The Dismissal Dossier by Jenny Hocking – a Review/Summary

cover90143-mediumNovember is always about Melbourne Cup, Remembrance Day and of course the anniversary of The Dismissal. Many comrades may have not yet read The Dismissal Dossier by Jenny Hocking. It really is a remarkable piece of work, exposing, inter alia, Prince Charles’ complicity and Malcolm Fraser’s duplicity in The Dismissal. It’s a very short book, absolutely worth the read.

Here’s my summary, with a very brief review at the end.

The Dismissal Dossier: Everything you were never meant to know about November 1975
Jenny Hocking
Melbourne University Press, 2015.

This book discusses both the issues of the Dismissal and the events of the day and the weeks prior.

It argues that the history of the Dismissal has been distorted in a kind of conspiracy against history. So Kerr, Barwick, Fraser and Anthony Mason all conspired to carry out the coup itself, and subsequently conspired to cover up the reasons for it.

There are some quite astonishing revelations.

Fraser knew beforehand of Kerr’s plan, and then lied afterwards and said he didn’t. Reg ‘Toecutter’ Withers was in the room when Fraser got the call prior to the Dismissal from Kerr outlining the conditions under which he would make Fraser PM.

The Queen, the Palace and particularly Prince Charles knew of Kerr’s plans, and gave tacit agreement.

Sir Garfield Barwick, who happily accepted much of the opprobrium for advising Kerr that the Dismissal was legally ok, wasn’t as instrumental as he and others have claimed. In contrast, Sir Anthony Mason’s role was much larger, and is only now coming to light. Mason advised Kerr for a long time before the Dismissal and even wrote a draft letter dismissing Whitlam for Kerr (Kerr used a different form of words in the end.)

Whitlam’s poll numbers were improving and Fraser’s were diving in the lead up to 11/11/75. 60% disagreed with Fraser’s tactics.

Whitlam had announced to Caucus on 11/11 his intention to go to Kerr and call a half-Senate election. Caucus reacted to the news with some confidence and ALP HO began preparing for an election. Whitlam had actually informed Kerr of this decision in the week prior, but went to Yarralumla to formally present his letter requesting a half-Senate election, before announcing it in Parliament that day. He never got the chance.

As Whitlam was presenting his letter advising of this election, Kerr interrupted him and gave him the letter sacking him. Kerr said “We will all have to live with this.” Gough replied ‘You certainly will!”.

Kerr later stated that Gough tried to call the Palace immediately after Kerr presented his sacking letter. Gough has always denied this, and witnesses at Yarralumla on the day support Whitlam rather than Kerr. Whitlam didn’t contact the Palace until that evening and simply said he was no longer PM.

Kerr had had some G&T’s before seeing Whitlam, as he was interviewing/socialising with three candidates to become his Aide de Camp. He had drinks with the three candidates, went away and sacked Whitlam, then came back for lunch with the three and Lady Kerr. He proceeded to get pissed. David Smith, Kerr’s official secretary interrupted them to ask whether anyone had informed the Palace. Kerr, visibly drunk by this stage, said they hadn’t. Lady Kerr then told Smith to do so. (p.18)
Kerr’s conditions for giving Fraser the caretaker role included that no inquiry be held into the Loans Affair, into which Fraser had been calling for a Royal Commission. Kerr had been made aware of legal advice (sought by Billy McMahon, who was fixated on the Loans Affair) that any inquiry into the Loans Affair may result in Kerr being called before an inquiry, as it was the Executive Council that authorised the seeking of unconventional loans by the Labor Govt. Fraser also threatened Kerr in the lead up to the Dismissal that if an election was not called, and Whitlam was not sacked (in the context of the Loans Affair) he would be forced to tell the Australian people that Kerr had failed in his duty to the Australian people and the Constitution.
Kerr was obsessively afraid of Whitlam calling the Palace to sack Kerr if he told Whitlam that he was thinking of sacking him. So he didn’t tell him!
It appears as well, that Kerr was afraid that Fraser would sack him if he became PM for his part in the Executive Council decisions in the Loans Affair.
Hocking finds Whitlam’s faith in Parliamentary, vice-regal and regal propriety was as naïve as it was unshakeable. If instead of waiting to see Kerr to announce the half-Senate election, Whitlam had simply announced it to the media or to Parliament beforehand, the Coalition would have passed the Budget. They were terrified of a half-Senate election.
A half-Senate election would have threatened the Nationals/Country Party’s gerrymander in the bush, as Whitlam would have pursued ‘one vote, one value’ laws. Labor was a good chance of gaining control of the Senate for at least a six month period after a half-Senate election.
Whitlam had met Fraser on the morning of 11/11 and told him there would be a half-Senate election, after Fraser refused to negotiate over Supply and Whitlam’s offer to delay the half-Senate election for 6 months. But Fraser didn’t tell his party room that this was happening. Fraser’s stony silence on all these matters shows that he was well aware of the coup that was about to happen and kept shtum while letting Kerr’s coup unfold.
Fraser told colleagues that he would resign as leader if Whitlam succeeded in getting a half-Senate election, but by 11/11 he knew he’d never have to do this, as Kerr was going to sack Whitlam.
Hocking believes that the half-Senate election was the crucial element in the whole Dismissal saga, and yet the ‘official’ history forgets it. Kerr should have done what his predecessor Sir Paul Hasluck had done in 1974 when Snedden tried similar tactics to Fraser, and allowed a half-Senate election to break the deadlock.
The whole issue of Supply was a charade, as Fraser couldn’t guarantee supply either, and Kerr would have kept him as PM even if he couldn’t get his budget bills through the Senate. In the end, Labor passed supply on the afternoon of 11/11 anyway.
The SMH and Age made similar points the day after the Dismissal.
The whole ‘Whitlam forgot to tell the Senate that he’d been sacked and that Labor should have itself blocked Supply that afternoon’ line is an ahistorical reconstruction. Whitlam had no idea that Fraser had been appointed PM. When he left Yarralumla, he returned to the Lodge and (after his famous steak) drafted a motion for the House that affirmed the House’s confidence in him and his Government and its lack of confidence in any Government formed by Fraser. Whitlam thought he’d be PM again by that afternoon, as per the constitutional convention that the Government is formed in the House of Representatives.
Hocking argues that the proceedings in the HoR on the afternoon of 11/11 were the most dramatic in our history and have been sorrowfully overlooked in analysing the Dismissal. When Fraser announced he’d been commissioned by the G-G, Whitlam proposed a motion that Labor won by 10 votes, which expressed a want of confidence in Fraser and called on the Speaker to inform the G-G to commission Whitlam as PM. At this stage Kerr’s entire strategy had been derailed. The Senate had passed the Supply bills and the House had expressed confidence in him and not Fraser. If Kerr was acting constitutionally, that should have been it. Fraser, once having lost a motion of no confidence should have immediately resigned. And on this Whitlam was the most excoriating of Fraser, saying that ‘this is the course that honour and precedent and history have sanctioned.’ Hocking says ‘Fraser failed to protect the HoR and the processes of democratic government’, ignoring ‘the single most important resolution the HoR can ever make, the resolution by which governments are made and unmade…the defining feature of the Westminster system and the sine qua non of democratic government. ..The repudiation of the foundational role of the House of Representatives in the formation of Government was nothing less than the repudiation of representative democracy itself.’
Once Kerr heard that Fraser had lost five motions in a row in the HoR, including a no confidence motion, he called Sir Anthony Mason to ask for advice. Mason told him it was ‘irrelevant’, which was astounding for a sitting High Court justice. Kerr then refused to see the Speaker of the House and delivered his ‘second sacking’, the double dissolution. Mungo MacCallum described it as ‘a reassertion of the divine right of kings’.
Hocking concludes:
‘At every stage it required deception- in its inception, in its implementation, and, after the dismissal, in its telling. The dismissal was never a matter of law, not even a matter of politics alone, but of personal and political choices, of ethics and morals’.
Review note:
To cast my historiography eye over that final statement- that comment is of great interest to the cultural historians, who factor in things like ‘performativity’, ‘cultures of dominance and hierarchy’ and the importance of language. After a slow process of absorption of cultural history ideas over the past 30 years most of the departments of history in Australian universities are dominated by cultural historians, even if the liberal and political historians like Jenny Hocking, James Curran and David Day still dominate modern political history.
Saying that the Dismissal came down to morals and ethics – effectively the cultures of the Australian ruling class – including Kerr, Fraser, Mason, Barwick and indeed Whitlam himself, really is saying something new, at least historiographically. Contrast that with more old-fashioned Marxist and anti-colonial type history typified by Pilger et al, that would say that Whitlam was sacked because of Pine Gap and ASIO and because Rex Connor wanted to nationalise the mines.
Personally, I’ve shifted slightly toward the cultural history view from the Marxian one over time, but in the end the material conditions do affect the cultural conditions. The ruling class cultural response was motivated or at least justified by the Loans Affair in particular, and by Whitlam’s move away from the US sphere of influence. The Marxist/post-colonial analysis isn’t wrong, it’s just incomplete. But I think the liberal/political history view which views the Dismissal through the forms of the Parliament and the constitutional role of the G-G is more incomplete without the Marxian view, in its failure of recognition of the counter-revolutionary nature of the coup. And same with a cultural history analysis, it’s incomplete without acknowledging that Australian capitalism was challenged by Whitlam, which set in motion the moves to remove him. Although cultural historians would probably argue that their point of departure is the Marxian, structuralist view, and they’re just putting the cherry on top, as it were, by describing how those objective material economic conditions were played out in the context of the culture of the Australian ruling class. Someone should probably put all that together, as modern political history in Australia doesn’t generally get the cultural history treatment, as the cultural historians are only really up to the first half of the 20th century. I tried doing that, with a modicum of success, in my thesis on the end of the white Australia policy in the ALP, but it’s a bit novel to do cultural historical analysis on what is seen as ‘political history’. Hocking’s opened the door on that a little.

