tax free threshold could be raised,”

I think what Costello has proposed is more equitable than merely offering a free ride to some whilst penalizing the efforts of the astute.

“It is not only the most vulnerable of workers who have suffered”
Actually they suffered more due to the irresponsible and inflationary strategies of past socialist governments, than through the prudence of the incumbent federal government.

The price of full employment might well be industrial reform but at least people in jobs, being modestly paid, is far better than higher incomes for some with higher unemployment rates due to the socialist / union bully-boys threatening the commercial growth of employers.

As for “affordability have become an “impossible dream”.”

“Mortgage payments now account for 30.7 per cent of the average first home buyer's income”
Re http://www.abc.net.au/news/newsitems/200705/s1936346.htm

Affordability of housing varies generally within the range 27% and 33% of gross family income.

It is tied to the borrowing calculations done by mortgage lenders with variability depending upon the general present and predicted fluctuations in economic wellbeing (consumer confidence) (viz economic boom and prices increase, times of economic depression, prices collapse of the early 1990’s under Keating).

Housing affordability might seem different today than it was 30years ago but then, incomes have risen, availability of mortgages has risen, interest rates have fallen, the only thing which has not changed is land supply and that supply is pretty much the same as it was when the aborigines arrived and is not likely to alter anytime soon.

“It is to be hoped that this contribution will in some way inform a vital and much-needed debate.”

When all is said and done, it doesn’t.

A full critic of this piece would take much more than the 350 words available to me; but here goes.

Firstly: - areas where I am in agreement.

Raising the tax free threshold. Throughout the Hawke-Keating & Howard governments this has changed little and should be increased to between $10-12,000pa. This should result in a savings to the government in administration costs, somewhat offset by an increase budget to combat social security fraud. It would need to be implemented over time with changes to the bottom two tax scales to remain revenue neutral.

Care-giver allowance should be broadened to include a greater variety of circumstance. There are areas in the health portfolio that are deserving of extra funding and savings to be made.

I also support the public ownership of utility networks.

As for the rest of the article, most of what is put forward is simplistic, ill-conceived or socialist mantra.

The abolition of the Private Hospital Insurance rebate will not result in a $18 billion windfall to the government (over 3 years). The cost shifts would be complex, but the end game would be a public system that is unable to cope and a private system that performs below capacity. A lose-lose scenario. Not much difference in the cost to the public purse; but the real cost would be counted in lives.

The statistic from Ross Gittins comparing wage share of the economy as a percentage of GDP seems strange (until you read the article). The paragraphs which follow are truly bazaar. “…requiring businesses listed on the Australian Stock Exchange to issue shares every year to community-based funds valued at 7.5 per cent of total stock.”

Not all shares make 7.5% pa earning on their capital. Companies involved in research & development may not provide a dividend to investors for years, if at all. Why would a company stay listed on ASX? Surely this would decimate the government’s tax receipts.

Tristan must be gutted that Rudd has decided to plagiarize the government’s tax policy; as it has largely done in education, health, housing and defence.

Tristan,

I am unsure of what you mean by the danger of austerity if taxes are not raised as a percentage of GDP.

The money is still in the economy, it is just in the hands (or accounts) of those who earned it. They can spend it on whatever they want, and will probably do a much better job of it than some civil servant or government.

I am all for increased taxation of the rich, (or spending mandated by the government), as long as those who pay net taxes can tell the recipients of that welfare what they can spend the money on.

I for one would allocate 10% of all welfare towards investments, to allow those on welfare to eventually derive income from this.

Concupiscence,

To begin with - yes, it is very hard to discern what the end result of means testing the Private Health Insurance Rebate. It is very likely, though, that the wealthy would retain their private insurance regardless of any means test, and that the cost to the budget would not be as high as you suppose. On the other hand, the move would be a big 'win' for those on lower incomes who cannot afford private health insurance, and the cost structures of the entire industry would be reduced as the beed to factor in profit margins was largely removed.

re: wage earner funds - in Sweden such funds were introduced at a rate of 20% of all profits. Robin Blackburn has suggested a rate of 10%. I admit, here, that I've made a mistake: I said 'share value', while the proposal is meant to refer to profit share. With a rate of 7.5% we it would take many decades for the funds to establish themselves. But the move would, to a degree, compensate workers for a loss in the wage share of the economy.

Miner; as for austery - the point, here, is that as the progressively scaled tax share of the economy falls, spending on the social wage falls, and those on lower incomes face reduced services - combined with the burden of user-pays.