Labor v the Greens:

Martin Gordon writes: Re. “Why the Labor Right is off-beam on the Greens” (yesterday, item 1). Most times Bernard Keane can quite some insightful, but occasionally he is off target. So it was with the Labor attack on the Greens relationship.

Keane is partly right about the Greens replacing the Democrats, except that the Democrats were nowhere as doctrinaire as the Greens and the support base is not exactly the same. The Greens ideologically are on the far left of the spectrum and their voters are partly ex-Democrat types but largely the left types that voted Labor if not directly at least through preferences.

The Green impact on the Coalition vote is insignificant and this is reflected in the very different preference pattern of the Democrats relative to the Greens (i.e. 40% to the Coalition versus 20% from the Greens). Whilst what happens in Grayndler and Sydney and Melbourne is interesting, it is actually the views of the great mass of Australians that live elsewhere in the urban areas of Australia, regional and rural areas that matters. They simply are vastly more numerous and are where elections are won and lost.

The Greens seek to supplant the Labor Party as the major party of the left (read some of their dissertations and writings, which make it clear). The fact is alignment with the Greens alienates the Labor Party from the greater mass of Australians. The Greens political spectrum is novel it sees the world differently there is certainly moral certainty in a view that sees only right versus wrong, not diversity of opinion. The Greens are not Labor’s friends and many party members are heartily sick of playing to the Greens tune rather than a Labor agenda.

Les Heimann writes: Ever since the silly thinkers within the ALP — the right factions in Victoria and the NSW got together — the party was hijacked. It’s what corporate raiders do — take over the company, strip it and sell the shell.

The ALP is controlled by the raiders, they won’t let anyone else in, they will do anything to stay in control and will blame everyone but themselves when their absolute incompetence leaves them floundering on the shoals of defeat.

A political party that actually says what it means and means what it says — and stands by its policies and principles; that’s the Greens. And that’s childish in the eyes of Labor. As a lifelong social democrat I shudder to think the mess that will be Australia after the next federal election when Labor will be utterly destroyed.

In my view the Liberal Party has also been taken over by extremists and those who vote for them will get the government they voted for.

The only way forward is for the ALP to disappear and a social democrat party to rise from the ashes. Those who control Labor now are driving it to the absolute bottom of the deepest hole.

This once great party is gone and gone forever — and true it is that much of the Greens support have come from disaffected Labor voters.

Now there’s no one in the middle, the Liberals have swallowed them and the left have gone to the Greens.

Tax and employment: black holes in Coalition policy:

Gavin R. Putland writes: Re. “Coalition’s policies? We’ve got ’em — well, sort of” (July 5, item 1). In the “Coalition Speaker’s Notes” released by Crikey, there is no section on tax per se.

There is of course a section headed “Carbon Tax”, in which the nearest thing to a tax policy is the promise that “At the next election, the Coalition will deliver personal tax cuts that are not just compensation. It will be a tax cut without a carbon tax.” The document goes on to attack the carbon tax under every possible heading, including “Carers”, “Disabilities”, “Families”, “Tourism” and “Voluntary Sector”.

Tony Abbott has rightly characterized the carbon tax as a “reverse tariff”. He has reasonably described its effect as a “python squeeze”. But, as I explained in Crikey on May 11, the carbon tax is only the fourth-biggest reverse tariff in Australia’s tax-transfer system. If the carbon tax is a python, then payroll tax is an anaconda, and the Superannuation Guarantee is a Titanoboa, and the income tax system is the sea serpent in The Chronicles of Narnia. All four are reverse tariffs. Mr Abbott has promised “in blood” to slay the python, but not the others.

Well, excuse me, but you can’t build a Federal election campaign around opposition to the fourth-biggest reverse tariff while supporting three bigger ones — of which the biggest and second-biggest are imposed at Federal level — and while supporting plans to increase the second-biggest reverse tariff by raising the rate of the Super Guarantee. Is it too hard to get rid of the Big Two reverse tariffs? No. The trick has four components:

  1. Allow employers to keep the PAYG income tax that they withhold from employees and contractors; but credit it to the employees and contractors as if it had been paid to the ATO on the grossed-up incomes. That doesn’t abolish personal income tax altogether, but does stop it from feeding into prices; thus it stops personal income tax from acting as a reverse tariff. It also preserves current after-tax wages and wage relativities.
  2. Abolish company tax — except the capital-gains component, which is mostly a resource rent rather than a reverse tariff.
  3. Abolish compulsory employer-funded super contributions, and instead fund the contributions out of general revenue.
  4. Replace most of the lost or spent “general revenue” by imposing (e.g.) a VAT on the broadest possible base, assessed by the subtraction method (like company tax) so that it can coexist with the GST. A VAT is not a reverse tariff, because it does not add to the costs of inputs (e.g. labour) and is not applied to export sales.

As the retained PAYG income tax and the avoided company tax and super contributions would be available to pay the VAT, there would be no need for any overall rise in prices even if ALL of the revenue had to be replaced. But not all of it would need to be replaced, because welfare expenditure would be reduced, because the unemployment rate would fall to near zero, because steps (1) to (3) would cut the marginal cost of labour as seen by employers without reducing workers’ take-home pay.

Compared with all those benefits, the redistributive effect of broadening the base and lowering the rate of the GST would be negligible. So the GST might as well be abolished in favour of a higher rate for the subtraction-method VAT. If this were done, employers would no longer be unpaid tax collectors, so the tax system would be immunized against attack under s.82 of the Constitution.

These proposals constitute not only a tax policy, but also a workplace-relations policy, which is another thing that the Coalition sorely needs.

*The author is employed by Prosper Australia but is currently on leave. The suggestions contained in this article are his own.

Peter Fray

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