Advertisements
Posted in history, Labor, Whitlam | Tagged , , , | Leave a comment

Basic income update and resources

 

Quite a few of NSW ALP Branches have passed motions on basic income, calling on the ALP to investigate a universal basic income.

Thanks to those branches for having me along or passing motions on basic income – Hornsby, Oatley, Macquarie (North Ryde), Hawkesbury, Katoomba, Glebe, Seven Hills, Springwood, Hughes FEC, Greenway FEC, Macquarie FEC and a bunch of others have had the debate and sparked interest among members about the topic.

We held the first meeting of the NSW Labor Economic Policy Committee on Saturday 8 October and it was discussed there as well. The Committee was fairly positive about potentially using the idea as a topic of conversation at Central Policy Branch and as a way of getting people interested in economic policy more generally. I’ll keep you posted on whether that comes to anything.

What follows is a  rough collection of links on articles and videos that I often refer to when talking to Labor Party members (and others!) about UBI. I think if you read and watched them all you’d be very well versed in the topic. Anyone keen to summarise or review them is invited to do so!

The first one which everyone must watch is the Yanis Varoufakis video – Basic Income is a Necessity. If you haven’t watch it yet, stop what you are doing and watch it. NOW!

Yanis Varoufakis – Basic Income is a Necessity

https://www.youtube.com/watch?v=BvgdtF3y0Ss

“Wealth is not privately produced and collectively appropriated, but the complete reverse. It is collectively produced and privately appropriated. Basic income is a way to ensure that those who produce the value get a greater share of it.

Thru a basic income, society stakes a claim to the returns to aggregate capital, which was created collectively, which then becomes an income stream to everyone.” (Paraphrase)

 

QUT’s website also has a very helpful introduction, and the Basic Income Earth Network’s site links to dozens of other sites, FAQs and articles.

QUT

http://www.basicincome.qut.edu.au/

BIEN

http://www.basicincome.org/

 

 

In the future, we could all get free money from the government — here’s when it might happen

CHRIS WELLER

AUG 12, 2016, 6:08 AM

http://www.businessinsider.com.au/basic-income-experts-predictions-2016-8?r=US&IR=T

 

Here’s more evidence that giving people unconditional free money actually works

CHRIS WELLER

JUL 26, 2016, 11:30 AM

http://www.businessinsider.com.au/what-is-basic-income-2016-7?r=US&IR=T

 

Why Land Value Tax and Universal Basic Income Need each other

Martin Farley

Author of the ‘Transformation Deal’. Interested in social & economic change, especially Land Value Tax, Basic Income, Flat Tax and anything else…

https://medium.com/basic-income/why-land-value-tax-and-universal-basic-income-need-each-other-42ba999f7322#.jn7esca0x

 

74% of billionaire wealth from rent-seeking

A new report by Dider Jacobs at the Center for Popular Economics offers a breathtaking estimate of how the rich have gotten richer in recent years. According to Jacobs’analysis, 74% of billionaire wealth in America was gained through rent-seeking, or socially useless activity.

https://shadowproof.com/2016/03/27/report-74-of-billionaire-wealth-from-rent-seeking/

 

This article by ABC’s Michael Janda is incredibly important, especially in the context of the UBI debate.

Australia’s banks are too big for the nation’s good

ANALYSIS

By business reporter Michael Janda

http://www.abc.net.au/news/2016-08-31/janda-aus-banks-are-too-big/7789830

 

 

Some say you can have a basic income without raising taxes – in the US at least.

A UBI without raising taxes

https://brausblog.com/the-us-can-afford-a-universal-basic-income-w-o-raising-taxes-6543d4c928b5#.zf9w1lvdx

 

NZ Labour Party considering universal income for all Kiwis

http://www.stuff.co.nz/national/politics/78100200/Labour-Party-considering-universal-income-for-all-Kiwis

 

 

NZ Labour discussion paper on UBI, with some costings and options:

https://d3n8a8pro7vhmx.cloudfront.net/nzlabour/pages/4208/attachments/original/1461211267/Background_Paper_-_A_Universal_Basic_Income_for_New_Zealand.pdf?1461211267

 

A feminist case for Basic Income: An interview with Kathi Weeks

criticallegalthinking.com

http://criticallegalthinking.com/2016/08/22/feminist-case-basic-income-interview-kathi-weeks/

 

Virtuous Rent: a Rudder That Can Transform Our Economy – Peter Barnes

How to create a bottom-up stimulus machine in which the people rather than the government do the spending.

http://evonomics.com/dont-ditch-capitalism-tax-extractive-side-effects-fuel-growth-barnes/

 

 

Should Australia Adopt a Universal Basic Income?

Fabians Event – Sydney

Here’s the video and audio record of the Fabians event in Sydney (I’m at 1h:05m:10s if you want my take on the necessity of basic income – hint, it’s to do with deflation and economic rent-seeking!)

Should Australia adopt a Universal Basic Income? – NSW Fabians

nsw-fabians.madewithopinion.com

Weren’t able to make it to the NSW Fabians event about a basic income on Friday evening? Catch up with our audio recording of the event at http://nsw-fabians.madewithopinion.com/should-australia-adopt-a-universal-basic-income/

Video of the event by EconomiKarma is also available at https://m.youtube.com/watch?feature=youtu.be&v=xUNDZSPuhVU

 

How Basic Income Solves Capitalism’s Fundamental Problem – Evonomics

evonomics.com

“The Basic Income Guarantee solves the problem of demand, stimulates the economy, increases corporate profits, gives workers more freedom, and provides a safety net to the most vulnerable. It is economically sound and politically savvy. But the very rich don’t fear unemployment, they fear redistribution and they will be the most significant force against the implementation of the Basic Income Guarantee.

 

Universal basic income wouldn’t make people lazy–it would change the nature of work

qz.com

 

CALIFORNIA, US: State Legislature Recommends Carbon Tax and Dividend | BIEN

basicincome.org

The carbon tax-and-dividend model is often viewed as a way to introduce a basic income in the United States.

Earlier in the week, the California state legislature approved a resolution calling upon the President and Congress to support a tax on carbon with revenues distributed as a cash dividend.

 

Basic income and other ways to fix capitalism | Federico Pistono | TEDxHaarlem

youtube.com

 

Basic income calculator shows policy’s feasibility | BIEN

basicincome.org

The Economist recently unveiled a Basic Income Calculator that can illustrate how much each person could receive under a UBI by scrapping existing non-health related welfare …”

 

Economist Mariana Mazzucato: Basic income is a “basic right” | BIEN

basicincome.org

Basic income isn’t redistribution. It’s pre-distribution, allowing each of us to create the value that or society collectively creates.

 

Basic Income? Basically unaffordable, say most Canadians – Angus Reid Institute

angusreid.org

Canadian polls on basic income. I would wager that Australia’s stats would be almost the same. For interpretation, the NDP is sister party of the Labor Party in Canada.

 

New Book on Basic Income in Australia and New Zealand | BIEN

basicincome.org

There is a new book out on Basic Income in Australia and New Zealand.

The book is edited by Jennifer Mays, Greg Marston, and John Tomlinson, all of whom are affiliated with the Queensland University of Technology.

 

Basic income: the post social democratic economic pathway for the 21st century | BIEN

basicincome.org

Alexander de Roo, one of the co-founders of Basic Income Earth Network, describes the current state of the #BasicIncome movement in the Netherlands.

 

Neurodiversity and Mental Health

medium.com

“Noisy environments, interruptions, long work hours and lack of autonomy are stressful for everyone, but often downright intolerable for autistic people. Expectations of conformity hit neurodivergent people especially hard, but they can be stifling or even ruinous for people from other cultures, too, not to mention anyone who doesn’t fit neatly into the gender roles assigned them by society. …

Moving to a less bureaucratic, stigmatising and conditional system like Basic Income should benefit almost everyone, but could be an especially large boon for the neurodivergent, the disabled and the mentally ill.”

