POST WAR AUSTRALIA - EQUALITY - REVIEW
a new Australia
Reviewed in Arena,
30, 1972, pp. 8-12.
In the decade following
the defeat of the Labor governments in post-war Britain and Australia
there developed the notion that political ideology was exhausted. In the
context of the ALP, this assumption meant that nationalisation was no
longer accepted as an intrinsic component of the party’s “democratic
socialism”. To the extent that anything was salvaged from the wreckage
of the experience of Labor in office, it was a commitment to
“equality” – R. H. Tawney found a new audience as right-wing
Laborite Tony Crosland assured his readers that “socialism is about
equality”. If nothing else had turned out right, at least the welfare
state had redistributed incomes, as could be demonstrated from the
continuous lamentations that taxation was crippling initiative.
Then, in 1962, came
Richard Titmuss’s Income
distribution and social change which argued that all that the
welfare state had done was to hold the distribution of income at pre-war
ratios. To put the point in reverse, he had proved that the natural
tendency of capitalism is for the rich to get richer and the poor to get
Titmuss was taken up by
people such as Labor’s Frank Crean who devised a tax system by which
the rich would be hurt: he promised to abolish all deductions, to offer
a higher upper limit on non-taxable income, to redraft the tax schedules
and he threatened a capital gains tax. None of this would have helped
for very long as it largely bypasses the central fact – wealth in this
society arises from capital, and unless wealth is attacked at the point
of its production it cannot be equalised.
This preamble is
necessary because its contents are now irrelevant to the plans of the
ALP under Whitlam. The summary is important only because it enables us
to see more clearly what it is that the ALP has rejected. What has been
adopted in its place is evident from the recent collection of Fabian
essays, Towards a new Australia.
While some of the
contributions are irrelevant to a discussion of equality there is one
notable absence: industrial policy. Calwell would take this silence as
further proof that the new Labor leaders have once again neglected the
workers. It would be entirely wrong to suppose that technocratic
laborism has forgotten the workers. It has an incomes policy in store
for them and a new arbitration and conciliation system designed to
facilitate its implementation. (For an idea of what is in store see
Dunstan’s industrial relations bill.)
Among the contributors,
there is widespread agreement that socialism is not on the agenda. The
nominally furthest left of them – J F Cairns – concludes his piece
by suggesting that a modified tariff structure is the most that a Labor
government could achieve in the near future of a socialist nature. (p.
95) Crean makes some suggestions for reforming the tax system which are
based on the explicit assumption that it is his job to help ensure the
survival of a mixed economy. (p. 62) Another accountant, Chris Hurford,
is even more adamant that “the market economy is here to stay”. (p.
The tensions between
the old and new Laborisms are clearly marked in the differing emphases
given to income distribution by the two economic essayists, Hurford and
Crean. Hurford represents the new school of technocrats and plans to
make the poor richer by increasing the size of the cake so that their
relative position will remain unaltered:
Crean, on the other
hand, accepts that the “labor movement would foster economic growth”
because “everybody cannot have more unless more is produced”, but he
recognises that “this should not sidetrack us from inequalities and
distortions in present distribution.” (p. 77)
It is essential to
remember that an increase in the size of the cake will not automatically
mean that the poor will maintain their percentage. If Titmuss is any
guide, the poor may well get a smaller percentage unless there is the
most vigorous programme of “confiscation”. And even if the
percentage remains constant, this level of distribution will increase
the gulf between the rich and poor, so that if poverty is socially
defined, the poor will have became poorer.
speculations are by no means the most important evidence of the ALP’s
retreat from equality. For the real data, one must examine Hayden’s
chapter on Labor’s proposals for national health, compensation and
retirement schemes. All three will be financed from contributions by
taxpayers, but not from the general tax fund. Special contributions will
be required and it is these taxes which are at the core of Labor’s
The following table gives an idea of what Labor has in mind. Hayden stresses that the details are not final but this codicil is a sop to the rich and powerful, not a promise to revise the scales in favour of the poor; in other words, it is an election ploy to sooth the doctors and superannuation contributors. The rates are taken from page 223. The column on contributions as a percentage of weekly income has been added. Significantly, Hayden omitted this table from his own calculations.
This proposal would not
be strange if it came from the Liberals, but as a working paper from the
ALP, it demonstrates the degree to which equality no longer constitutes
even a verbal commitment.
The same criticism
applies to the health scheme under which everyone will contribute 1.35
per cent of taxable income. The anti-equalitarian aspects of this
proposal are many and varied:
In defence, Hayden
would claim that his proposals are less regressive than the practices at
present and that he would equalise the services received. In the light
of Titmuss and Piachaud, it would be unwise to suggest any certainties
about the impact of any taxation proposal except to say that the
unanticipated consequences invariably run counter to the poor, precisely
because the laws of capitalism ensure that they will. Therefore,
Hayden’s hoped-for equalization of services may or may not eventuate.
In the case of the retirement benefits, it is clearly not intended to do
Whitlam has also spoken
of the need for equality which he misuses in the same way as he does “internationalisation”.
In his Fabian pamphlet Labor in Power, he nforms us that “Equality with freedom is, I
apprehend, the basic ideal and inspiration of democratic socialism.”
For the next two pages, he does indeed devote himself to equality but
not in the usual sense. He proposes an equalisation of resources between
Federal, State and Local government so as to equalise the distribution
of funds for health, education and urban living. This might have some
“spin-off” effects in assisting the poor but these would be
incidental. The main thrust of these proposals would be to assist the
sixty to seventy per cent in the middle-income ranges. The tall poppies
would be left out but so would the lower-income groups who have no
access to these funds.
Whitlam talks about equality and means it. But it is an entirely new
twist in which the question of income distribution is sidestepped.
In the months and years
ahead it will be necessary to chart the progress of these schemes very
carefully. For the present, it is sufficient to note their
non-equalitarian bias and to wonder how much less effective they will be
at reducing real differences in income than been those schemes which at
least commenced from an equalitarian ideal.
 David Piachaud, “Poverty and Taxation”, Political Quarterly, 42 (1), January-March 1971, pp. 31-44. Piachaud concludes: “Many of the poor in Great Britain at the present time have, in effect, higher tax rates than any other section of the population. The benefits available to the poor are hard to comprehend and complicated and time-consuming to claim. Many poor families are taxed into poverty and are prevented by the system of taxes and benefits from raising themselves out of poverty.” Because our welfare system is not as extensive as Britain’s, this situation may not apply to anything like the same extent – but if Labor’s proposals are implemented its appearance becomes increasingly likely.
 Labor’s emphasis on urban development must be scrutinised in the light of what we know about local government in action. To the extent that money and power are transferred from Canberra, it is likely to fall into the hands of a local squattocracy of real-estate sharks and corruptible Labor aldermen. One only has to read Bryson & Thompson’s study of An Australian Newtown (Pelican, 1972) to realise how repressive local government is of the wishes and needs of the underprivileged. When some Labor councilors stood up for the residents in Balmain, they were expelled from the ALP. In Victoria, the forces of intervention use Richmond council employees to terrorise the Socialist Left at ALP branch meetings.