Sniffin’ glue: Labor gives itself a break on tax and class unity

“Looks like I picked the wrong week to quit sniffin’ glue” says Lloyd Bridges in Flying High, and one can imagine there are similar scenes happening right now at the Australia Institute. What do you do when, weeks after you launched a (very good) book, The Nordic Edge, which has urged Labor to follow its compass to the high-taxing northern social democracies once again, the party goes and commits to Scott Morrison’s new tax system, which flattens the rate out to 30c between $45,000pa and $200,000pa?

By the time you get to the higher end of that, you’re talking about less than 10% of wage-earners. The case for some flattening out has been due to bracket creep (which is also Jim Chalmers’ nickname — coincidence?) but that was more relevant, for Labor, in the lower levels round the $80k to $120k mark.

Flattening out the higher reaches, from about $130k to $200k, is the Libs’ main game, and Labor has clearly determined that it will leave no daylight between them on these matters; that it won’t go into an election handing the Libs one big thing that they can run a Howardian-style campaign on, where the entire frontbench says the same thing till everyone’s bored sick with it, themselves included: Labor will raise your taxes.

Real bracket creep works forwards but as we saw with Chris Bowen’s Dr Franking Credits’ monster in the last go-round, people worry about higher tax on incomes they will never have but imagine they one day might, and on the basis of such mass delusions is our fiscal policy made. Your correspondent backed Labor letting the tax cuts through when they were first put up, and it was the correct thing to do, I mean, of course, duh.

Had they not done so, the government would still be hitting Labor with it, weekly, even through the pandemic. As it is, all Josh Frydenberg has is a rather lame complaint about how Labor “says this then it says something else”, which no one really cares about. The cuts themselves are so supremely clientalist that complaining about Labor responding to perceived public demand in forming its policies rings hollow.

For a time, at the start of the Albanese reign, one hoped that this manoeuvre was to buy breathing space in which a new joined-up social democratic policy could be made — one which proposed a modified progressive tax system, together with a real crackdown on corporate overshoring, and which, crucially, told us what specifically they wanted to do with the money. 

Faint hope. Instead we have had relentless low-level factional wars, or manoeuvres, and this tax policy itself appears to be an expression of a left-right stability pact, in which whatever side isn’t in power gets to pick the policies, a la Bill Shorten’s sudden “enthusiasm” for renewables targets last go-around. What a great way to draft a party program. 

So the right has been pushing this but, as John Quiggin noted, the suspicion among progressives would be that this is not a political-tactical move. It’s a chance to use such reasoning as cover to do what they want to do anyway. That is, to run Australia on the basis of a permanent real estate bubble and high-end consumer spending, as we keep chipping bits off the continent and shipping it north, once, under an Albanese government, we have re-attached our lips to the CCP’s, uh, backward sections.

The Labor right’s wonk section is, as someone remarked, the only part of the political spectrum that really believes all that classical liberal crap anymore, with the IPA et al filling up with bitcoinbug Islamophobes. 

But even if there’s a bit of that, it doesn’t alter the fact — one that many progressives won’t acknowledge — that Labor in Australia faces a hell of a dilemma. Australian society has been relentlessly privatised, much of it done by Paul Keating. The broad working-middle class has split — but not down the middle. Instead, the benefits-dependent and precarious and “low-prospect” workers — about 25%, maybe 30% of the population — are marooned, utterly without political leverage. The interests of what was once a united social class are now in contradiction, given the embedded nature of such divisions.

Why would upper-strata working-middle class people — ‘ere we go again, plumber and nurse, teacher and construction worker, medical admin and her husband, a juggler breaking into the industry (Northcote/Marrickville only) — feel that a higher-tax society would protect them from life risk? Why would they not see it as a drain on their prospects for life and intergenerational advancement?

Class solidarity once anchored policies like heavily progressive income tax; class decomposition is privileging their exact opposite. Progressives have to face the fact that the Whitlam spirit is gone from the party, beyond recovery or repair, because there is now no unitary working class to anchor a larger class coalition with trendies/intellectuals/the knowledge class in its various guises.

There is no longer a “natural fit” between progressive social policies and social democratic political economics. The “low prospect” groups locked out of power are unrepresented as themselves within Labor because so many actual left unions — construction, admin — have members drawn from the upper strata.

Furthermore, the official unions of low-prospect workers, such as the SDA, are de facto company outfits, subcontracted by capital to manage workers’ expectations downwards and deliver workplace compliance. The left unions’ leadership (and the Greens) maintain progressive policies — but as a general moral-political commitment, not as representation of a class-for-itself.

And were a genuine “party of the poor” to be started up, it would face the same problem as the Greens: compulsory preferencing removes leverage, which is exactly why Labor supported it when it was introduced a century ago. Kevin Rudd managed to pull something together, but only because he was an outsider, a worldly diplomat, capable (or with a team capable) of surrounding conventional politics with a comprehensive program. It appears that such people can no longer come from within Labor.

It also appears that social changes make that big picture thing far more difficult than it was even a decade ago. Such a program would be necessary to resisting tax cuts. I hate us being locked into a semi flat tax regime for years. But I can’t see a scenario here in which it wouldn’t have happened. Oh, and new COVID variants are coming. Off topic, I know, but good to get it all out of the way. Looks like we picked the wrong week to quit sniffin’ glue.