 

We already have a UBI: NZ Super

morganfoundation.org.nz

Economist Gareth Morgan analyzes New Zealand’s pension program as a long-running universal basic income experiment:

 

What Happens When We Give People a Basic Income?

futurethinkers.org

 

BOOK: Vijay Joshi, India’s Long Road to Prosperity | BIEN

basicincome.org

Vijay Joshi, Emeritus Professor of Economics at the University of Oxford, has published a new book in which he argues in favor of a basic income for all citizens of India.

 

Satyajit Das says the world isn’t ready for another banking crisis

smh.com.au

There are many reasons for a universal basic income, but perhaps the most pressing is that financialisation has depleted the growing power of labour and non-financial capital. And even though this system is essentially insolvent – the world is awash with non-performing private debt – it continues to seek ever more unearned rents from labour and industrial capital. So you get negative interest rates, further lack of demand and deflation. A UBI is therefore essenital, not just desirable, in order to stabilise the system and provide a foundation for demand, while also guaranteeing a decent life for all.

 

Socialist leader: basic income is a means for better society

politics.hu

“The introduction of a basic income is not a goal but a means to create a better society, the leader of the Socialist Party [of Hungary] said at an international conference in Budapest. …”

 

What will the evidence say about a universal basic income? | Devex

devex.com

“With a basic income people could be freed up to do only the work they want to do, versus the work they have to do. That could mean more people working on issues like those contained among the Sustainable Development Goals, from improving health and well-being to advancing gender equality.”

 

Some residents of Oakland are about to get a basic income

vox.com

Lots of different basic income experiments happening.

 

Basic income online course

https://www.facebook.com/Basic.Income.Earth.Network/posts/1056126284425098

 

A Silicon Valley entrepreneur says basic income would work even if 90% of people smoked weed instead of working

http://www.businessinsider.com/sam-altman-praises-basic-income-on-freakonomics-podcast-2016-4?IR=T

 

19 Jobseekers For Every Job: The Unemployed Elephant in the Room

By Owen Bennett on October 10, 2016

https://newmatilda.com/2016/10/10/19-jobseekers-for-every-job-the-unemployed-elephant-in-the-room/

 

“According to the Australian Bureau of Statistics, there are 713,300 unemployed workers (5.6% of the workforce) and 1,110,100 underemployed workers (a record-high 8.7%).

Adding the 1.82 million Australians looking for work, the most recent ABS data indicates there are a further 1.34 million ‘hidden unemployed’ who are not considered part of the workforce but are also looking for work.

That’s just over three million Australians who are currently looking for work. Can they all be ‘leaners’, ‘dole bludgers’ and ‘job snobs’?

Not according to the Department of Employment’s figures on job vacancies. According to the Department’s August Vacancy Report, there are 166,800 job vacancies currently listed in Australia – down from over 300,000 in 2008.

No wonder the average time spent on Newstart – a payment that is $392 below the Henderson poverty line – is over 4 years.

This is where the Coalition’s plan to break ‘welfare dependency’ starts to resemble a vicious Malthusian attack on Australia’s most poor and vulnerable – much to the apparent delight of conservatives in the media.

Instead of focusing on creative new ways to force poor and vulnerable people off social security, why isn’t the Coalition addressing our growing employment crisis?

The answer is simple: the Coalition knows that as soon as it acknowledges Australia’s employment crisis, the pernicious myth of the ‘dole-bludger’ (first initiated by Labor Treasurer Clyde Cameron in 1974 and perpetuated with gusto ever since) would collapse.

Who then will the Government ‘crackdown’ on to fix the ‘budget emergency’?

Who then will the Government use as a policy tool to ensure a massive over-supply of labour designed to drive down wage growth and union membership?”

 

Trade union membership hits record low

Nick Toscano

http://www.smh.com.au/national/trade-union-membership-hits-record-low-20151027-gkjlpu.html

Union membership among public servants sits at 39 per cent, well above the 11 per cent in the private sector.

 

Scott Morrison’s mixed messages and his faith in a private sector that isn’t investing

Greg Jericho

https://www.theguardian.com/commentisfree/2016/oct/11/scott-morrisons-mixed-messages-and-his-faith-in-a-private-sector-that-isnt-investing

The IMF would have Australia’s GDP per capita not growing above 2% in any one calendar year in the next five years – a stretch we haven’t experienced any time since the second world war.

 

A Policymaker’s Guide to Basic Income

AUTHOR(S): 

David Macdonald

https://www.policyalternatives.ca/basic-income?utm_source=newsletter&utm_medium=email&utm_content=A%20Policymaker%E2%80%99s%20Guide%20to%20Basic%20Income&utm_campaign=Newsletter%2010/07/16

 

Wouldn’t Unconditional Basic Income Just Cause Massive Inflation?

An answer to the response to the answer to the growing question of the 21st century

https://medium.com/basic-income/wouldnt-unconditional-basic-income-just-cause-massive-inflation-fe71d69f15e7#.qopt99sin

 

A basic guide to taxing economic rent in Australia

http://www.austlii.edu.au/au/journals/CanLawRw/2012/12.pdf

ABSTRACT Taxing economic rent is one key element in tax reform in Australia and sets possible directions for the future. This paper introduces readers to the ideas of Adam Smith and David Ricardo and others on rent to aid understanding of the debates about economic rent today. The discussion also includes the Petroleum Resource Rent Tax, the Australia’s Future Tax System Report and the Minerals Resource Rent Tax. The thinking of Smith and Ricardo was that rent was unearned gain. It is unearned because it arises as a consequence of the nature of the holding, an exclusive property right against the rest of the world. The amount of the rent is judged by comparison with the landholding that was just adequate enough to sustain profitable production. The rent is that difference on return. In a world of economic rent today these ideas retain their relevance. The political compromise that is the Minerals Resource Rent Tax is so far removed from these Smith and Ricardo benchmarks that taxing the unearned gains of the mining and other companies arising from the landed and other monopolies they hold remains, although warranted, a task for the future and for a government with the resolve to take on the rich and powerful. We can argue for the future by drawing on the past.

 

The Natural Commonwealth, “A Basic Income Guarantee Doesn’t Need Coercive Redistribution”

http://basicincome.org/news/2014/01/the-natural-commonwealth-a-basic-income-guarantee-doesnt-need-coercive-redistribution/

 

The largest basic income experiment in history is coming to Kenya

http://www.businessinsider.com/kenya-will-see-the-worlds-largest-basic-income-experiment-2016-4/?r=AU&IR=T

 

 

Give Directly charity

https://www.givedirectly.org/research-at-give-directly

 

Charles Wohlforth, “Alaska’s dividends help make us equal and protect our common wealth”

March 8, 2016  Josh Martin

http://basicincome.org/news/2016/03/charles-wohlforth-alaskas-dividends-help-make-us-equal-and-protect-our-common-wealth/

 

Bank inquiry a victory for public relations – Michael Janda

http://www.abc.net.au/news/2016-10-11/bank-inquiry-a-victory-for-public-relations/7922402

“Only so much blood can come from a host before it dies

In the final analysis, while Australia’s big four banks operate almost exclusively in Australia and New Zealand – two countries with amongst the most indebted households in the world – it is hard to see how they can grow earnings without issuing inappropriate credit or selling exploitative products.

After all, there is a fine line between banks having a symbiotic relationship with the economy where they facilitate savings and investment to boost growth and where they become parasites feeding off that productive economy.

The Bank for International Settlements – the central bank of central banks – reckons that line is around 100 per cent of GDP, and Australia crossed it long ago.”

 

 

 

 

 

 

 

 

Posted in Uncategorized | Leave a comment

In reply to Liam Hogan on UBI

Liam Hogan at http://orangejuiceandryvita.com/88/ubi

kindly and thoughtfully responded to my request to write something on a UBI. His musings did not disappoint – thoughtful and well written as always. But wrong!

Here is my response. I can’t figure out how to share his post directly just yet, so I will have to make do with simply posting his link above. I have written this reply in his comments section as well, so feel free to comment over on his page.

