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Abbott, not Gillard, is the true 'class warrior'

Date

Nicholas Reece

Look at the policies: the Coalition wants to take from the poor and give to the rich.

Ilustration: Jim Pavlidis.

Ilustration: Jim Pavlidis.

Is Prime Minister Julia Gillard engaging in ''class warfare'' in a desperate bid to save her political skin? A recent Galaxy poll found most middle-income earners think she is. So, that settles it, right? Well, not really.

As with most things in politics, the reality is more complicated.

It is simply wrong to claim only one side in Australian politics is engaging in ''class warfare'' when both major parties have policies that will shift resources between different income groups. 

''Class warfare'' used to refer to the conflict in society between the competing interests and desires of people of different socio-economic class. In recent times, however, it has become a knee-jerk response to any Gillard government policy that affects one group in society differently to another.

Tighten superannuation tax breaks to make the system more sustainable - class warfare. Fix Australia's broken and unfair model of school funding - class warfare. Move the mining taxation system from royalties to profits - class warfare. Tighten enforcement of 457 visa requirements so the scheme works as intended - class warfare.

As Age columnist Tim Soutphommasane presciently observed in these pages, ''class warfare'' has become the catchcry of a new conservative political correctness.

The truth of this assessment is made clear by an analysis of the competing policy platforms of Labor and Tony Abbott's Coalition. What it shows is that both parties have policies that result in a redistribution of resources from one group in society to another.

This is not surprising. With only finite revenue, a decision to give to one individual or group means, by definition, that another will miss out.

What is surprising is the extent to which Coalition policies will result in a significant redistribution of wealth upwards rather than downwards. Consider the following Coalition policies:

■ Lower the tax-free threshold from $18,200 to $6000. This will drag more than one million low-income earners back into the tax system. It will also increase the taxes for 6 million Australians earning less than $80,000.

■ Abolish the low-income superannuation contribution. This will reimpose a 15 per cent tax on superannuation contributions for people earning less than $37,000.

■ Abolish the proposed 15 per cent tax on income from superannuation above $100,000 a year. The combined effect of these two superannuation changes is that 16,000 high-income earners with superannuation savings in excess of $2 million will get a tax cut while 3.6 million workers earning less than $37,000 will pay more than $4 billion extra in tax on their super over the next four years.

■ Abolish the means test on the private health insurance rebate. This will deliver a $2.4 billion tax cut over three years for individuals earning more than $84,001 a year, or couples earning more than $168,001. People on lower incomes will receive no benefit.

■ Introduce a paid parental leave scheme that replaces a mother's salary up to $150,000. To put it crudely, this means a low-income mum gets about $600 per week while a high-income mum gets close to $3000.

■ Abolish the means-tested Schoolkids Bonus that benefits 1.3 million families by providing up to $410 for each primary school child and up to $820 for each high school child.

These policies will result in low- and middle-income earners paying billions of dollars more in tax while those on higher incomes receive billions in tax cuts and new benefits. Rather than take from the rich and give to the poor, the Coalition policies are a case of take from the poor and give to the rich. And this remains the case even taking into account the flow-on effects of the abolition of the carbon price and the funding of the Coalition's paid maternity leave through a tax on big companies.

So who is waging the real class war? And why is it that Coalition MPs are the ones who most frequently level the accusation of ''class warfare''?

One answer lies in Australia's tendency to mimic political debates in the United States and Britain.

In the US, Republicans rallied against Democrat Barack Obama in the 2012 presidential race with the claim he was waging ''class warfare'' with his deficit-reduction plan. The plan included tax increases for high-income earners and the introduction of the Buffett Rule - named for billionaire investor Warren Buffett - to compel those making $1 million or more a year to pay the same overall rate as other taxpayers.

The President defended the plan by arguing: ''This is not class warfare - it's math … The money has to come from some place. If we're not willing to ask those who've done extraordinarily well to help … the math says everybody else has to do a whole lot more.''

That is the rub in Australia as well. With the government facing a very tough budget environment it is perfectly entitled to give consideration to things such as ''fairness'' or ''capacity to pay'' in making difficult decisions. It is because of these considerations we have a progressive income tax scale and a welfare system based on need not entitlement.

If the values behind these policies meet the modern definition of ''class warfare'' then it seems the voters are all for it. The Galaxy poll also revealed that voters supported cutting back on middle-class welfare if it was to pay for school funding reform or the national disability insurance scheme.

It is also the case that Obama's so-called ''class war'' worked. He won the election and it is looking more likely that he will get a deal on the US budget. Did the President have an eye on the politics in framing his budget plan? Of course. Do Australian politicians do the same thing? Absolutely.

All parties consider the impact of their policies on different groups in the community. Their objective is to stay true to their values while building a coalition of voters across society that will win them the next election.

It is simply wrong to claim only one side in Australian politics is engaging in ''class warfare'' when both major parties have policies that will shift resources between different income groups.

What we desperately need before the September 14 federal election is a debate that moves beyond the rhetoric and examines the real impact on people's lives of the parties' competing policy agendas.

Nicholas Reece is a public policy fellow at Melbourne University and a former senior adviser to Prime Minister Julia Gillard and premiers Steve Bracks and John Brumby.

