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CURRENT POLITICS - Eureka Dinner Speech 2014 |
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EUREKA DINNER ADELAIDE 15
November 2014 The Adelaide Club is but one more
stockade for the corporates. After Eureka, the propertied classes in Victoria
built themselves a stockade called the Legislative Council. It had the same
power over legislation as the Legislative Assembly. Only electors with £10,000
in property could be members. Only electors with £1,000 could vote for them. In
today’s values, only the likes of Rinehart, Palmer, Forest and Turnbull were
eligible. No wonder the Bulletin
referred to the Victorian Legislative Council as the ‘House of Landlords’.
South Australia got something similar. Here, the property qualification for the
franchise lasted until 1975, twenty-five years after it was abolished in
Victoria. The global corporates maintain all
kinds of stockages. The G20 has erected a fortress around their Brisbane
meeting. The presence of 6,000 thousand police and military forces is more than
justified when you bring together so many of the world’s crime bosses. They
should spend the rest of their lives in maximum-security prisons. Of course,
the overtly violent wing of the state is there to do what the troopers did at
Eureka, that is, to repress the protestors calling for justice. As Parisian
students said of the barricades they erected in 1968, they are not designed to
keep the police out, but to see who is on the other side. The people have kept building
stockades. In 1998, the offices of the Maritime Union at the Port was the
Eureka Stockade. For the past few years, the stockade has been at Mukedy
station. The spirit of the stockade ranges across land wherever people have
‘locked the gate’ – to fly this green Eureka flag. Those sites are places of
struggle, strongholds around which unionists, Aborigines, farmers and
environmentalists continue to fight. They are not hiding places, not bolt
holes, not retreats, not bomb shelters and not comfort zones. The rebels at Eureka put up a
makeshift stockade which did little to slow down the dawn attack by the
military. Nonetheless, the rebellion galvanised the rest of the population so
that the authorities could not convict the rebels who were, after all, as
guilty as hell. The jury boxes were stockades for democracy. In
1852, the leader of the squatters in the Legislative Council, W.A. Splatt, gave
the game away when he opposed a stock tax with a cry which has reverberated
ever since: ‘Shall we tax ourselves?’ That rhetorical question is the key to
understanding why the miners were driven to open defiance of the Crown. The
flashpoint was the enforcement of the licence fee. The miners did not object to
paying a fee. What they objected to was to being taxed while the squatters and
the merchants refused to pay anything.
Sound familiar? Hence, it is appropriate to take
taxation as the connecting thread for an address at a Eureka Dinner. The official historian for the
mining and other corporates, and sometime President of the Melbourne Club,
Geoffrey Blainey has run the line that the rebels were the forebears of
resistance to higher taxes on mining corporations. The fact is that the rebels
are the forerunners of those of us who want a super profits tax to make the
profit-takers pay more. Indeed, the problem has been to get
the mining giants to pay any tax. In 1973, the new Minister for Minerals and
Energy, Rex Connor, asked a simple question. What has been the contribution to
Australian welfare from the mining boom that began in 1957 with bauxite? The
assumption had been that the government would get more back in taxes than it
had paid out in subsidies and granted as investment allowances. When the
Fitzgerald Report came in April 1974, the numbers showed otherwise. The
governments had got nothing. In fact, the rest of us had been forking out to
pay BHP and CRA to profit from exporting finite resources. Calculations varied from
$5m. up to $55m. but there was no doubt that we taxpayers had been subsiding
the mining giants. Proof positive came when the Queensland government reacted
to the Report by driving up freight rates for the coal companies. While the mining corporations were
sucking money out of the public purse their export earnings were forcing up the
exchange rate of the Australian dollar thereby making every other area of the
economy uncompetitive, both rural and manufacturing sectors. Whitlam then made
the squeeze worse with a 25 percent across the board tariff cut early in 1973. The
Fitzgerald Report focused on how the mining corporations deployed investment
allowances and accelerated depreciation on capital outlays to take back more
than they paid into the government coffers. At the same time, the corporates were
up to another swindle that would reduce their tax liability once their
investment phase was over. This device is called transfer pricing. It works
like this – I use the present tense because it is still going on, and not only
among resource firms. The rort works like this. A transnational firm produces
in Australia where the average tax rate is 30 percent. They export their goods
to a country where the effective rate is lower. The arm of the company over
there fiddles with the price it pays so that the Australian arm appears to have
sold at a loss. The transnational declares its profits there and thus appears
to have made little or no profit here. These off-shore locations are not all
tax havens, such as the Cayman Islands, which are the extreme end of this
racketeering. Almost half of world trade takes place
between arms of the same corporate entities. Transfer pricing is wrought by
managers who hire accountants, recruitment services and travel agents from
within the web of sub-branches that are registered in lower taxing countries.
