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Final thoughts as Australians go to the polls

By Tristan Ewins - posted Wednesday, 18 August 2010


Australia goes to the polls this coming Saturday, August 21, 2010. But some voters will not make their decision until the final day. Others might not even decide until they arrive to vote.

That said, what kinds of issues might play on voters' minds as they make their decision? What follows is a consideration of some questions which might influence voters - even this late in the campaign.

Would-be-Prime Minister, Tony Abbott opposes the National Broadband Network claiming it's too expensive and that it shouldn't be public. But privatisation of Telstra created a private interest which obstructed modernisation of communications infrastructure to defend its own profits. Does Abbott want to repeat this mistake?

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He is also proposing an alternative to the National Broadband Network which makes use of inferior technology. This infrastructure should last decades; but if we don't invest in fibre optic broadband now, we will have to do so in the future. Tony Abbott talks of “waste”, but given his $6 billion commitment to broadband based on inferior technology, and its probable short-term life span, does he really know what he is talking about?

Compared to the Abbott proposal, Communications Minister Stephen Conroy expects the NBN to provide “speeds of up to 1,000 megabits per second”, ten times the speed originally envisaged by the government. Conroy described Labor’s NBN investment as being "truly about future-proofing".

Another commitment from the Abbott campaign is their determination to drop the resource rent (mining) tax which gives Australians a share of the profits from resources, which belong to us all. Rio Tinto and BHP now accept the tax. But Abbott’s plan to drop the tax would cost the budget bottom line more than $10 billion a year. This, in turn, raises the question, what specifically will Abbott cut - amounting to $10 billion a year - to pay for this promise? Will he take the knife to healthcare again? Already we know he plans to abandon the GP “Super Clinics” designed to take the pressure off hospitals.

Abbott wants to implement a parental leave scheme which will discriminate against parents on low and middle incomes. According to Jenny Macklin, Abbott’s scheme “would provide high income earners living in cities with up to $75,000 and hairdressers, cashiers and hospitality workers much less”. But even voters on low incomes would pay as a proportion of costs from Abbott’s company tax levy, to pay for the parental leave scheme, flows through to all consumers. Abbott’s parental leave scheme would initially cost more than $8 billion in the first two years. Voters on low and middle incomes would effectively subsidise those on high incomes. Is this fair? Why should voters on low and middle incomes vote for this?

By comparison Labor’s existing scheme “provides 18 weeks' pay at the minimum wage, currently about $570 a week”: a flat rate for all.

There are crucial questions on taxation policy, also, which have barely featured in media coverage. Abbott is considering the Henry Tax proposal for a flat 35 per cent rate for earnings from $25,000 up to $180,000. Michael Stutchbury of The Australian, however, thinks there may be complications. These concerns, and also some of my own, are as follows.

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How will this affect overall revenue? And if it is reduced where will the shortfall come from? Will the GST rise? And where's the fairness in taxing an average income earner at the same rate as a person on $180,000 a year? Will Abbott announce the full details of his tax plans ahead of election day? Voters deserve the full story.

Then there are Liberal claims about “debt” and “waste”

In fact, Liberal claims of “stimulus waste” are greatly exaggerated and their advertisements downright deceptive. At first, Liberal “attack ads” accused Labor of an “$8 billion waste” on “school halls”. This has now been revised to “up to $8 billion”.

The Age, however, reported that the costs of Labor’s “Building the Education Revolution” (BER) infrastructure program “blew out by [only] up to 12 per cent”. Any blow-out is obviously a problem; but the Liberal response via their “attack ads” has been one of extreme and deliberate exaggeration.

Despite the hype, the Sydney Morning Herald has reported that only 2.7 per cent of all schools engaging in infrastructure projects funded by Labor's BER program have reported problems with the program! And meanwhile the BER program provided economic stimulus when it was desperately needed: with school communities all over the country now enjoying vital infrastructure which will enhance education processes and outcomes for generations.

Tim Colebatch - economics editor of The Age - has also blown Liberal claims to the “high ground” on debt out of the water. Writing on August 12, Colebatch claimed that the Coalition “has used up almost all its budget savings for new spending and tax cuts, leaving it with a bit over $1 billion of net savings over the next four years - on its own costings”. To put that in context, with an economy valued at over AU$1.1 trillion, we’re referring to less than 0.0025 per cent of GDP in additional surplus for the Coalition as opposed to Labor.

Here would-be-PM-Abbott is playing upon negative preconceptions built up regarding Labor’s economic management: but the reality is that the Labor stimulus package prevented recession. Coalition claims on debt management simply have no substance.

Recession under Abbott would have meant a downward spiral of unemployment, falling public revenue and government debt.