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760 comments

  • Nicholas, your rather one-eyed article neglects a few small facts:

    • The Coalition have not said they would repeal the $18,200 tax-free threshold
    • The 15% income on super above $100,000 is not legislated so there’s nothing to repeal
    • The government decision to means test the private health insurance rebate will blow out government health costs and impact everyone
    • The PPL does redistribute income, but is likely to go before the election

    Further you ignore the other side of the ledger where the less wealthy benefit:

    • The carbon tax, which both penalises business but is also a massive income resistribution from rich to poor
    • The plasma handouts
    • Gonski which is loaded in favour of public schools
    • The NDIS

    It's all very well to argue one side, but some balance would be more objective.

    Commenter
    Hacka
    Location
    Canberra
    Date and time
    April 29, 2013, 5:58AM
    • Don't worry Hacka, let them have their moment in the sun befoe Sept 14! I was about to read this article, but instead went straight to the bottom of it first to see what the author's "credentials" were....enough said really.....

      Commenter
      MTK
      Location
      Port Melbourne
      Date and time
      April 29, 2013, 8:09AM
    • hacka - you do yourself a great injustice with this misleading catalogue.

      The coalition has threatened to reintroduce the lower tax threshold when it abolishes the carbon tax that offsets it.
      If the 15% tax on high superannuation has not yet been legislated, there is no reason why superannuation income should be taxed any differently to any other income.
      It is unlikely that the means test on private health insurance rebates would cause many people to drop their insurance - it does not make economic sense for them to do so. You have used hyperbole (or hyperbowl as jimc spells it).
      The carbon tax is not a massive redistribution from the rich to the poor. Nor is it a big impost on business.
      If Gonski is loaded in favour of public schools, then that is only a problem if the rich choose to use private schools - if it is not in their interests to do so - (which seems probable even in the current system), then they will transfer their children to public schools to enjoy the bonanza.

      Commenter
      Ross
      Location
      MALLABULA
      Date and time
      April 29, 2013, 8:18AM
    • Gee Hacka

      A little scrutiny on the LNP and you go into defense mode, dont tell me the LNP have a glass jaw its about time that the LNP are given a little touch up and in doing so we are starting to see the Wheat from the Chaff,truth hurts eh?

      Commenter
      Buffalo Bill
      Location
      Sydneys Northshore
      Date and time
      April 29, 2013, 8:22AM
    • Hacka, your rather one eyed reply neglect a few LARGE facts.

      Joe Hockey has said that if they get rid of the carbomn tax they will remove the sweeteners, including the tripling of the tax free threshold.

      Read the article, RE the 15% tax on super income over $100,000, Nicholas says 'proposed.'. So tell me how he neglects a fact there?

      Studies have showed that higher private health insurance costs have had little effect in making well-off people dfrop private cover.

      PPL: So, Tony Abbott has next to no policies, and this is one that he does have, but you want Nicholas to make assumptions, based on your assumption, that this will go?

      Carbot tax: Penalises business? No, it makes business pay the true costs of the pollution they create. That's like saying that charging people to take their rubbish away penalises them. No, they make the rubbish, they need to pay.

      Plasma handouts? Loaded comment? Oops, we survided the GFC thanks to this Govt.

      Gonski? It is giving fund to the schools that need them most. it's not loaded, just honest and worthy.

      NDIS? Needed, and a great scheme.

      I think we all know who is really one-eyed here.

      Commenter
      Fotografa
      Date and time
      April 29, 2013, 8:30AM
    • The article fails to mention the greatest rort of all - Howard's gift to wealthy self funded retirees - completely tax free superannuation earnings and withdrawals.
      Howard, and now Abbott, are like Robin Hood in reverse - skim as much as possible from the less well off and give tax free concessions to the wealthy.
      And we haven't even mentioned the increase in GST that is surely down the track - and guess which section of the community that will hit the hardest.

      Commenter
      cruiseabout
      Location
      Broadbeach
      Date and time
      April 29, 2013, 8:34AM
    • Hacka - Could you please explain to me exactly how Gonski is loaded in favour of public schools? Gonski Lite was altered to catch the bottom 50% - which now includes MANY independent and Catholic schools. You are clearly wrong with your claim.

      Commenter
      Paper work
      Location
      Melbourne
      Date and time
      April 29, 2013, 8:34AM
    • "Gonski which is loaded in favour of public schools"

      The purpose of the Gonski funding reform is to give more funding to students from a disadvantaged background.

      Where do think you are more likely to find disadvantaged students? Public or Private & Independent?

      Commenter
      Level Playing Field
      Date and time
      April 29, 2013, 8:35AM
    • Abbott hasn't promised to raise the TFT, but he's sure left the gate wide open to do so. Quote: 'Mr Abbott said it did not automatically follow that the tax-free threshold would return to $6000 from $18,000 if the Coalition won office and scrapped the carbon tax'

      He's right, it won't be automatic, it will only happen if he raises it deliberately - which he can do without breaking a promise. We're getting to the pointy end where Abbott's wriggle room on his election promises and his budget management should shrink dramatically.

      Commenter
      rudy
      Date and time
      April 29, 2013, 8:36AM
    • gonski = "loaded IBM favour of public schools". how is that a bad thing? the government is responsible for public schools. all children should have a right to a decent education... not just those who can afford to pay for one

      Commenter
      jade
      Date and time
      April 29, 2013, 8:40AM

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