Those providers charge more than the price that their services would bring in
open competition in Australia. Again earnings are reported in low-tax
countries. New twists in transfer pricing came
with the era of financialisation. The Australian-based firm borrows money from
a branch of the same global conglomerate. The interest rate here for a $200m.
loan, let us say, is 7 percent. Instead of going to Westpac, the firm borrows
overseas at 10 or more percent from a branch of itself in a lower taxing
country. The result of this thimble-and-pea trick is that the firm operating here
reports much less profit in Australia and so pays even less tax here. That is a simple version of what they
get up. All of the scams that gained notice during 2008, such as Default credit
swaps, are used to shift profits at the touch of a computer key. Australian law
stipulates a corporate tax rate of 30 percent. The average paid seems to be
around 23 percent, with some down around 10 percent. The truth is that it is
impossible to know for sure without a permanent commission of inquiry to take
up Fitzgerald’s investigation since 1974. There is a forty-year back-log and no
sign that any government is interested in finding out how much we taxpayers are
contributing to the welfare of corporations. Like
tax evasion and avoidance, taxation itself comes in several guises. In recent
times, levies have become the rage.
They let politicians avoid having to admit that our tax rates on higher incomes
and corporate earnings are too low or not collected. The spin-doctors attach
these taxes to good causes such as flood relief and of course, health care. The levies are flat-rate
taxes. There is nothing progressive about them. The Medicare levy from
1974 re-introduced flat taxes into Commonwealth revenue gathering. Palmer
boasts that he does not mind paying $2 million each year for his Medicare levy
because he takes home $200m. It’s only fair, he says. But it is not fair at
all. Fair would be if he and his ilk had to pay at least $20m. on $200m. The co-payment is far worse. It is
regressive lump sum. Take a more modest example than Palmer and his millions by
looking at the Minister for Health, Peter Dutton. A co-payment of $7.00 out of
his salary of $337,000 is one dollar in every 48,143. Seven dollars from a
worker on $35,000 is one dollar in every 5,000. That means that someone at the
bottom end of wage-scale will pay at a rate ten times higher than the Minister
will for a co-payment. Outrage over the co-payment should not
blind its opponents to the unfairness of the Medicare levy. True, the levy is not
as bad as the co-payment. No doubt Dutton and his kind think both are fair and
equal. Meanwhile, Abbott justifies the
co-payment as introducing ‘market signals’ into health care. If that principle
is established, how long will it before the coalition send the market signal
that we should be buying and selling blood? And why not a futures market in
organs for transplantation, run by Aspen Medical? Chicken hawk Howard’s Remembrance Day
Address claimed that the troops went to ‘defend the weak’. No one can know how
many members of the First and Second AIFs had any such idea. But there is one
thing of which we can be 300 percent certain. When their fellows were injured,
they did not need a market signal to donate blood. Moreover, anyone who
suggested that he should be paid by the pint was likely to fall victim to
‘friendly fire’. That attitude extends beyond the battlefront. No construction
worker ever thinks about being paid if a workmate needs a transfusion. If
Abbott is having a hard time selling the co-payment, it is not just because of
the seven dollars. It is also the insult that Australians look forward to
dumping the gift relationship of the Red Cross transfusion service for a market
signal that treats health as a commodity like coal or Coca-Cola. The slogan is going around ‘It works.
