Green senators oppose budget cuts to social spending


By Jennifer Thompson

WA Greens senators Dee Margetts and Christabel Chamarette are opposing social spending cuts in the 1995 federal budget, arguing instead for an increase in corporate taxation and cuts to defence spending.

Speaking to Green Left Weekly, Margetts said that Liberal support for Labor's cuts may, however, mean that "the only power will come from the community looking at what is proposed in the budget and making their opinions known very loudly if they feel the government is doing the wrong thing".

The WA Greens have released a paper criticising the government's fiscal framework of cutting public spending in order cut the budget deficit. Rather, they argue for an increase in the revenue base to fund expanded public spending. "We do not believe that the current level of funding for health or education is adequate ... [nor is] current funding for regional development, urban development and rural adjustment."

They oppose the high level of defence spending, currently 10% of the total budget.

Explaining the suggestion for a 20% minimum corporate tax rate, Margetts said bigger corporations utilising major tax concessions, grants and assistance from government and taxpayers are paying tax at a rate much lower than the official rate. "The people with the cleverest tax accountants and tax lawyers are able to get their corporate tax levels down sometimes below 5%", said Margetts.

While the Greens have accepted the argument for dividend imputation, they believe that it should be reduced from full imputation to 50% in recognition of the low real rate of corporate taxation. Dividend imputation is the waiving of taxation on dividend income to shareholders in proportion to company tax already paid. It was introduced by Labor in 1985.

Investment income, said Margetts, "should be subject to tax so that people can't use the buying and selling of shares as a way of avoiding tax" and to discourage the growth of speculative investment.

Margetts said she was saddened by the proposed sale of Qantas — a key revenue raiser for the government and a huge bonus for some lucky corporate buyer. "There's a reason why countries have a national [airline] carrier; that is there are some services that are uneconomical which are part of the public service that our national airline provides ...

"We have the corporatisation ethic coming through in some proposed [competition] legislation which may end up with privatisation of power and water supplies. I'm very concerned about that, considering the kind of environmental and social imperatives that come with us making better, more sensible, more community-minded decisions."

The Greens oppose a compulsory superannuation levy because it would hit ordinary people hard, giving them less disposable income. High income earners already pay voluntary superannuation as a tax minimisation scheme and will not be affected. The Greens also dispute the idea that "savings" generated will be productively invested, given the dominance of speculative investment.

The Greens' paper points to Australian economic vulnerability to global fluctuations, arguing for a new industry policy aimed at greater self-sufficiency. Commenting on the deregulation of the finance sector during the '80s, Margetts said she was appalled to see that deregulation based on an ideological preference, but not followed up with an analysis or check on its impact.

"That should have happened with financial deregulation, and with trade changes in relation to the tariff removals. There's major debate with regard to any taxes on industry, but they don't seem to do that in relation to tariffs. Unfortunately, in some of the industries mainly employing women, like the footwear, clothing and textile industries ... they talked to unions and the industry, government and other bodies, and then ignored the outcome of this discussion."

Trying to re-regulate is now quite difficult under the international trade agreements like the recently signed Uruguay round of GATT, said Margetts.

In relation to industry policy, the Greens are not talking about nationalisation of industries but of regions and communities finding local solutions. Giving an example of the wool industry, Margetts pointed to the Garnaut report of a couple of years ago which focused on exports. "It left out whole areas — the economic, social and environmental impact of land degradation through erosion and so on which is hugely important in that industry. It also left out any mention of value-added production for the local market and for employment."

On unemployment, Margetts said that GDP-measured growth doesn't result in a commensurate growth in employment. It also doesn't take account of environmental degradation and social suffering. "The statistics in recent times show that over the last 20 years the working hours of men and women have increased substantially. People are working longer hours, there are people who are having to hold down a couple of part-time jobs because they can't get reasonable wages and people who can't get work at all."

As examples of alternatives, Margetts mentioned community schemes like the local enterprise trading schemes, community credit unions which give emphasis to local enterprises and value-added rural industries which create economic diversity in a community as insulation against dependence on primary products which are declining in value.

"Community economics is about regions and communities solving their problems better", she said. "Over time this has to come with a change in people's attitudes towards local or regional governments. That's going to take a full discussion, but I really think that's something that we've all got to talk about in relation to any changes to the constitution."

Margetts stressed that the community should mobilise against regressive budget measures, saying that the Greens' ability to demand minimum standards would likely be limited to taxation measures, which would also be opposed by the Liberals as in 1993.