Under Labor Australia has maintained its “AAA” credit rating, aiming for a return to surplus - after the critically-required stimulus - within three years. And drawing on Treasury statistics the “Australian Government net debt is expected to peak at 6 per cent of GDP in 2011-12 compared with a peak of 94 per cent of GDP for the G7 economies.” No wonder Abbott has been running scared from a proper debate with Julia Gillard on the economy.

Regardless of this, fears about public debt need to be placed into perspective.

Reduction of public debt under the Howard government came from privatisations - asset sales which saw reductions in debt matched or outstripped by reductions in government revenue. And neglecting to modernise infrastructure and invest in education - as typified under Howard - costs the economy in the long-run. Obviously what’s needed is a balance between managing debt, and investing for the future.

Neglected issues and final observations

There are other issues which also have been neglected during the campaign, and in media analysis of policy.

First: affordability and availability of housing. Under Howard a housing bubble developed which grossly inflated property values. This means that even modest movements in interest rates have a greatly magnified effect on mortgage repayments. Many can no longer afford home ownership.

What is needed is a massive investment in social housing; not only to provide for the poor and vulnerable; but crucially - to increase supply and make housing affordable again. Simply releasing new land alone isn't enough, though - because there is the added cost of new infrastructure. Neither major party is leading on this issue, afraid to make an investment of the necessary scale to make a real difference. Greens policy on this issue seems deeply-thought-out; but on their policy websites they provide no costings.

Second, there is the demographic challenge, and the need for a reformed social wage. Australia has an ageing population; which means in the future we'll have lower labour market participation. This will effect revenue and squeeze funds for services, infrastructure and welfare. We also have tendencies towards labour market polarisation (with more low-paying jobs) which means we need a stronger social wage in areas such as health, education, welfare and transport - for all of us, but also to support the disadvantaged. This also needs to be complemented with subsidies for energy and water, as well as communications and intervention to support social participation. The consequence is that we need progressive tax reform to maintain welfare, infrastructure and services. Who will do the right thing and progressively reform tax?

Finally, there is the matter of a National Disability Insurance Scheme (NDIS). Australian Medical Association (AMA) President, Dr Andrew Pesce, stated in July of this year:

Labor’s draft National Disability Strategy is based on the right for people with disability to enjoy full and effective participation and inclusion in society, and the right to have respect for inherent dignity, individual autonomy, including the freedom to make one’s own choices, and to be independent.

According to the Australian Institute of Health and Welfare estimates there are 1.5 million people [in Australia] with a severe disability and that will grow to 2.3 million by 2030. All of us; and all our families are potentially at risk. Therefore: providing dignity, security and participation for those affected is a matter of personal interest to all of us. It is also a matter of human decency.

According to The Australian a NDIS would come “with a price tag: a net $4bn to $5bn a year to cover people aged under 65.” That’s about half of what it would cost for Abbott to cut the resource rent (mining) tax.

And of course the elderly must be fully covered also. A new levy similar to the Medicare Levy could be established at a rate of 1 per cent or 1.5 per cent for taxpayers.

But regardless of the human need it appears the major parties are shying away from such fundamental and urgently needed reform because of the price tag.

Again, the Greens have supported an NDIS type scheme in principle, but haven’t put a dollar-amount on that commitment. I am is still hoping Labor will announce a NDIS as a last minute “drawcard” establishing Labor’s superior credentials in welfare and health, and providing scope for enhancement of mental health services.

Conclusion

There are many important issues facing voters in this election. Labor acted quickly in response to the global financial crisis. Labor stimulus was swift - as necessary - but moving so quickly inevitably involved some waste. The alternative was recession.

Although forced to compromise, Labor’s resource-rent tax will take in about $10 billion a year: providing scope for the Company Tax cuts that underpin an increase in employer superannuation contributions to 12 per cent.

Labor rolled back the worst of WorkChoices - but there is more to be done. No worker should be worse off under Award modernisation; and workers deserve the right to pattern bargaining.

There are many other issues as we have discussed here also.

In the face of Liberal deception on debt, waste and stimulus, the real choice for socially and economically-conscious voters is between parties of the Left and Centre-Left. There’s the choice of rewarding Labor for what reform it has achieved; or trying to nudge Labor into further action by voting for the Greens.

Some will not be able to stomach the kind of pragmatic electorally-driven decisions Labor has made: for instance with regard to refugees. And a Greens balance-of-power in the Senate may spur more of the kind of reform as we saw with Labor and the Greens having worked out reform of Disability and Aged Pensions in response to a rising cost of living. But rewarding Labor for what it has done right may provide the motivation - and the self-interest - for more reform as well.

This election will be close. Every vote matters. Make your vote count on August 21.

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About the Author

Tristan Ewins has a PhD and is a freelance writer, qualified teacher and social commentator based in Melbourne, Australia. He is also a long-time member of the Socialist Left of the Australian Labor Party (ALP). He blogs at Left Focus, ALP Socialist Left Forum and the Movement for a Democratic Mixed Economy.
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