an article by an Inner Sydney Greens member
We await with trepidation the outcome of ScoMo’s deliberations over the forthcoming federal budget. So far the smoke signals are not good, little that is original or humane and lots of harping on the need for stringency. A striking lack of vision from the side of politics that flatters itself as ‘better economic managers’. Are they really? From a Greens perspective I don’t think they have the ‘ticker’.
We constantly hear from the likes of the Treasurer that people are paid too much money and that governments take too much in taxation and that they spend far too much as well. But the government plays a crucial role in redistributing resources for the benefits of the community by setting employment standards and wages and investing in services and programs that support people and develop the capacity of the community. These programs mean that we have a healthy, educated, productive workforce, viable efficient infrastructure and a much bigger and richer economy than we ever could if we did nothing and tried to let the market solve everything. (More like let the Devil take the hindmost!) If the market did just spontaneously solve all social problems, we wouldn’t have any. But we do, so it doesn’t.
Instead of any proper explanation or defence of the vital role of government in the money-go-round that is the economy, we have a lamentable Coalition government devoid of ideas in how to stimulate more vigorous economic activity. In spite of the fact that the NDIS isn’t fully funded, that Gonsky isn’t fully funded, that the NBN isn’t properly funded, (but we can find $50 billion for big business tax cuts and another $50 for submarines), that a huge number of vital social safety nets from public housing to remote Indigenous communities to basic legal aid and mental health services are chronically underfunded, and that all these things would add to the efficiency of our economy and increase jobs, yet they are scratching for ideas in how to drive economic growth and investment. The idea of a boom driven by investment in social justice is simply foreign. We won’t even mention the lamentable and spiteful, ideologically driven ignorance on display when it comes to the opportunities avoided in investing in Australia’s clean energy future. To them, government is nothing but a drain, a waste, a hand-brake on the economy, not a vital part of its organism and the one most amendable to help the community and eliminate problems.
With the top 1% of Australians owning 21% of assets and earning 9% of income, while the top 10% have 45% of all wealth and earn 29% of income, we still have a government scratching for ideas in how to raise revenue. This is even while capital gains tax concessions and negative gearing are costing the budget a fortune and pricing houses out of the reach of ordinary people as investors rush in to minimise their tax exposure and to soak up real estate.
In fact, the Coalition’s policies on house prices, capital gains taxes and negative gearing should be the final nail in the coffin of any idea that they might be superior economic managers. They seriously argue that this isn’t contributing to the real estate bubble in Sydney and Melbourne. Even though negative gearing allows a person to reduce their income tax by the size of the losses they make renting investment properties purchased a grossly inflated prices. At the same time, they tell us that if we grandfathered negative gearing and capital gains tax concessions, flats and houses would stop being built and so, um… prices would go up? This is whilst record numbers of houses and flats are being built all over these cities as prices increase at nearly 20% a year in a stagnant wages environment. But no bubble. No. Nothing to see here…
The fact is, housing prices are going crazy because, there is too much demand from people who want investment vehicles, not housing! Any policy which adds to demand, or the money available to spend on housing is therefore wrong. What we need is a way of stopping investors from inflating prices, which means discouraging them, which means ending the favourable taxation treatment of investing in real estate. While interest rates are on the floor because if insufficient demand in the rest of the economy, (mainly due to a lack of government spending and flat wages), investors will find tax protected real estate hard to resist with such huge annual increases in price. So the Coalition finds itself with a wicked problem that its own meanness has created. At the level of fairness, why should the wage earners paying income tax subsidise the investors renting them their houses and keeping them out of the property market?
Fairness doesn’t seem to feature much in Coalition calculations however. We have no death duties and the dole is well below the poverty line. We have a climate crisis and the best renewable energy assets in the world, but no carbon tax and no long-term plan to drive investment or to solve the engineering issues and then export renewable energy to the world. A systematic program to address these problems and build a better future could actually claim the name of economic plan, unlike the Coalition’s Tax cuts for big business, which amount to more of an action point.
Instead we have a rigid, timid, mean and tricky Coalition government, obsessed with cuts and exclusion, showing all the imagination of a jellyfish and all the spine of one too when it comes to staring down the loony right. To them, abolishing the Human Rights Commission and stopping immigration are fresh ideas, and a series of tax cuts amounts to a strategy, even in the face of all the complex problems we still face. I think the Greens can show the world a better way.