Very well written and a useful contribution.
However!
To take the last point first – How do you think we propose to pay for a UBI? You seem to presuppose a simple income redistribution like the current welfare system – which won’t work. A UBI can be paid for a number of ways, but two jump out immediately as particularly attractive – a) by ownership of the means of production (either in part or as a whole), or by taxes on the common wealth and land of a society- a tax on unearned rents. The first of those goes straight to your last point. A UBI is simply the dividend from ownership. The question is which you choose to do first and which has more likely chance of gaining the support of the majority in a liberal nationalist (post)colonial society. We know that the State ownership of certain means of production in the 20th century did not free people from capitalist wage labour relations, either here or in the Soviet systems. A UBI is a practical way of allowing that freedom to happen.
To your point that technological change has always existed, ie. the ‘there’s nothing new under the sun’ argument. People can argue about this, but all the signs are there that deflationary forces in the production of actual goods are real and accelerating. If energy abundance is a likely result of simple (ie. non-exponential) advances in technology, then costs of material production will continue to fall. Add to that demographic change, which further removes the effectiveness of monetary policy, which is already proving to have little growth-promoting potency, and the result is deflation and permanent high unemployment. Both of these are already happening. Since the 1970s unemployment in Australia has never been under 5%, and no policy, fiscal or monetary, macro or micro-economic has been able to give us full employment. And the jobs that have been created after automation has killed the old ones are mostly low-paid, insecure and often meaningless or demeaning. If the effect of automation is to increase unemployment by ‘only’ 9% as some conservative commentators are saying, then this is taking us into devastating territory. Even with our current levels of unemployment we have seen the precipitous decline in working class industrial and political power, in all jurisdictions, no matter the local labour laws, because unemployment is the strike-breakers friend. A UBI gives labour a base from which it can negotiate with capital about wages and conditions, rather than capital’s preferred position of ‘take it or starve’.
To address your point that allowing top-ups to the UBI defeats the simplifying purpose of a UBI. Well it all depends on the top ups. For instance, I don’t think a UBI could ever replace the NDIS. But the rules for qualification for the NDIS are very different from those that dictate whether you get the single or couple pension, or unemployment benefits if you’re in a relationship. I don’t think the state has a lot of right to ask who I sleep with and how often in order to determine what subsistence cash I am given to keep body and soul together in a permanent low-employment economy. But that is the situation we have now. I do accept that the Government should see proof that my child has a disability before giving me money for that child’s treatment. So to get to practicalities, a UBI in Australia should be higher than the single pension, higher than the dole + rent assistance, and the UBI + child’s UBI should be higher than the single parent payment. So it can replace nearly all our welfare payments, but it needn’t replace the NDIS. That would reduce the complexity of our welfare system by about 95%. The only people that may be worse off in that situation are people currently working at DHS, and a transitional package would need to be implemented to ensure they got other comparable jobs. If any didn’t however, they’d at least be eligible for a UBI which would be higher than the benefits they previously administered. As a proud CPSU member I am very serious that the workers who currently administer the welfare system are looked after in the transition away from our complex and often punitive system of welfare compliance.
Finally, as to your labelling of UBI as a libertarian solution or even as immoral. Firstly, you and I are old enough to remember when
libertarian socialists were the best kind – when a revolution was no fun unless it allowed dancing. Alas, ‘libertarian’ has been hijacked as a term by Americans with adolescent fantasies of screaming ‘leave me alone!’ at the world. Even still, the idea that people should be able to say to the state and capitalists that they don’t want to give them their time, their bodies, their obedience or their mental energy is still attractive to many. I for one, agree with you that the state, especially the colonial settler state, the nationalist, genocidal war-mongering state, the state of child abuse, deaths in custody, torture in detention and so on, is something that it would be nice to be able to avoid if possible. No other policy proposal I have seen in the past twenty years does that as effectively as a UBI, especially if innovative institutions are set up to pay for a UBI.
Finally, to address possibly the biggest hurdle, the ‘immorality’ of giving anything to people that are already rich. This is what Yanis Varoufakis addresses in his speech here https://www.youtube.com/watch?v=B1eOVU61mZE
As Yanis points out, we already do give direct income support to the already rich – the tax free threshold applies to all, no matter their income. You can give people a UBI and do away with the tax free threshhold pretty easily and have nearly the same net result. And of course the rich also get all the benefits of our common wealth and the economic rents they appropriate for themselves more generally. A UBI paid for by either owning some of that currently owned by capitalists, or by taxing their rents, starts to deal with that immorality of the rich getting something for nothing.
The implementation of ‘from each according to ability, to each according to need’ has its attractions, but the rub always lies in – who judges ones abilities and needs? Funnily enough, our system at the moment works on this principle. Our progressive income tax takes from the richest according to their ability, but only at the top marginal tax rate. Our punitive job search/welfare system judges the abilities of the poorest. Then the Parliament, the liberal nationalist settler-colonial legislature, decides how much we all ‘need’. Currently that’s set at about ‘starving-minus-$100-a-week’ for those out of work who are judged to be fit and able to swing a pick.
In contrast to ‘from each according to ability, to each according to need’ I prefer, ‘All human beings are born free and equal in dignity and rights.’ and ‘Everyone has the right to life, liberty and security of person.’
A UBI can help make that a reality. Our current system does not.
Once again, thanks for taking the time to respond. As usual, your eloquence far outweighs mine, but I hope you don’t see the urgency of my response and language as anything other than how it is intended, as usual, with great respect and affection.
LW

Posted in Labor, Tax, Universal Basic Income | Tagged , , , , , | Leave a comment

Universal Basic Income

Originally posted in Challenge Magazine http://www.challengemagazine.com.au/universal_basic_income?recruiter_id=15520

Universal Basic Income
NSW Left member and Deputy Chair of the NSW Labor Economics Committee, Luke Whitington, explains Universal Basic Income

What is an unconditional/universal basic income?

A ‘UBI’ is a simple idea – that everyone, without qualification deserves a basic income, to survive, whether you work or not.

Free money! Yay! Wait, won’t that cost a lot of money?

It depends. For example, a UBI can work like a negative income tax, where the Government tops you up if you don’t earn enough to get a basic level. A UBI could replace some welfare payments. The money spent policing the welfare system would also be saved. Governments could also tax (or own) the companies that own the technology that make a UBI necessary in the first place.

Why would we need a UBI?

Automation and mechanisation are accelerating, causing permanent large scale unemployment and under-employment. This is partly responsible for a crisis of demand in advanced economies which is causing a permanent low-growth, low wage, deflationary environment. When artificial intelligence takes off it’s likely there won’t be enough new jobs to replace the old ones. A UBI solves many of the problems that arise from technological change while ensuring all people have the financial security to reach their potential.

Why would anyone go to work if everyone got a UBI?

To get more than just a basic income. Experiments have shown that some people, particularly students and new mothers, do work less, but then often spend their time studying, or doing other socially and personally productive activities instead. The overall productive performance of the economy doesn’t fall, it’s just that the labour necessary for production is paid for in a different way.

Threatening unhappy workers with unemployment and poverty would also be less effective, improving productivity. Employers would need to attract workers with good jobs, not just the threat of poverty.

Sweet! So how much will I get?

Hold your horses comrade. Many conservatives like it because it reduces complex state apparatuses, but it’s no done deal yet. There are experiments being conducted in Utrecht (Netherlands) and Finland, but of course there is opposition to it. The Swiss held a referendum and it got 23% of the vote, not bad for a first attempt, but a long way off winning. There are also a lot of details to work out. How much should it be? What mechanism should we use to pay it? Who gets it? All residents? Just citizens? Kids?

What kind of moron doesn’t like free money?

The ones that think they’ll have to pay for it. Many people assume that taxes will have to rise to pay for a UBI. That actually may be the case, but of course the question is – taxes on whom? And what? A UBI paid for by taxes on multinational corporations that own the very machines that are displacing thousands of jobs seems like a good idea to many. A UBI paid for by a broad based progressive land tax is another, rather neat method. Land taxes are just about the best taxes it is possible to levy, and as long as they are progressive, they are paid by the wealthiest landowners. The idea that humans deserve to have enough to live on, paid for by the value of the land on which they live, is revolutionary but also has a ring of common sense about it.

There are also strong cultural values that go against the idea of everyone getting something to live on just because they’re a human being. Protestant work ethic, Catholic guilt, Confucian discipline – you know the drill – ‘You have to suffer first in order to receive the rewards’. Once the economic arguments are dealt with (and they’re actually pretty straightforward), the real fight over perception and politics begins. The task is to show that UBI addresses the fact that the value our society creates is collectively created, and therefore everyone deserves a share of it.

What’s the first step?

As Deputy Chair of the NSW ALP’s Economic Committee, and as convenor of the Progressive Economic Policy Network, I’ll be pushing for a motion like the one that got up recently at the Unite (the UK’s largest union) conference in the UK, to investigate a UBI.

A motion? Great! Where else can I find info on this?

Loads of websites, such as basicincome.qut.edu.au, and Basic Income Earth’s. Yanis Varoufakis’ speech on it is particularly good. But if you just want to get on with it, here’s a motion for your party unit. I would be very happy to come out and speak to it.

Motion 1

Universal Basic Income to be investigated

[Party unit] calls upon the ALP, either via the Policy Forum or by special committee, to investigate a universal basic income, ie. how much it will cost, who would be eligible and the mechanism for payment.

[Party unit] notes the crisis of entrenched poverty, insecure work, low wages and a labour market increasingly characterised by short-term contracts and casualised forms of employment.

[Party unit] notes the threat to living standards of low wages growth, deflation, low aggregate demand and aggregate demand funded mostly by private debt.

[Party unit] notes the acceleration of automation in many industries contributing to structural unemployment, under-employment and low wage growth.

[Party unit] further notes the evident inability of our social security system, with its complex and intrusive means-testing, activity-testing and arbitrary sanctions, to provide an adequate income for all.

[Party unit] believes that a universal basic income, an unconditional, non-withdrawable income paid to everyone, has the potential to offer genuine social security to all while boosting economic growth and productivity.

[Party unit] notes the exploration of the concept of a universal basic income by NZ Labour and welcomes the planned practical experiments in Finland and Utrecht, Netherlands.

I want a UBI not just an investigation!