It’s fair. It’s Medicare’. Sad to say, Medicare neither works nor is it ‘fair’.
Just one instance of why it does not work. If it worked, the death rate in
non-urban areas would not be twice that in the cities. That gap applies to
settler Australians not just to indigenous ones. There is much that needs to be
done to redirect the health care system towards preventive and community
models. On that road to wellness we have no surer guide than the socialist
epidemiologist, Fiona Stanley. In her 2002 address as Australian of the Year
she put the problem clearly when she pointed out that the brain drain did not
start when Australian graduates left for Harvard. The real brain drain starts
before children are conceived. One of her early achievements was to get folic back into bread. No wonder she
is towards the top of the 100 most trusted Australians. How medical services are delivered,
like their quality, decides the degree to which a health-care system works, and
works fairly. Vital as those matters are, we shall follow the money trail
primarily in regard to taxes. Equality
of sacrifice was the Tory slogan during the Great Depression. Every worker had
to give up ten percent of their income. A labourer lost £25 pounds out of an
annual income of £250. An Arbitration Court judge lost the equivalent of the
laborer’s total yearly earnings to be left with a mere £2,250.
In an unequal society, establishing equality before the law will never
produce equal outcomes. For instance, people call for ‘equal love’ that
same-sex couples should have the right to marry. For as long as Jamie Packer
can have million-dollar weddings and honeymoons while other Australians have to
go to the Vinnies for a second-hand mattress, there will not be equal love. Equality before the law is the lie
that Hansonites pushed against Aborigines and Islanders. All Australians should
be treated equally, she chanted. Indeed, we should be treated equally but that
rule cannot be confined to the delivery of government services. The call to
treat everyone equally requires an end to unequal social, economic, political
and cultural circumstances. ‘Equality of opportunity’ is a slogan to distract
us from the need to achieve equality of outcomes in health, housing and
education. Social equality starts from recognising that not everyone is in the
same situation. Equality before the law ignores the
range of disadvantages across generations - the real brain drain. To
make matters worse, both the flat-rate levies and the progressive taxes are
calculated on taxable incomes. We saw what happened with the mining companies
which used accelerated depreciation and other dodges to turn their tax bill
into a minus. To
reduce this criminality, here are five modest proposals for reforming the tax
system. These changes are what we used to call reforms. The last thirty years
has seen the term ‘reform’ applied to what are in truth ‘deforms’. Second, abolish all deductions
for persons and businesses. The moment accountants can deduct expenses in any
way related to earnings, the doors and windows are flung open to evasion, and
not just avoidance. Stricter rules about what is or is not a legitimate expense
is great for the income of tax lawyers but little help in getting non-PAYG
earners to pay their share. That is even more the case for corporations. If we
abolish deductions, we can lower the tax rate on gross incomes for those most
in need of more spending money. Three, impose a HECS payment of
a million dollars for business degrees if graduates work for the corporate tax
accountants but suspend HECS if they work for the ATO catching the dodgers. My
fourth reform concerns another flat-rate tax, the so-called Goods and
Services Tax. Here, I suggest we move in
two directions. First, abolish the current GST. The tax deformers talk about
extending it to health, fresh foods and education. They also want to lift the
rate from 10 to 12½ or even 15 percent. Forget about extending the flat-rate
tax. Forget about lifting the rate. Instead, replace the GST with a Financial
Services Tax, that is, a tax on the major ‘service’ outside the GST net. The
de-formers never mention the biggest ‘service’, the one that is not taxed. The proposal is to replace the unfair
GST at 10 percent with a Financial Services Tax of 0.1 percent on each dollar
traded. The annual turnover on Australian foreign-exchange markets alone is $50
trillion. One cent out of every thousand of those five thousand trillion cents
would collect $ 50 billion. That
is the same amount as is gathered by the current GST. On top of the foreign exchange trades, there are those on the stock
exchange and the futures markets. If they also paid a 0.1 percent Financial
Services Tax on each dollar traded, who knows how many welfare services could
be funded for citizens instead of for the corporates. No doubt you have already worked out
what the traders will say. A Financial Services Tax will not generate anything
like the revenues I’m predicting because it drive those transactions off shore.
