Yes, Labor made the right choice on the government’s tax cuts

Attention reader:

1. This article is about the Labor Party
2. This article is about the Labor Party because it lost an election it could have won handily, and now is the time to make changes and get in new ideas
3. It is not about the Liberals and what poobums they are because i) that simply increases the sense of self-righteousness that led to fatal smugness in the first place, and ii) the seven people who read me who are Liberals know what they are and are not going to be convinced to be otherwise by the likes of me
4. It is not about the Greens because we will get to them
5. For I will consider that cat, Anthony…

Labor’s capitulation to the Coalition’s entire tax programme last week has been taken by some as a sellout afresh, the next betrayal, etc etc. To be honest I find myself utterly bewildered by that attitude. Once it was clear that Centre Alliance had made a deal and had also so quickly and easily dominated Jacqui Lambie that her vote was gone, Labor’s vote against would have made no difference.

As your correspondent noted last week, there were no good choices to make — as is the case when you’ve gambled and lost. Good gamblers cut their losses by taking the loss. Losers let their losses run on in the vain hope of avoiding them altogether.

Labor cut its losses, got it over with and moved things on. It was the right choice. That it was so can be easily gamed out. To have voted against and lost was to invite a taunt for the next three years, a tagline that wouldn’t grow old as the rebates flowed. The reverse taunt — “well you, uh, voted for the thing we wanted” — doesn’t have the same force. Voters don’t care about who made who whose bitch, they care about things being done.

The need to cede the position was not a thing of the moment either. It was the logical conclusion of a path Labor put the country on in the Hawke-Keating years: individualising welfare; making the state an umpire of labour agreements rather than a prime mover; in general, depriving the state of its identity as a moral agent and the representative of the collective good. Having arranged a situation in which some workers can pull miles ahead of others — having created a situation in which there is, in other words, no class common good — defending progressive taxation was always going to look quixotic.

Hundreds of thousands of couples in classical working class jobs have now slipped above the old $90,000 bracket, and then above the $180,000 higher threshold. Many have passed office workers who have a residual higher social status. The ALP should have offered a new tax deal before the Libs did, with a better deal for low-income earners, and an extra band for the rate between 32.5 cents and 37 cents per dollar, for example. 

The response by many to Labor’s quick pass on tax struck me as curious. The first common reaction was that people wanted Labor to die valiantly on that hill, which had a touch of old Whitlamite lost causers about it. The second reaction was that it was rewarding “selfishness”. But the politics of progressive taxation never relied on altruism. It was demanded by and offered to a working class with very little capital, and a far narrower wage range than now exists. It was an expression of collective class interest. Now that class is entirely fractured, wage differentials and capital ownership is vast.

Flattening the tax rate between $90,000 and $180,000 was to the advantage not only of many workers, but of many strongly unionised workers — construction, teachers with senior loadings, agency nurses. The howl that such an offer to them was selfish came from knowledge class people whose attachment to Labor has had a longstanding altruistic/ideological attachment, and a romanticised image of a unified working class.

Australia is a very unusual cat among the advanced capitalist societies. Elsewhere, the working class is far more unified in terms of economic interest and a simpler programme can be offered. Labor is going to need a more complex programme which serves high-wage earners while raising up the benefits-dependent and precariously waged through transfer payments and the increased universal provision of services.

These two big policies can be joined together as part of a social liberal compact — if you’re doing well you get to keep more of it; if you’re not, you get more help than hitherto — with the application of a third element: real taxes on corporations, which makes them pay more of what they owe.

We are going to have to do that anyway. The combination of monopoly, automation and consumption means that wealth transfer to the dead capital of corporation and the finance sector is now so great that transferring money back into the labour-centred economy is not even a particularly left-wing proposition. Currently, Labor is so sluggish on really big structural macroeconomic innovation that the Libs’ll probably be offering a universal basic income before Labor does.

Should the party not have the nous to spend the next 18 months exploring the most dynamic and creative solutions to a society with unusual features, then come next election it will be in even worse shape than it is now. Getting the tax stuff out of the way was only a start, but it was a good move.

If the Coalition returns to attacks on trade union rights, Labor is on firmer ground — if only because many working-lower Liberal voters gained the high wages they want to hang on to because they’re members of strong unions. Labor, though it cannot fly, is an excellent clamberer.