I thought you’d never ask! Here’s another motion that your party unit could also pass if you’re already convinced.

Motion Two:

Universal Basic Income

That the ALP replace the current inadequate social welfare system with a universal basic income.

A universal basic income would not need to replace all targeted social security payments, such as disability support, but any such payments would be in addition to a universal basic income.

A universal basic income would be non-withdrawable and unconditional, and would not be means-tested or activity-tested.

A universal basic income should be paid for via progressively levied taxation and other progressively raised government revenue.

Posted in Debt, Inequality, Labor, Labor Policy and Party reform, Tax, Universal Basic Income | Tagged , , , , | Leave a comment

World awake to neoliberal failure, Australia carries on as though the Great Recession never happened

The defining feature of Australian politics since the collapse of the global financial system in 2008, and the subsequent unraveling of the neoliberal consensus  that has ruled policy makers’ minds since c.1980, has been our studied and willful ignorance of that massive event and the end of that consensus.

A quick scan of today’s papers reveals this contradiction, this weird condition.

In the domestic politics section, you see the daily articles calling for an increase in the GST, a consumption tax, in order to cut company taxes. Think tanks, conservative politicians, and the occasional Labor voice, are rolled out each day, to prescribe more of the exact same policy formula that has caused the world’s biggest destruction of wealth since the Great Depression.

All this goes on without the slightest hint of acknowledgement that this egregious formula is anything other than rational, natural and sensible – a consensus. There are promises of wonderful economic boons to all if we’ll only cut taxes on corporations and impose them on consumers.

The Australian maintains the steadiest drum beat, today’s edition no exception, promising a $30b gain if we hike the GST and cut company tax. (Sorry about the paywall. You can do that trick where you just google the title and you’ll get the whole thing for free). http://www.theaustralian.com.au/national-affairs/treasury/30bn-gain-in-gst-hike-company-tax-cut/news-story/d8b05bd7c7320cb40609c9342884d592

On the same day, reports from the wider world saying that this policy prescription has caused massive inequality and financial instability, anaemic growth and income stagnation, as well as social breakdown and environmental disaster.

Today we have this story in the Fairfax papers,

http://www.smh.com.au/business/the-economy/sixtytwo-people-have-the-same-amount-of-wealth-as-half-the-world-says-oxfam-20160116-gm7h6y.html

which says, inter alia, that an Oxfam report  ‘says a “broken” economic model underpinned by deregulation, privatisation and financial secrecy has seen the wealth of the richest 62 people jump by 44 per cent in five years to $1.76 trillion.’

And that while many people had been lifted out of absolute poverty in that time (as though this is a miracle of capitalism, rather than due to the hard work of the people themselves), the policies in place are actually preventing hundreds of millions of people from rising out of poverty.

​”Yet had inequality within countries not grown during that period, an extra 200 million people would have escaped poverty. That could have risen to 700 million had poor people benefited more than the rich from economic growth,” it said.

And it wasn’t just quoting those infamous communists at Oxfam (you know, the organisation founded by Quakers to persuade the British Government to lift the food blockade on Nazi-occupied Greece in WW2).

The report also quoted the IMF extensively, those red-flag-in-hand Trotskyists, who have said that the neoliberal consensus is now quite officially a Very Poor Idea.

‘The International Monetary Fund last year warned the gap between rich and poor in advanced economies was now at its highest level in decades, making widening income inequality the “defining challenge of our time” and suggesting “the benefits do not trickle down”.’

The solution to these worldwide woes is relatively straightforward for Oxfam:

​“It is also calling for workers to be paid a living wage rather than the minimum, for the end of the gender pay gap, for the influence of the powerful with vested interests to be kept in check, and for the tax burden to be shifted away from labour and consumption and towards wealth and capital.”

In response, well not in response at all, but in total, wilful and studied ignorance, what’s the suggestion from the great and good in Australia?

Increase taxes on consumption, and reduce taxes on wealth and capital. Cut the wages of the lowest paid, attack workers’ rights to collectively defend their living conditions by nobbling their unions. Do everything possible to accelerate the widening inequality that Australia has experienced at a faster rate than the rest of the world.

Maybe this is a type of Australian Exceptionalism? We used to have socialisme sans doctrine, socialism without doctrine, maybe now we have neoliberalisme sans pensee, neoliberalism without thought?

Posted in Inequality, Tax | Tagged , , , | Leave a comment

Stamp duty on homes must go – a progressive land tax is the solution

If you’ve been paying attention to what passes as ‘the tax debate’ in Australia you’ll notice a couple of threads running through it. Firstly, nearly all commentary is done by people who assume that our economic system is relatively fair and reasonable, sustainable and sensible, not the litany of disaster and inequity that it actually wreaks upon the world. But setting that aside, they also generally say that we have a number of problems:

  • many of our state taxes are truly, atrociously bad, but stamp duty is the absolute worst;
  • we don’t have enough revenue going to the states to cover their expected expenditures;
  • we also probably don’t have enough coming in to cover our Federal Budget either (and that’s bad, which is arguable, but let’s let that one slide for a bit);
  • income and company tax receipts are down (relatively) and that they’re prone to minimisation and avoidance.

Some have also pointed out the tax expenditures (ie. tax breaks) on housing investment (“negative gearing”), and superannuation are pretty outrageous and have iniquitous effects. (Saul Eslake’s submission to the Senate inquiry on housing policy and negative gearing is one for the ages. John Howard gets a rather enjoyable lashing.)

The answer for most of these commentators then, is to increase consumption taxes, the GST specifically. Even Jay Weatherill, SA Labor Premier has proposed expanding the GST and giving the states a slice so they can better fund their liabilities.

But you really have to be paying attention to notice the occasional advocate for taxes on property, rather than consumption.

Yet they are there. The Grattan Institute published a proposal for a broad based land tax in 2015. The Henry Tax Review (Recommendations 51 to 54, reproduced at the bottom of this post) said “Ideally, there would be no role for any stamp duties, including conveyancing stamp duties, in a modern Australian tax system.” The 2012 Lambert Review of NSW Finances initiated by Barry O’Farrell, (see particularly Table 13.1.1 where the ‘excess burden of land tax is compared to stamp duty. Stamp duty is 62c per dollar of revenue. Land tax is 6c) said land tax should be expanded. Fairfax’s Michael Pascoe and Jessica Irvine and other journalists have advocated a broad based land tax, specifically to replace stamp duty.

Labor should take this up and run with it before a) the Liberals bring in higher consumption taxes or b) bring in higher consumption taxes AND replace stamp duty with a broad based progressive land tax.

If you’re reading this blog, you already know that consumption taxes are terrible. They hit poor people hardest. If you don’t know that here’s Malcolm Turnbull malsplaining it in Parliament.

Well, here’s some news. Transaction taxes, like stamp duty on property, a tax  on the family home, are even worse.

They are a massive drag on the economy (as noted in the Lambert review at page 13-2, table 13.1.1.) They distort markets, make it hard for people to move where they need or want to, and are a barrier to entry for the 30% or more people that don’t own a home. It is a pro-cyclical tax, making recessions worse and overheated markets more overheated.

Lets make this crystal clear: Stamp duty on property is the worst tax in NSW. A dog of a tax.  You can’t get a worse tax.

It should be the #1 priority for replacement as a tax by any Labor Government.

So I will be proposing amendments to the NSW Labor Platform that will allow us to replace stamp duty as quickly as possible, after a public consultation process and proper input from Treasury and the public service.

At the moment, NSW Labor’s Platform bars an incoming Labor Government from considering a stamp duty replacement that includes a better way of taxing the principle place of residence. Remember of course that stamp duty is a massive tax on the principle place of residence right now. So the platform bars a land tax on owning the sacrosanct’family home’, but not a (iniquitous, distorting, inefficient, procyclical) transaction tax when buying the ‘family home’. This is patently absurd, so we need to change it so that an incoming Labor Government can at least consider a broad based progressive land tax to replace stamp duty.

So what follows is an open letter/briefing to all Party units, Branches, SECs, affiliated unions etc on this issue. I would be grateful if you would take it to your branch and have it moved and debated. I would be happy to come out and speak at any Branch or Party unit about what it means.

Platform Amendment to allow NSW Labor to consider a broad based land tax to replace Stamp Duty

In Chapter 3, ‘Our Economic Future’, part 3.19, dot point 2.

Delete the word ‘extensive’ after ‘on’.

Remove all words after ‘holdings’.

(Page 20 in 2014 Policy Book)”

For your reference, this is the section in the Platform:

3.19 NSW Labor will:

 -Legislate to close any loopholes that allow the use of artificial tax avoidance schemes. 

 -Maintain a progressive system of taxation on extensive land holdings with exemptions for land used for primary production, or as the owner’s principal place of residence.

So the new clause would read:

3.19 NSW Labor will: 

 -Legislate to close any loopholes that allow the use of artificial tax avoidance schemes. 

 -Maintain a progressive system of taxation on land holdings.

 

Explanatory note:

Stamp Duty is a terrible tax.