There is no doubt that an FST will be a blow to Merchant Bankers like
billionaire Malcolm Turnbull. The FST would also bring down an exchange rate
that has been kept high by parasites whose ‘value adding’ to fictitious capital
has helped to destroy manufacturing jobs and to stymie the export of other
services. Before Hawke and Keating floated the dollar in December 1983, foreign
exchange trading met the costs of trading real goods and services. Since the
biggest deform of all, FOREX has become a diamond mine for speculators. The
huge trades on foreign exchange add to the volatility of an inherently chaotic
system. In 1980 the annual turnover on the local futures market was $100
million, a fraction of the trillions this year. We can’t afford to wait for the
next crash. We have to take the fight up to the Masters of the Universe by
re-regulating the financial sector. Re-opening a peoples’ bank to replace the
Commonwealth Bank that the ALP sold out would be a start. It is true that Mr Mellon, Mr Ford, My
Roosevelt, Mr Schwab, Mr Morgan and a great many others not only manage to keep
their enormous fortunes intact, but increase their fortunes every year … But
can any one of them improve on the financial genius of Mrs Maria Esposito or
Mrs Rebecca Epstein or Mrs Maggie Flynn who is keeping house in a New York
tenement raising five or six children on a weekly envelope of thirty dollars …? Think
of working single mums who have been forced off benefits to scramble for work
as temporary casuals while juggling school hours and working hours and we see
that the finest financial planners in Australia have annual incomes of around
$10-12,000. The
fifth reform takes up income management. This morning I had the pleasure and the privilege of speaking at the protest outside the
Hilton against the extension of income management to ever more categories of
tax-funded beneficiaries. [In parenthesis, I might say that I was pleased that
the protest was at Victoria Square because I could then go across to one of my
favourite places in Australia, the Central Market. My other favourite public
space is Southbank in Brisbane which, this weekend, has been enclosed within
the stockade built to protect the crime bosses at the G20 summit.] I shall sketch what I said then
because the issues involved are vital to a great deal more than this latest
deform. First, the Northern Territory
Intervention has proved to be the thin edge of yet another wedge. Income
management has spread beyond the Territory and beyond indigenous communities.
We are now confronted by the de-form proposed by paper billionaire Andrew
Forrest. The Coalition had commissioned him to investigate indigenous affairs.
He went way outside that brief to say the regime should apply to two million
Australians. He exempted pensioners and war service benefits because that would
be politically disastrous – for the moment. The Coalition has not accepted
Forrest’s ambit claim – for the moment. But the universal management of incomes
is now on the agenda. The boundaries of what is acceptable to argue over has
been thrust further to the Right. The second point takes up an
assumption behind the Forrest report, an attitude which is crucial because it
takes us back to the unequal version of ‘equality’ that Forrest uses to extend
income management to settler Australians. He justifies extending the regime so
as not to be seen to discriminate against indigenous ones. Once more, we
encounter the doctrine of equality before the law, but it still the Hansonite
mantra: ‘treat everyone the same’ and ignore generations of social inequalities. Finally, managed incomes really are a
great idea - if applied to the likes of Andrew Forrest. Socialists should turn
the tables by arguing that Forrest did not go far enough to achieve equality.
We should demand income management for billionaires by stripping them of their
booty. Let’s manage his income by relieving him of most of it. A marginal tax
rate of 90 per cent would be a start. At
the same time, we should manage corporate welfare by putting an end to it. Forrest
has also been promoting a campaign against slavery. Where does he get the money
for his philanthropic projects? From his wage-slaves. He picks and choses which
kind of slaves to liberate. Forrest plans to employ as many indigenous
labourers as he can. That plan is more welcome than Rinehart’s importing 1,700
workers under 457 visas to work without the protection of activist unions.
