Federal Politics


It's the season for giving, for some

MANY YEARS ago I did a deal with my sisters: You don't give me any Christmas or birthday presents and I won't inflict any on you either.

It made us all happy.

Today, the only person who gets a present from me is my elderly father. My partner detests the process as much as I do, my children are grown up and I don't have grandchildren.

Giving presents to adults, who already have more than enough, is a gross waste.

I know the festive season is an essential selling period for retailers and this generates jobs for millions of people, but surely it's time to do things differently.

We would keep giving presents to children - everyone loves that. But could we turn the festival into a time when, in some small way, we try to redress inequality? Christians and humanists together would welcome the change.


Businesses would not be so keen.

For many years now we have concentrated on growing the economic cake and, with a record-breaking run of more than 20 consecutive years of growth, there is no doubt we have been successful. Our population has grown too. But after taking this into account, the raw figures suggest that the average Australian citizen is much wealthier today than he or she was a few years back. Per capita gross domestic production is more than one-third higher than it was 10 years ago.

But not everyone is one-third richer. The growth has not been equally shared.

No one will be surprised to hear that profits' share of our total production has increased steadily since the 1960s. The other side of this coin is that wages' share has declined.

Wages' share of the cake peaked at 62.5 per cent in 1975, then fell steadily until June 1980, before creeping up again, under the Fraser government, to 61.6 per cent. The Accord negotiated by the Hawke Labor government brought inflation under control and saw the union movement agree to a lower wages' share in return for other social benefits. Since then the wages' share has declined steadily, to stand at only 54.2 per cent in September 2012.

Nevertheless, with the growing cake, most Australians are materially richer than ever before. Some have done very much better than others.

Readers will not be surprised to find that, following the financial liberalisation of the 1980s and 1990s, the financial sector increased its share of profits. Thanks to the strong rise in commodity prices, the mining sector joined the bonanza.

Superannuation funds owning shares in these companies spread the benefits across the wider community to some degree.

In addition, a small minority of Australians have grown immensely wealthy. Most of these show little inclination to share their gains.

A 2010-11 study by Philanthropy Australia found that overall giving levels were lower here than in the UK and Canada. Moreover, Australia's high and ultra-high-net-worth individuals tended to give at a relatively low level. The high-net-worth individuals gave under 2 per cent of their taxable income, compared with 3.2 per cent in Canada and a range of 3.5 per cent to 7 per cent in the US. A hopeful sign was that overall giving had increased over the past decade. But the generosity of high-net-worth individuals has not increased at the same rate as their incomes.

The major way the less well-off in our society are assisted is through social service payments.

As a share of total production, these benefits rose sharply in the early 1990s and then slipped back. They received a major boost from the stimulus package the Rudd government delivered to help Australia ward off the 2008 global financial crisis, but have since settled back to about 8 per cent of our total production. This percentage is about the same as was paid at times in the 1980s when our population was much smaller.

But what must be remembered here is that the payments are going not only to a larger population, but that an increasing share of the population needs them. As our population ages, more and more people require age and health benefits assistance.

Many of the leaders in the corporate sector detest paying the taxes necessary to fund such assistance. Perfectly reasonable mining resource rent tax proposals were met with mining industry leaders' threats to take their capital elsewhere. Similarly, proposals to impose a Tobin tax on financial transactions continue to meet fierce resistance from the speculative cowboys playing the markets worldwide.

At times there is a degree of bluff here. You can only mine where there is a sufficiently rich deposit of ore. Nevertheless, individual governments cannot ignore the threats. Miners can and do use their money to mount political campaigns and bring down governments.

Only broad-based citizens' campaigns, which are now possible thanks to the internet, have the capacity to challenge such heavily funded campaigns. It would also help if economists, major economic organisations and political parties around the world again took up the issue of how the economic cake is shared. It's not a debate business wants.

But I, for one, would like to hear business leaders try to justify why profits should take an ever-increasing share of the cake that the community as a whole produces.