NSW already taxes the family home, the principle place of residence with stamp duty.

Stamp duty is one of the most inefficient and despised taxes in our entire system.

Stamp duty is regressive, as it hits low and high income people at the same rate, simply as a proportion of the cost of the house (sure, higher income people may buy more expensive houses, but moderate income people with lots of kids also buy expensive houses – stamp duty takes no account of income, only the property’s value).

It is socially regressive in that it discourages the transfer of houses to people that need them the most. We have 5 bedroom houses with one person in them and 2 bedroom apartments housing five people.

It is distorting- by making people pay stamp duty every time they want to move house, it discourages people from moving to where jobs, or family or other opportunities are.

It is inefficient, as it can be avoided by not selling one’s property.

It is pro-cyclical because receipts go up when the economy runs hot, encouraging Government spending, and receipts collapse when the economy tanks, encouraging Government spending cuts, worsening cyclical downturns. (See the 2008 post GFC mini-budget).

Stamp duty has increased disproportionately in the past 40 years as the cost of housing has increased.

Stamp duty has no friends in politics, academia or economics. It is a terrible tax. Everyone agrees it must be replaced.

With what do we replace stamp duty then?

Some conservatives want to replace it with a higher GST. But consumption taxes, as everyone in the ALP knows, are also regressive, lead to ‘compensation churn’ and can be avoided by overseas and ‘cash’ purchases.

Some progressives want to increase company and income taxes. While this isn’t the worst idea, both of these are Federally controlled taxes and NSW cannot replace stamp duty itself with increased company and income taxes. Furthermore, there has been a long term trend of declining receipts from these taxes, partly because they are more easily avoidable – companies and individuals can hide their income through various means. Crackdowns and closing loopholes only gets you so far- like drugs in sport, the regulators are always behind the innovators in tax minimisation. Land, on the other hand, cannot be moved offshore or hidden.

A broad based land tax is a progressive tax.

Broad based land taxes also have a very rare economic quality. They have a ‘negative dead weight’, that is, instead of dragging down growth and production, like most other taxes, they actually increase productive use of resources, by encouraging efficient and timely use of land.

Land taxes also capture the value of increased infrastructure allocations by Government. If the Government puts in a new railway and the value of land goes up, then land taxes will capture that value increase. This encourages investment in schools and transport.

The ACT Labor Government has introduced a broad based land tax phased in to replace stamp duty over a generation of property and home buying.

Land taxes also cannot be avoided by crooks and shonks, or overseas-based tax avoiders. If you run a cash-in-hand or criminal enterprise, you still have to pay land tax if you want to own property.

Objections to land tax

‘I paid stamp duty, why should I have to pay twice.’

This is a question of design rather than principle. You won’t have to pay twice if it is phased in slowly. If you have to start paying after 20 years, then it is probably fair enough that you pay some taxes for the upkeep of the State after that long a break.

‘I’m a pensioner sitting on a $1m property, I won’t be able to pay an annual land tax’

Again, a design issue. Pensioners would likely have their tax deferred until the sale or transfer of the property, similar to the way many of them pay their Council rates.

However, in the end, if someone is sitting on a $1m property, they are a lot wealthier than the vast majority of Australians, 30% of whom don’t own anything. Asking them to pay a fair share of the taxes to keep hospitals and schools going is only reasonable. Asking the purchaser of their house to pay for State services via stamp duty is deferring the cost of services from those who own to those who want to own property. Taxes shouldn’t just be levied on those buying, but on those that own things.

‘We’ll never win an election if we propose to tax people’s homes’.

The ALP has lost the past two elections with a primary vote of 25% and 30%. There is not much worse we can do. But even if we are concerned that people think we’re too economically innovative (rather that they thought us economically bold than corrupt and incompetent, but maybe that’s just me!), we can still go to the electorate with a promise to repeal stamp duty and replace it with something better, rather than a promise to simply implement a land tax. Labor could promise a tax summit, and a green paper-white paper process. It is absolutely guaranteed that Treasury, economists and academics of all ideologies will recommend replacing stamp duty, and most will suggest replacing it with a broad based land tax, as has been done in ACT. The only real impediment is our own Platform.

‘We should wait for the Feds to do this, rather than just doing it ourselves in NSW’

Waiting for the Feds may take a long time. Firstly, the Feds have different revenue problems, solving the States’ problems is not their highest priority. Secondly, NSW is in a special situation with massive housing affordability and congestion problems. Stamp duty is bad everywhere, but Hobart and Adelaide aren’t feeling the squeeze on housing as much as Sydney. NSW needs to solve this problem sooner than other States. Leaving it up to the Feds is also irresponsible because the Liberals version of tax reform is always the same- tax consumption via a GST. Labor’s response has to be more progressive.

‘What about a GST increase instead?’

Firstly, go join the Liberal Party if you think the GST is the answer to our tax woes.

Secondly, thank you for raising this- the big debate over tax in the future is simple- with income and company taxes declining, how do we keep paying for services?

The Liberals say we should tax consumption, hitting the poorest hardest.

Labor should say that we should tax property, which makes the wealthiest pay their fair share.

With a broad based land tax, the 30% of the population that owns no property pays nothing at all.

Land taxes are also a disincentive to investing in property for speculative purposes, so investors (like our super funds) will be more likely to put money into productive asset classes like manufacturing capital, agricultural capital and other productive assets, rather than simply putting it into property and hoping for rent and capital growth.

Housing supply is also encouraged as land that is unused attracts the same tax as land that houses people or produces goods (if the tax is levied on the unimproved value of the land- more on that below).

Do you tax the whole house or just the unimproved land value?

The ‘economically correct’ method is to tax the unimproved value of the land, because taxing the house or other property built on it is taxing a ‘good’ thing, it’s a tax on the building work done, and the productive use of the land. Land taxes traditionally are designed to avoid this, so that building work and productive use of land is encouraged.

Some people have complaints that this is unfair and that the value of the entire property should be taxed, including any buildings that sit on the land.

People say that it is unfair that if they have lived in an area for a long time but haven’t improved their house, but due to circumstances beyond their control their land is worth far more, they shouldn’t have to pay for that.

But people in this circumstance are, no matter how it came about, sitting on an asset that has increased in value. If the tax is designed so that pensioners and others on low incomes don’t have to pay until the property is transferred or sold, then they shouldn’t have any problems. The tax they pay will always be lower than the profit they’ve made on the increased value of the property.

If they don’t want to pay any tax because they bought when the property was cheap and now the property is expensive, well that position is untenable and illogical. They can’t complain about having a windfall increase in the value of their assets and that this therefore means they have to pay more tax. The tax will never amount to more than the profit they made.

‘Won’t this encourage gentrification? Haven’t you seen the Blues Brothers? They wanted to kick out the nuns for not paying land tax!’

Gentrification is a complex and sometimes inevitable by-product of population growth and capitalist expansion, as anyone from the eastern suburbs of Sydney knows. Land tax evens out the unfair nature of gentrification by providing funds for social services, and by encouraging the transfer of land from those who don’t need it to those who do, from those who are hoarding it for rent, to those who will use it to produce things, whether that is a family or a manufactured good or art.

By keeping the tax on the unimproved value of the land, those who don’t have a fancy house will pay a similar rate to the person next door who has built a mansion. This can appear unfair. But the person who has a mansion has to pay GST on the products that build their house and tax on the income earned to pay for it. Taxing them at the property level for their wealth may or may not be a good idea, but it is extraneous to land tax. Many people are in favour of wealth taxes, and with the introduction of a land tax that may be a way in which we can start to set up the machinery of government necessary to tax wealth.

Conclusion

Australia is an unequal society becoming more unequal. NSW is even more unequal than most of Australia, and Sydney is at the cutting edge of one of our most insidious social and economic problems- housing inequality.

Stamp duty on principle places of residence is exacerbating those problems of inequality. A broad based land tax will not fix all of them, but it will make things better than they are now.

The experience in the ACT is that land tax, properly explained and implemented gradually and fairly, so that pensioners and low income people are protected, is popular and relatively easy to implement.

It is very likely that the Liberals will look at it as a policy option in the medium term, although their preference is for a higher, broader GST, as that protects their mates and hurts Labor’s constituents.

It is incumbent on Labor to come up with a progressive economic plan for NSW. It is impossible to do that without addressing State revenues and our broken tax system. Labor needs to have the debate about our tax system free from the ban on proposing a broad-based land tax.

 

Notes:

Recommendations 51 to 54 from Henry Tax Review:

“C2 — Land tax and conveyance stamp duty

Recommendation 51: Ideally, there would be no role for any stamp duties, including conveyancing stamp duties, in a modern Australian tax system. Recognising the revenue needs of the States, the removal of stamp duty should be achieved through a switch to more efficient taxes, such as those levied on broad consumption or land bases. Increasing land tax at the same time as reducing stamp duty has the additional benefit of some offsetting impacts on asset prices.

Recommendation 52: Given the efficiency benefits of a broad land tax, it should be levied on as broad a base as possible. In order to tax more valuable land at higher rates, consideration should be given to levying land tax using an increasing marginal rate schedule, with the lowest rate being zero, with thresholds determined by the per-square-metre value.

