Like what you've read?

On Line Opinion is the only Australian site where you get all sides of the story. We don't
charge, but we need your support. Here�s how you can help.

  • Advertise

    We have a monthly audience of 70,000 and advertising packages from $200 a month.

  • Volunteer

    We always need commissioning editors and sub-editors.

  • Contribute

    Got something to say? Submit an essay.

 The National Forum   Donate   Your Account   On Line Opinion   Forum   Blogs   Polling   About   
On Line Opinion logo ON LINE OPINION - Australia's e-journal of social and political debate


On Line Opinion is a not-for-profit publication and relies on the generosity of its sponsors, editors and contributors. If you would like to help, contact us.


RSS 2.0

Labor's first budget pitched as 'modest and responsible', but more ambition needed

By Tristan Ewins - posted Monday, 31 October 2022

Labor's first Budget has been pitched as 'modest and responsible', with limited new spending; and the intent of not fueling inflationary pressures. That said, there are some welcome measures. $20 billion will be invested towards upgrading the electricity grid ; preparing for a low-emissions future. Promises on Aged Care will be fulfilled, with tougher regulation and an improvement in the wages and working conditions of Aged Care workers. Over $2 billion will go into Education ; with free TAFE, 20,000 university places for the disadvantaged, and money for more qualified teachers and better-resourced schools. Money will be provided for 'urgent care clinics', and reducing the maximum co-payment for medicines from $42.50 to $30. Finally, there will be more support for parental leave and subsidised childcare ; with a plan to promote an increase in housing supply (and hence affordability), as well as an increase in Defence expenditure to over 2 per cent of GDP. (Herald-Sun 26/10/22) Though this housing plan appears over-dependent on private investment.

All that said, there are numerous problems as well. Jim Chalmers has flagged possible intervention into the energy market, with power prices set to rise by 40 to 50 per cent. This will crush struggling individuals and families. Also, Labor is flagging its intention to go ahead with the Stage Three Tax Cuts which will deliver a $9000 windfall for those earning $200,000 at a cost to the Budget of around $250 billion over 10 years. Nothing has been projected in the way of energy subsidies, and the price for reining in inflation seems to be falling upon those least able to pay. Wages are also flatlining, regardless of pre-election commitments to get wages moving.

So – what *should* Labor do? Some would oppose improvements for those on low wages and welfare as fuelling inflation. But those people should not be shouldering the burden. Already the bulk of their income is going towards non-negotiable necessities ; and increases in power costs will challenge their capacity to make ends meet in the most basic sense. There will be homelessness, skipped meals, and Winters and Summers without heating or cooling. A temporary increase in tax for those on middle and higher incomes could also have an anti-inflationary effect without impacting on the most disadvantaged. Specifically, temporary tax increases for those on middle incomes could tighten demand significantly. Without such tax increases, individuals and families will be left to shoulder the burden with higher interest rates, and hence higher home loan repayments. Some of this will be passed on to renters as well. The question is: What is the most efficient way of containing inflation? ; and how can this be achieved while lessening the burden on those least able to pay? Also ; what other measures need to be taken to sustain an improvement in the social wage longer term? Including the preservation of a truly needs-based National Disability Insurance Scheme. (NDIS) This may mean some other taxes need to increase progressively and permanently. Over the longer term Labor needs a rethink on tax reform. Ideally the Stage Three tax cuts should be withdrawn completely. There are so many priorities which demand funding. But a compromise strategy could be to deliver the same amount of tax relief ; but skewed towards those on lower and middle incomes. Median taxable income is just under $50,000/year. If tax credits are provided for those on low and middle incomes ; relief could be delivered without delivering an expensive windfall for those on higher incomes. By the time the tax cuts are projected to be phased in we will likely be struggling to recover from an inflation-induced slowdown ; or maybe even a recession. At this point, it makes sense to support the vulnerable and low-paid – as they spend the highest proportion of their income on 'getting by' compared with others. That is ; they can be depended upon to spend their incomes. Unemployment is also set to rise to 4.5% over 2023 to 2025. This begs the question of whether Labor accepts arguments around a supposed Non Accelerating Inflation Rate of Unemployment. (NAIRU) Again ; recession and 'spare capacity' are not the only means of containing inflation. Taxes can achieve this without depending on social misery and wasted human resources.


Also, record profits in the gas industry should be subjected to taxation ; as has occurred in Norway for instance. Those resources properly belong to all Australians ; and any windfall should be shared substantially with the Australian people. This could be redirected to energy consumers with subsidies – especially those on low incomes – while a legislated gas reserve could ensure Australian consumers don't miss out because of exports and global demand.

Into the future Labor should be seeking to reduce poverty and inequality by boosting the social wage and driving reform of the labour market ; especially for the working poor. An important improvement in the social wage would be implementation of Medicare Dental. Earlier in its first term Labor delivered an increase in the minimum wage. But others on low wages also need urgent assistance. This is especially the case in feminised industries like early childhood education. Again, any inflationary impact could be countered with strategic and temporary increases in tax. While impacting 'the economic middle' would be regrettable ; the plight of those on low incomes is more urgent ; and Labor needs to prioritise.

While Labor needs to deliver on promises to improve the Cost of Living, including energy affordability, it also needs to be looking to boost the wage share of the economy. To some extent this should be delivered as a matter of distributive justice ; and not only in return for improved productivity. In 2018, Jim Stanford explained how the wage share of the economy had fallen from 58.4 per cent in 1975 to 47.1 per cent in 2018. That translated to over $16,000 a year on average per worker ; and $210 billion per year in total. Not only does Labor need to agitate for improved Awards at the lower end. It also needs to improve workers' bargaining power more broadly ; and this must include support for pattern bargaining. Even Secondary Boycott should be legalised in circumstances where the 'industrially strong' support the 'industrially weak' 'in good faith'.

Importantly, though, the wage share is lagging in areas like mining ; where regardless of this wages are significantly higher than average. Profits are that high. In this case the social wage needs to be factored in ; and again a windfall profits tax ; and a longer-term super-profits tax – could help. Welfare also needs to be reformed to respond comprehensively to the Cost-of-Living crisis ; including all pensions and unemployment benefits.

Finally, the required strategic expansion of social and affordable housing demands a greater public investment. While Labor is correct to promote an increase in housing supply in geographic areas of job growth, it also needs to 'put its money where its mouth is'.

Labor has come to government at an especially difficult time. But there is a need to deliver on its mandate ; especially for those most in need. Inflation can be contained without hitting the most vulnerable overall ; and this needs to be Labor's priority during its first term.



  1. Pages:
  2. Page 1
  3. All

This article was first published on ALP Socialist Left Forum.

Discuss in our Forums

See what other readers are saying about this article!

Click here to read & post comments.

13 posts so far.

Share this:
reddit this reddit thisbookmark with Del.icio.usdigg thisseed newsvineSeed NewsvineStumbleUpon StumbleUponsubmit to propellerkwoff it

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.

Other articles by this Author

All articles by Tristan Ewins

Creative Commons LicenseThis work is licensed under a Creative Commons License.

Photo of Tristan Ewins
Article Tools
Comment 13 comments
Print Printable version
Subscribe Subscribe
Email Email a friend

About Us Search Discuss Feedback Legals Privacy