Like the sign over the bar that reads ‘Free Beer Tomorrow’, the Liberals are always telling the vulnerable that they have to suffer today for the hope of a better future … Andrew Leigh explains.
‘Fairness’ is a word that’s been getting a pretty heavy workout since the Abbott Government handed down its first budget almost a year ago.
The Australian community and Labor have responded with one voice to say that the government’s plans for health, education, pensions and more were not fair. I don’t have that many words of praise for Joe Hockey’s first crack at the national books. But the Budget certainly did a good job of reinforcing how much Australians prize the egalitarian social compact this country was founded on.
What’s more, the Budget backlash revealed that Australians share a deeply-held understanding of what is and isn’t fair. For all our differences in lifestyles, backgrounds and habits, the majority of us agree that taking the most from those with the least doesn’t qualify. Although we may support different footy teams or tune in to different TV programs, we are united in believing that sharing the load between business and families, and between high-income earners and low, sure does.
That’s why it’s been puzzling to see Joe Hockey and his supporters attempting the redefine fairness with the tax discussion paper. Having muddled the definition of a regressive tax when he was raising fuel taxes, the Treasurer now wants us to stop asking whether particular taxes are regressive or how much the poorest pay compared to the better-off.
In the Treasurer’s line of thinking, it doesn’t matter if the GST on the same basket of groceries accounts for 1.5 per cent of a poor family’s weekly income but just 0.3 per cent of a well-off family’s budget. In this view, it shouldn’t bother us that Australia’s 900 biggest companies reportedly pay just 19 cents in the dollar in tax. And we should stop worrying about the fact that Australia currently spends around $31 billion on superannuation tax concessions a year, with the top one percent getting more superannuation tax concessions than the bottom 40 percent.
Like the sign over the bar that reads ‘Free Beer Tomorrow’, the Liberals are always telling the vulnerable that they have to suffer today for the hope of a better future. Take the GST, for example. When it was introduced back in 1999, Joe Hockey’s logic would have seen the Howard Government tell poor families: ‘don’t worry about the hit right now, because it’ll even out when you start drawing the pension.’ Wind forward to today, and the Abbott Government has been working to change the indexation arrangements so as to halve the pension by mid-century. Vulnerable Australians would have been dudded then just like they’re being dudded now if we hadn’t paid attention to the regressive impacts of that specific tax.
Australia has a long tradition of focusing our social spending on those who need it most. That’s one of the reasons why the OECD rates our social security system the best targeted in the advance world, and Allianz says our pension is the most sustainable in the world.
But wealthy Australians are the main beneficiaries of our spending on super concessions. For example, a person with more than $2 million in their superannuation account receives more government assistance through superannuation tax concessions than a full rate pensioner. That’s why Labor in government sought to rein in superannuation tax concessions – a measure scrapped by the Coalition upon winning office.
The disappointing thing about Joe Hockey’s attempt to redefine fairness is that it is so transparently self-serving. He and his colleagues want to raise the GST by adding it to fresh food, health and education. They’re happy for tax breaks to continue benefiting wealthy superannuants even as they raise superannuation taxes on the 3 million Australians earning less than $37,000 a year. And they certainly seem loath to do anything about the imbalance between what individual taxpayers and some major corporates contribute to our common wealth.
Instead of addressing the equity element in all those decisions, the Treasurer would prefer to wave them away by changing the way he talks about fairness. Unfortunately for him, you can’t just take a word that signifies a deeply-held set of values shared by the Australian community and force it to mean something else.
Fairness means recognising we all want to contribute, but differ in our capacity to do so. It means being mindful that it isn’t just dollars that matter in our tax and transfer system, but also what proportion those dollars take from the total in someone’s pocket.
By that definition, many of the policies the Coalition is currently pushing for will never be seen as fair. Instead of attempting to re-write our common language to justify those policies, Joe Hockey’s labours would better be used on fixing the unfairness that sits at the heart of them.
Andrew Leigh is the Shadow Assistant Treasurer and Member for Fraser. His website is www.andrewleigh.com