How to pay for socialist policies

Table: Dick Nichols

The Socialist Alliance proposals for the federal election, detailed at, won’t come cheap. They include lifting welfare payments above the poverty line, ending the 200,000 public housing waiting list, achieving 100% renewable energy by 2020 through a plan of public investment, boosted public transport including inter-city high-speed rail, and closing the gap in Indigenous health, education and housing.

Are these daydreams or an achievable goal? Green Left Weekly spoke to SA national executive member Dick Nichols about how the SA’s proposals could be funded.

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How much would the Socialist Alliance’s proposals cost?

Here’s a provisional sketch. To lift all major welfare payments (pension, Newstart, Disability Support Pension, Youth Allowance, Austudy and Abstudy) above the Henderson poverty line would cost $18-20 billion a year.

To wipe out the public housing waiting list over 10 years would cost $5-6 billion a year. To close the gap in Indigenous health, education and housing by 2020 would require annual federal spending to triple to $10 billion.

The Zero Carbon Australia 2020 report on achieving 100% renewable energy by the end of the decade cites an annual cost of $37 billion.

If we apply European costings for creating a high-speed rail network between the capital cities, annual spending would be at least $11 billion over the same period, and could go as high as $34 billion.

So that’s an absolute minimum of $81 billion a year for the big initiatives for social justice and environmental sustainability this country needs.

But there’s a lot more. For example, our policy of increasing overseas aid to 1% of GDP would cost $7.7 billion and free dental and health care billions more.

Total annual spending to implement our proposals could reach $140 billion. That’s 40% of all present Commonwealth spending (11.5% of GDP).

So how could these proposals be funded?

First, by cutting wasteful and destructive spending. The box above summarises the main available sources of savings and revenue. Detailed figures and background are available at our website .

One stand-out conclusion from these figures is that Australia’s foreign and “defence” policy, as summarised in last year’s White Paper is more than just aggressive and likely to provoke a regional arms race. It’s also a huge waste of money.

It will require the armed forces to spend at least $100 billion on military hardware that can “project Australian power” into Asia.

The same applies for other unjust and repressive policies — “keeping out the boats” and “offshore processing” of asylum-seekers is costing nearly $5 billion a year. The Australian adventure in Afghanistan costs $1.6 billion a year.

Other areas of wasteful expenditure that could be cut are energy and transport subsidies to big business ($6.2 billion), hand-outs to private schools and health insurers ($7.5 billion), and tax rorts like the concessional taxation of employer super contributions ($12.1 billion), negative gearing of rental property ($2.6 billion), and capital gains tax concessions ($6.4 billion).

Cut all that out of the budget and savings amount to $46.9 billion — and that’s without tackling other highly questionable spending, such as road funding.

But where would the rest of the funds come from?

First, from reversing the ALP-Coalition race to the bottom on company tax. If the company tax rate were restored to 49% (as it was in 1988) it would bring in $30 billion more a year.

Second, by applying a serious super-profits tax, along the lines of that in Norway. If the mining giants like Rio Tinto and BHP-Billiton were compelled to cut their profit rate in half government revenue would benefit by about $26 billion a year.

And that’s without applying a super-profits tax to other industries, such as finance and real estate.

Last, by increasing marginal income tax rates for taxable income above $100,000, but especially for those “earning” more than $1 million a year. That would bring in an extra $25 billion.

Applied to the 2010-11 Commonwealth budget, all these measures would make close to $130 billion available.

But how can such policies be achieved? Just look at the fate of former PM Kevin Rudd’s modest Resource Super Profits Tax. (RSPT) Yet SA’s budget sketch proposes a much bigger raid on the corporate powers-that-be.

Labor lost the war over the RSPT because it was completely out-mobilised by the mining giants, the most powerful sector of Australian capitalism.

Once BHP, Xstrata and Rio Tinto unleashed their threats of an investment strike and job losses, the Rudd government had no answer.

The Rudd government was never going to raise the threat of nationalisation to counter the big companies’ rebellion.

That experience just confirms that the sort of budget the SA proposes (which would benefit the vast majority of the community) has to be fought for. Labor’s RSPT was feasible technically, but the social and political force to impose it on the big mining corporations was missing.

A bigger vote for more left-wing candidates, including the Socialist Alliance, at this election will be a step forward. But what will bring this sort of budget closer to realisation are much stronger campaigns for social justice, peace and serious climate and environmental action. Without them even the best “red-green” budget will remain a pipe dream.