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French economist Thomas Piketty argues that current conditions have set us on track for a return to 19th century-levels of inequality. The Commission of Audit proposals suggest that the auditors and the Government are keen to expedite this neo-Dickensian era. It's all done in the name of 'incentives' toward 'personal responsibility', but this cannot remain coherent in the face of those who will be hit hard by the proposed suite of cuts and co-payments.
In politics, one should never opt for a balanced and thoughtful description of the truth when wild exaggerations will do. Especially when you want to take from the poor and give to, if not exactly the rich, at least the investor class. The dire pronouncements from the Abbott Government in response to the Commission of Audit's 86 recommendations reflect not only the PM's relentless negativity, but also more than a whiff of class war.
Federal Treasury secretary Martin Parkinson has called on the Government to increase the GST. In isolation this would hurt the poor and benefit the rich. But it could help the common good if it is part of a tax reform package that cuts tax avoidance strategies for high income earners, including superannuation concessions, negative gearing and trusts.
I reject the dystopian vision of an Australia where people experiencing poverty are made to endure expenditure cuts while the people who have the least need for assistance enjoy overly generous tax concessions. From time to time someone comes out of the woodwork and accuses me of being a communist but that's the least of my worries. What worries me is the myth that people living in poverty are to blame for their own situation.
The budget problems are not caused by Newstart or disability pensions, which have been declining as a proportion of economic activity. Had the Howard Government not been so generous with its tax cuts to upper and middle income groups, there would today be no budget deficit.
Two of the most important issues to have been given scant attention in the election campaign are ageing and property. Even less noticed is the inter-relationship between the two. The effect of ageing on property prices will be arguably the most important financial challenge facing Australian governments over the coming decades.
As the China boom fades Australia is experiencing a delayed version of the GFC, without the banking crisis. Until now we've been reasonably well served by both sides of politics, in terms of macro-economic strategy. Now we require a way of dealing with more mundane economic issues like productivity and efficiency. Neither side has many good ideas about how to achieve the required structural shifts.
The salary packaging and car manufacturing industries resented not being consulted about changes to fringe benefits tax rules. But as treasurer Chris Bowen said when he shrugged off the criticism: 'This is a matter of the integrity of the tax system.' A tax system that makes compromises with sectional interests is by definition corrupt and turning its back on the common good that it has been set up to serve.
Commentary on the proposed changes to tax on super has created the impression that the truly needy will miss out on extra cash as politicians pander to middle class voters. This is almost entirely false. In terms of where tax dollars are allocated, Australia has definitely concentrated on lower class welfare.
The GST appears unfair, as it hits the poor much harder than it does the wealthy. But that's due to the way it is implemented, and it doesn't need to be that way. The St Vincent de Paul Society would like to see it increased, but with a more sophisticated and fairer compensation mechanism.
It is not just Joe and Jo Suburbia that have a lot riding on real estate. Taking the heat out of house price inflation is extremely difficult, because the whole system is based on the expansion of credit and consumption that house price inflation allows.
During the Howard years, a culture of fear saw us closeted within our houses, reluctant to engage with the community. Prime Minister Rudd's apology to the Stolen Generations may have collapsed a few symbolic fences so that messages can begin to pass back and forth.
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