Forrest’s anti-slavery campaign ignores the evil under his nose. William Wilberforce drew the same
distinction between abolishing chattel slavery and living off wage-slavery. In
1799, he took a break from trying to talk the Commons into banning the slave
trade when he introduced a bill to make it illegal for workers to combine. He
had been scared by women joining the Abolition campaign behind banners which
read: ‘ABROAD AND AT HOME.’ Elizabeth Murdoch and Dick Pratt were
another pair of philanthropists. The Dame was a receiver of ill-gotten gains,
first from her husband and later from her son. Say what you like against Mass
Murdoch, he is not such a swine that he would let his mother pay tax. Pratt was a hands-on crook who,
through a price-fixing cartel, stole tens of millions from every Australian who
ever bought a package. He used some of the loot to big-note himself by
sponsoring the arts and donating to charity. So successful was his cover-up
that the prime minister flew to his bedside even though Pratt should have died
in prison. Pratt’s mates attacked the head of the Competition Commission for
going after him since he had enjoyed Pratt’s hospitality. So the rule of the
house at the Big End of Town is that it is okay to break the law so long as you
also break bread together while the majority are left with the crumbs. Transfield, the corporation with the
contract to manage the off-shore detention centers, has been big sponsor the
visual arts. Its co-founder, Franco Belgiorno-Nettis, confessed to his
corporation’s official historian that he had engaged in corruption and
strong-arm tactics: ‘We cover this with a veneer of civilisation’. We are not supposed to speak like
this. We are not supposed to use the language of class war. They practice class
warfare but that we are ill-mannered to point it out. They accuse us of the
politics of envy? What person in their right mind would envy Rinehart or
Palmer? They project their vices onto us. One
reaction to these five tax-reforms will be to say that they are too extreme
ever to get up. If that is so, it is high time to ask why? How has it come to
pass that the confiscation of unearned income is ‘too extreme’, while Forest’s
call for massive income management can become part of the ‘conversation’? A wider point is even more important.
The only battle that the Left has won in the twenty-first century was Work
Choices. That victory for mass action was soon lost because the unions did not
continue to pressure the ALP administration after 2007. The failure to ground
the super-profit tax in a mass campaign meant that it was doomed. The same
backroom mentality doomed Rex Connor’s plan to buy back the farm in 1975. One reason why the Left has been
losing is that the Right is no longer afraid to reset the agenda by launching
what start out seeming to be outrageous ambit claims. The ALP limps along
behind them or establishes its cred with the Big End of Town by coming up with
more efficient ways to end up with the same results. The outcome is that the
goalposts keep being shifted to the Right. That downhill drift will continue
for as long as the Left fails to take up confiscatory rates of tax on
individuals and corporations and the replacement of the Goods and Services Tax
with a Financial Services Tax. Those reforms would remove the cravenness of
seeming to be ‘fair’ by imposing a means test for social services on
ultra-high-income earners since they would no longer exist. We shall be told that these five tax
reforms are impractical, that it is no longer possible to raise such matters.
Not so. Such matters are part of what Australians do raise when given a chance.