Recommendation 53: In the long run, the land tax base should be broadened to eventually include all land. If this occurs, low-value land, such as most agricultural land, would not face a land tax liability where its value per square metre is below the lowest rate threshold.

Recommendation 54: There are a number of incremental reforms that could potentially improve the operation of land tax, including:

  1. ensuring that land tax applies per land holding, not on an entity’s total holding, in order to promote investment in land development;
  2. eliminating stamp duties on commercial and industrial properties in return for a broad land tax on those properties; and
  3. investigating various transitional arrangements necessary to achieve a broader land tax.”

 

 

 

 

Posted in Uncategorized | 2 Comments

“Morally indefensible that a socialist party should espouse a policy of racial discrimination” The 50th anniversary of the end of the ‘White Australia Policy’ in the Australian Labor Party

August 2015 marks 50 years since the Labor Party removed the words ‘maintenance of a White Australia’ from the ALP’s Platform. On 2nd and 3rd of August 1965 the ALP Federal Conference met at the Hellenic Club, on Elizabeth St, Sydney, and, after years of fitful debate, unanimously adopted a Committee report that recommended removal of the term.

1965 ALP Federal Conference Hellenic Club, Sydney

1965 ALP Federal Conference at the Hellenic Club, Elizabeth St, Sydney. Gough Whitlam had long campaigned for change, saying later, “Many in Labor’s Parliamentary ranks, such as Dunstan, Cairns and I, thought it ideologically intolerable and morally indefensible that a socialist party should espouse a policy of racial discrimination.”

No change to a Party in Opposition’s Platform would have more far-reaching consequences, but it was enacted with almost no overt conflict at the Conference, with both sides of the debate feeling that they had won. Labor’s change soon had repercussions. Prime Minister Menzies retired in January 1966 and the new Liberal PM Harold Holt could further relax immigration restrictions with less fear of Labor criticism. Over the next ten years, with the succession of Liberal PMs and with Gough Whitlam’s election and subsequent years of lightening-paced change, Australia would become officially anti-racist with the passage of Whitlam’s Racial Discrimination Act in 1975.

Whitlam and Calwell came to a compromise on removing White Australia from the ALP Platform in 1965, but in the long run Whitlam's views triumphed.

Whitlam and Calwell came to a compromise on removing White Australia from the ALP Platform in 1965. Whitlam’s anti-racist views were particularly informed by his experiences as a RAAF navigator into Asia from bases in Northern Australia where he worked alongside Aboriginal servicemen who were discriminated against. “There was nothing a junior officer could do, but I remembered it’ Whitlam said.

None of this was foreseen or anticipated at the 1965 Conference. Yet the decision wasn’t a precipitate change. From the very beginning of the ALP, particularly at the founding Conference of the Victorian branch, there had been those who opposed racial exclusion, on socialist principles of equality and fraternity. Those views were swept aside by a party that surged to success by marrying the two great ideologies born of the 19th century, nationalism and socialism. Australian nationalism was  a variety of white British race patriotism which Labor both exploited and created to gain support, and a White Australia was overwhelmingly popular in the labour movement and community generally, but it was not uncontested. In the radical environment of the late 1920s the nascent ACTU adopted an anti-racist stance, but it was quickly reversed as that body was brought more closely into the Establishment fold. The Depression and war against Imperial Japan heightened feelings of racial competition rather than tolerance and the issue was forgotten. The calls for change became louder in the aftermath of World War II. The incongruity of fighting a war against racism, fascism and imperialism only to maintain a racist policy at home became increasingly apparent to returning soldiers, political leaders and activists. Labor’s radical East Sydney MP Eddie Ward felt it necessary to defend the policy as non-racist, ‘Labor support has never been based on any claim of racial superiority…That is a Nazi doctrine’, he said.

WW2 veteran Arthur Gietzelt, ALP Senator from 1971 to 1989, instituted the first boycott of racially selected sporting teams when, as President of Sutherland Shire, he banned racially-selected South African teams from competing in surf carnivals.

WW2 veteran Arthur Gietzelt, ALP Senator from 1971 to 1989 and early opponent of the White Australia policy, instituted the first boycott of racially selected sporting teams when, as President of Sutherland Shire, he banned South African teams from competing in surf carnivals at Cronulla.

Criticism of the policy came from across the political and cultural spectrum, uniting the liberal Bishop Burgmann of Goulburn, conservative Archbishop Mannix, the Presbyterian Assembly and the Communist Party. Liberal, Labor and Country Party MPs began to question the policy, and returned soldiers debated it in the Army magazine Salt. Many of those returned servicemen would go on to lead the Party away from the White Australia policy, including Gough Whitlam, Jim Cairns, Arthur and Ray Gietzelt, Tom Uren, Gordon Bryant and Lance Barnard. Most reformers suggested a US-style system of quotas of migrants from different continents, to preserve Australia’s dominant white characteristics while removing any accusation of racism from a rapidly de-colonising world.Arthur Calwell, Labor’s Immigration Minister reacted swiftly, publishing pamphlets defending White Australia as the basis of higher standards of living and Australian egalitarianism. Between the Labor Government and the anglophile Menzies Opposition, there was to be no change for many years yet.

Immigration Minister  and later Opposition Leader Arthur Calwell's pamphlet

Immigration Minister and later Opposition Leader Arthur Calwell’s pamphlet “I stand by White Australia” from 1949. Calwell effectively stopped immigration reform in the ALP from the 1940s until 1965.

However, Labor Party grassroots activists did not wait long to agitate for change. At the 1957 Federal Conference, the Queensland Branch forwarded a motion to remove reference to White Australia from the Platform, but in the turmoil of the split between Catholic-corporatist labour and the rest of the labour movement, the issue was deferred. The late 1950s and early 1960s saw cultural attitudes continue to be influenced by transnational trends of decolonisation and anti-racism. On Australia’s northern periphery, Darwin led the way by electing Harry Chan to various local and territory Government positions beginning in 1959. The non-white world beyond Australia was increasingly coming to these shores, as students, businesses, diplomats, sportspeople and celebrities. The latter had a particularly broad impact. In 1960 radical black American singer and actor Paul Robeson toured the country to packed halls, and gave emotion-laden performances at Trades Halls and for the workers building the Opera House. Robeson met with Aborigines and sparked debate on racial attitudes in the labour movement. The 1960-61 West Indies cricket tour was the first to be led by a black captain, Frank Worrell, and the first to be televised nation-wide, and stirred feelings of admiration and affection that were unprecedented. After ticker-tape parades that saw half of Melbourne into the streets to see them off, the Anglican Dean of Melbourne, Dr Babbage, said:

“It is a sobering and humbling thought that the West Indians, whom Australia welcomes as cricketers would not be welcome as citizens. Their skin is the wrong colour. They may play with us, but they may not stay with us. It may be that the game of cricket will pave the way for more generous national policies. If only we could cultivate the spirit of cricket in all our dealings, one with the other. It is not far from the spirit of Christ.”

West Indies captain Frank Worrell and tour manager Gerry Gomez during the team's farewell ticker-tape parade in Melbourne 1961. @Getty Images

West Indies captain Frank Worrell, the first black West Indian to lead an overseas tour, and tour manager Gerry Gomez during the team’s farewell ticker-tape parade in Melbourne 1961. Over 500,000 people turned out to show their appreciation and affection for the West Indies team. @Getty Images

As the wider culture changed, students and grassroots Labor activists began to form the Associations for Immigration Reform (AIRs), and Student Action took up the cause. Labor Party members in local branches and delegates to State bodies began passing more motions calling for change. These motions were brought to the 1961 ALP Federal Conference, where Don Dunstan and Whitlam proposed the reforms. Dunstan moved a motion originating from Western Australia to review the policy, but lost 27-7. A separate Victorian motion to have the immigration platform re-written was ‘discharged’ along with all others and a policy statement was issued, which bore all the hallmarks of Calwell’s arguments from his time as Immigration Minister in the 1940s: “Maintenance of a White Australia shall provide the basis for immigration policy. This basis does not represent a racial prejudice or carry any suggestion of racial superiority. The policy rejects the ‘Asian quota system’ on the grounds it would make no material impact on overpopulated Asian countries, and would be harsher and more discriminating than the current regulations governing the entry of Asians into Australia for the purpose of trade and education…” This loss only led to more determined activism, both within the Labor Party and, increasingly, the wider community. Student groups held ‘speakouts’ at the 8 Hour Day Monument in Melbourne and recruited senior ALP figures to their cause. The Associations for Immigration Reform continued to lobby the Menzies Government, but much of their energy was spent on the ALP, as the alternative, potentially more progressive Government This lobbying effort led to conflict within the ALP, as the incumbent office holders began to see it as a challenge to their power and authority, as well as their long-held beliefs about the policy. Threats of expulsion were issued three separate times to anyone consorting with the AIRs. Reverend Keith Dowding, the Vice President of the Party in Western Australia, and another veteran of the war in the Pacific, was expelled in 1962 for advocating a position that was contrary to the Party Platform. This threat was effective for a while in silencing Labor involvement in the public campaign, as Gough Whitlam explained: “Many in Labor’s Parliamentary ranks, such as Dunstan, Cairns and I, thought it ideologically intolerable and morally indefensible that a socialist party should espouse a policy of racial discrimination. We were silenced in public, however, by the threat of expulsion.”

