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.