Canberra has an increasingly active group called SEE Change, where SEE stands
for Social, Economic and Environment. Its motif is ‘Is the country being run
for the majority, or for vested interests?’ It encourages the Kitchen Table
Conversations that did so much to unseat Mirabella in Indi. Once strangers sit
down to ask what they look forward to, tough matters come to the fore. To the extent that these challenges
have been marginalised, again we must ask why? Why is it that progressive
taxation is not a vote winner? Part of the reason is that the forces of
progress have perfected the preemptive buckle as a strategy. At every advance
by the corporates, the ALP and most of the unions have gone along with the
latest deforms, even to leading the charge. At best, they have retreated to a
new defensive position, saying ‘Okay, you can take this much from us, but no
more.’ The result is that the principle of social equality is surrendered. The
battlers for progress become confused and then dispirited. The field is thus
left open to one more deform after another. In the 1930s, R.H. Tawney’s Equality was the Old Testament to the
British Labour Party. From the 1940s, R.M. Titmuss supplied a New Testament for
the age of the welfare state. Under New Labour, anyone who wanted to implement
Tawney’s Christian Socialism was in danger of being expelled as a mad Trot by
the unctuous Anglican Blair. A ‘mad Trot’ is anyone who doubts that it is okay
for the market to rule. Sad to say, none of the contributors to the current
special issue of the Journal of
Australian Political Economy on health care refer to R.M. Titmuss or to
Fiona Stanley. It is as if the intelligentsia has performed lobotomy on the
Left side of its brain. BUY
CIVILISATION Reformers
used to feel comfortable repeating the 1930 remark by U.S. Supreme Court
Justice Oliver Wendell Holmes Jr: ‘I pay my tax bills more readily than any
others – for whether the money is well or ill spent I get civilised society for
it.’ Those
of us who are imbued with the spirit of Eureka remain ready to pay our taxes
when they buy civilisation, when they fund libraries, women’s refuges, swimming
pools and immunisation. But we can’t go along with Holmes’s carefree acceptance
that taxes are a good thing ‘whether the money is well or ill spent’. We must
oppose taxes when they are spent on barbarism, not civilisation. Taxes funded the police and troopers
who bayonetted the wounded at Eureka, taxes paid for the slaughter of the
original owners of this land, taxes funded conscription for ecocide against the
peoples of Indo-China, and today they underwrite the Building and Construction
Commission. In addition, we are opposed to
ill-spent taxes which end up in the misnamed private-public partnerships to
build schools, hospitals or toll-ways behind the racket of
commercial-in-confidence deals, not just the ones arranged between the casino
bosses and State cabinets. We oppose pouring hundreds of billions
of taxes each year towards making democracy safe for oil. It is past time to
take a step back from the submarine project to ask whether our taxes should be
going to serve the needs of US and Japanese corporates. The
world has more than enough desperate need to employ the creativity of the
people now working on the war machine. If the next submarine contract does go
to the Japanese militarists, the opportunity is here to apply the skills of
Adelaide workers to civilising projects in public housing, public transport and
renewable energy. It is always a good time to turn swords into ploughshares. Peace
is still union business. We
don’t have to imagine very hard to appreciate that none of my speech found its
echo at the Adelaide Club. You doubtless
heard the thundering NO to the question: ‘Shall we tax ourselves?’ Another
after-dinner text is remote from their satiated stomachs, this time from young
Oliver Twist who had been selected as job delegate to approach the Beadle in
the workhouse. ‘Please, sir, I want some more.’ ‘More!’, explodes Mr Bumble,
‘More!’ Instead of more ‘gruel’, Oliver is apprenticed to an undertaker. We all
know that you rarely get more merely by asking. For how much ‘more’ are we asking?
Enough to live in dignity. Unlike the tax cheats, we are not afflicted with
envy, which is the one vice that gives no pleasure. Bringing the New Start
allowance up to a living wage is a good instance of how little More we insist
upon. That increase will never be won if we do more than to fight off attacks
on who is eligible for the present pittance; the livable income will never be
won if we do no more than to retain the current regulations about when, and for
how long and under what conditions the unemployed qualify for their bowl of
gruel. The only way to win against the onslaught is to keep insisting on a
massive increase. That strategy applies to every aspect of life. We need to
block the co-payment by insisting on a health care system that is at least as
fair and works as effectively as the UK National Health did in its glory days.
Once we get that far, we can go after one as good as Cuba’s. The Business
Council proposed a $15.00 co-payment. The budget brought that impost down to
$7. Should that lesser deform get up, the BCA’s push for a higher charge will
reappear as surely as day follows night. The only defence is to attack.
“Audace! Audace! Toujours Audace!’ Like Oliver, we won’t get ‘more’ by
being ‘too polite girls’ when we need to ‘show a little fight, girls’. The one
way to make sure that our taxes deliver civilisation and not more barbarism is
to put into practice the Eureka oath: ‘to stand truly by each other and fight for our rights and liberties.’ |