Rev Keith Dowding, expelled form the ALP for remaining a member of the Association for Immigration Reform Photographer Unknown / The West Australian.  FAIRFAX ONLINE OUT.

Rev Keith Dowding, another veteran of the war in the Pacific, expelled from the ALP for remaining a member of the Association for Immigration Reform after repeated warnings that it was a proscribed organisation. Credit: The West Australian. FAIRFAX

Despite this, Labor Party reformers persisted with the internal push for change. Three motions from Western Australia, Queensland and Victoria regarding the term ‘White Australia’ were brought to the 1963 Federal Conference, seeking respectively to remove it, clarify it, or have it investigated by a committee.  In the Conference’s foreign policy debate, a unanimously supported motion condemning South Africa’s trusteeship of South West Africa stated that ‘Conference declares its opposition to any form of segregation or discrimination on the grounds of colour, race or creed’. The following day, the West Australian motion to remove the term ‘White Australia’ was debated. The motion included a clause that immigration policy ‘be directed to maintaining the basic British characteristics of the Australian nation’, but it still went down 29 votes to 6. All three motions were discharged, as a compromise motion setting up a special committee was passed unanimously. This Committee consisted mostly of men who had previously shown support for keeping the intent, if not the wording, of the White Australia policy, with the exception of Don Dunstan. The Committee did not meet for twelve months, but its job was clear; to remove this source of contention by forging a compromise between Labor’s democratic socialist principles and the Party’s grounding as a contestant for national power and therefore a movement that had to have policies on borders and immigration that were both pragmatic and reasonably popular.  The Party, perhaps unconsciously, was dealing with one of the great challenges of progressive movements since the French Revolution, that is, how to govern a nation, with its limits and borders, its in- and out-groups, while espousing universalist principles like equality and fraternity. Fifty years on, two of the most vexed questions of our time, the transnational problems of refugees and climate change, also defy national, and so far at least, inter-national solutions. When the Committee did finally meet in 1964, it refused to hear in person from activists in the AIRs. Undeterred, the AIRs in Victoria and NSW wrote detailed submissions answering all the arguments for retaining the policy. They also sent individual committee members copies of their publication Immigration: Control or Colour Bar? The title summed up the movement’s views. Australia could do away with ‘the colour bar’, as an out-dated form of discrimination, and replace it with control and restrictions that would ensure Australia did not change substantially. The Associations advocated barring migrants on lower incomes, to ensure Asians did not end up working as an underclass and threatening Australian workers’ wages. When pressed they proposed only low numbers of potential Asian migrants, 1500 a year, a mostly arbitrary figure. They disavowed support for a quota system that had been fashionable amongst some in the immediate post-war period. They refuted the arguments of Labor’s Fred Daly and Calwell about Britain, Fiji and South Africa, examples of inter-racial strife, with examples of Brazil and Hawaii, where different races lived together successfully. Above all they emphasised control and restriction and were solicitous toward Labor’s concerns, saying: “The Association agrees that there was at one time substance in Labor’s opposition to coloured immigration. The use of cheap labour on the goldfields and in industry in Sydney and Melbourne did appear to threaten living standards. But in 1964 controlled coloured migration need be no threat to living standards. An experienced Immigration Department and a strong legal structure, which fixes minimum wages and conditions, ensures that migration intake will not adversely affect the position of citizens already here. The continued success of the European migration scheme introduced by the Chifley Government is proof that migration does not reduce living standards. Here it should be stressed that Reform spokesmen are not urging any increase in the number of migrants coming into the country. All they urge is a more flexible attitude to the racial content.” These arguments were designed to allay the concerns of those who remained opposed to change by emphasising the continuity with the Australian national project that racially blind immigration would entail. The fear was that Australia would experience ‘racial strife’, and Daly and Calwell would later cite riots in Notting Hill, Little Rock and Sharpeville as proof that different races could not coexist in peace. Britain’s experience of mostly Afro-Caribbean migration was confirmation for the ALP’s older generation that racially different groups could not live together without the one dominating the other, resulting in hatred. They thought the best way to avoid such trouble was to forestall the creation of ‘ghettoes’ by prohibiting any migration of people who could not assimilate due to their visible differences.

Harry Chan, elected to Darwin Council 1959, then to the Legislative Council in 1965, and as Mayor in 1966. While on Australia's northern periphery, and with a long history of multiculturalism, Darwin nevertheless showcased the possibilities of non-discriminatory immigration. Chan was an independent but had good relations with the Northern Australian Workers Union, a dominant player in Darwin's politics.

Harry Chan, elected to Darwin Council 1959, then to the Legislative Council in 1965, and as Mayor in 1966. While on Australia’s northern periphery, and with a long history of multiculturalism, Darwin nevertheless showcased the possibilities of non-discriminatory immigration. Chan was an independent but had good relations with the Northern Australian Workers Union, a dominant player in Darwin’s politics.

They were boosted by a submission to the Committee from the ‘Institute of International Studies’ that reinforced fears of a racial dystopia arising from non-white immigration.  Singled out particularly was the prospect of Chinese communities that would undercut Australian small businesses and Australian workers by working longer hours for lower wages and smaller profits, and by doing business only with other Chinese. AIR accepted that these concerns needed refutation rather than rejecting them as racist, stereotypical or inapplicable. The Victorian AIR said in its submission to the Committee that: “A small intake of non-Europeans would not cause friction if they satisfied the normal requirements as regards health, criminal record etc and if they were so chosen that they come to jobs at all levels in the occupational scale. It would be important that they should not concentrate in jobs at the bottom of the economic ladder.” Such arguments were persuasive because they reflected Labor’s belief, indeed the Australian’s people’s belief, in continued white, European-Australian control of the polity and the nation. There was no conception or consideration that Australia would do other than remain as an English-speaking, liberal democratic, western nation retaining what many referred to as the Australian ‘way of life’. The Committee’s recommendations to the Federal Executive, drafted as a resolution, resulted in the 1965 Conference removing the words ‘White Australia’ from the Platform. The change was not intended to be a serious break from the past and the language of the motion ‘made it quite clear that it would not open the floodgates to Asian immigration’ as the ALP News put it in its Federal Conference report edition.  The language was measured and the intent remained similar to the previous Conference’s motion: the maintenance of the economic, political and cultural standards and norms to which the citizens of Australia had been accustomed. After an amendment from Western Australia to remove part D) was defeated, the following was unanimously supported, and the ALP dropped the term ‘maintenance of White Australia’ from its official Federal Policy document for the first time since it had formulated a Federal Platform, stating: “After close examination of the existing Platform, the Committee unanimously endorsed the following recommendation: That Clause XXI Immigration of the Platform be deleted and the following inserted- “Convinced that increased population is vital to the future development of Australia, the Australian Labor Party will support and uphold a vigorous and expanding Immigration programme administered with sympathy, understanding and tolerance. The basis of the policy will be:

  1. A) Australia’s national and economic security
  2. B) The welfare and integration of all its citizens
  3. C) The preservation of our democratic system and balanced development of our nation; and
  4. D) The avoidance of the difficult social and economic problems which may follow from an influx of peoples having different standards of living, traditions and cultures.”

In the judgement of some of those listening, Calwell, as he seconded the motion spoke ‘as if his mouth was full of ashes’.  This may overstate the importance of the change to Calwell, who repeatedly claimed at the time and afterwards that the change to wording would not change the Australian culture to one which accepted a multi-racial society.  Nevertheless, Labor had reworded its policy after nearly a decade of attempts. The change was barely remarked upon by Labor’s union affiliates, they had other, more immediate, concerns about wages and jobs. The general membership of the Party was similarly preoccupied with more controversial matters, with the reform motions coming from a relatively small number of Branches.  Whitlam and Dunstan drove the change at the top level, but even there it was an important, symbolic, but third-ranked priority, issue. This relative apathy was a reflection of the fact that a deal had been done which both sides could live with, each believing their point of view would prevail eventually with or without the words ‘White Australia’ in the Platform. It also showed that the reformers were not at the time advocating a radical change, and were not in power, and had not been for many years, to effect any changes anyway. In this they were mistaken.  Whitlam’s star was rising and Calwell and Daly were soon out of the picture. Change came quickly between 1965 and 1975 when Whitlam enacted the Racial Discrimination Act and did away with any semblance of racialism as official doctrine. That decade was filled with its own contortions over the appropriateness of integration, assimilation, multiculturalism and nationalism, but Labor never again tried to ‘maintain a White Australia’. For further reading and references see my thesis on this topic at Sydney Uni.

Posted in Conference, Immigration, Labor, Labor Policy and Party reform | Tagged , , | 2 Comments