What if I told you you could buy the right to shoot an endangered black rhino in South Africa for $150,000; or rent out space on your forehead to display commercial advertising for $777 in New Zealand; or stand in line to hold a place for a US congressional lobbyist for $15-$20 per hour?
Would you think this was market innovation or a free market gone mad? Yet, these are all economic realities in our world.
We could be forgiven for thinking the free market and neo-liberal economic thinking is ‘just the way things are’. We are constantly bombarded by messages that we can’t do something because ‘it would not be good for the economy’.
A statement issued by Uniting Church National Assembly in 2009 – An Economy of Life – outlines a Christian vision.
This vision is for ‘human flourishing’, for wholeness and reconciliation between God and the world. Our ‘economy’ is simply a vehicle for this to happen.
Taxation is a key part of this. Tax not only provides a means of fairly raising revenue which allows government to function, but it allows for redistribution of wealth as well as correction of injustices created in the marketplace. An Economy of Life reminds us that taxation should be “regarded not as a burden but as how people contribute, according to their means, to the well-being of the whole community through redistribution and the provision of goods and services”.
Our federal government has also outlined their vision for Australia.
It is to cut government spending and reduce the role of government – except for military spending which will increase from $25 billion to reach around $50 to $60 billion a year in the next decade. By comparison the overseas aid budget is being frozen at $5 billion.
Research by The Australia Institute found the Federal Government would have had an additional $38 billion for last year’s budget and would have collected an extra $169 billion throughout the last seven years had it not been for unsustainable income tax cuts.
These cuts were made in the lead up to the Global Financial Crisis and favoured those on higher incomes. The top 10 per cent of income earners got more than 40 per cent of the tax cuts.
Treasurer Joe Hockey, has identified education, health and social security as areas where costs continue to increase, implying these areas will be considered for cuts. The Minister for Health, Peter Dutton, has publicly labelled Medicare as “unsustainable”.
Similarly, the Minister for Social Services, Kevin Andrews, has argued that spending on Newstart and the Disability Support Pension are “unsustainable”.
The question is not: ‘Are these areas unsustainable?’ The question is: ‘Do we want a society where the wealthy build their private wealth and we expand our military, or a society where children have a decent education and there is decent health care for everyone?’
According to a recent report by the conservative economic body the International Monetary Fund, Australia currently doesn’t collect as much tax as it could. It collects less of its tax capacity than both New Zealand and the UK. It also spends only 8.6 per cent of Gross Domestic Product on social security compared to an OECD average of 13 per cent. Amongst wealthy countries, only Iceland spends less.
If we were to raise taxes to the level of the UK and NZ we could add $34 billion a year to government revenue. That would be almost enough to balance the current budget.
When other rich countries have chosen to slash public services they have found this resulted in increased poverty, unemployment and business failures, and widened the gap between rich and poor. At the same time corporate profits and corporate tax avoidance increased.
Modelling of the impact of Coalition policies before the election found that while 87 per cent of families would have more money, half of low income couples with children and single parents would be worse off.
The government has choices. They could choose instead to remove superannuation concessions for the wealthy (currently more than $20 billion goes to the top 20 per cent of income earners). Abolishing negative gearing, which largely favours the wealthy, would save an estimated $5 billion a year.
Excluding the ‘extras’ cover from the private health insurance rebate would save $1.25 billion, as most of the money for the rebate goes largely to high income earners. Removing the tax benefits family trusts get would save at least $1 billion.
It could also raise revenue by reforming tax on alcoholic products in Australia to collect an extra $1.8 billion a year. This is something the spirits industry itself has favoured.
Yet we know these would be hard decisions to make. Many of the rich in our society will fight hard against such measures. The parable of the rich man with Lazarus at his gate comes to mind.
It is easier to make cuts that will impact on the unemployed, single parents, refugees and people living in poverty overseas.
After the election, the prime minister promised to “govern for all Australians, including those who didn’t vote for us” and not to “forget those who are often marginalised; people with disabilities, Indigenous people and women struggling to combine career and family”. He committed to “do our best not to leave anyone behind.”
These commitments resonate well with our Gospel values. But the signals coming from the government seem to suggest these commitments will be forgotten at budget time.
By Cath James and Dr Mark Zirnsak – Cath James is a social justice officer with the Justice and International Mission (JIM) unit of the Vic/Tas synod. Dr Mark Zirnsak is director of the JIM unit.