It seems that everyone in Australia can now agree that a class war has erupted. Former Labor Party leader Simon Crean, recently sacked by Prime Minister Julia Gillard said: “The Labor Party has always operated most effectively when it has been inclusive, when it’s sought consensus, not when it has sought division, not when it has gone after class warfare.”
Former resources minister Martin Ferguson said, as he quit his position, “the class war rhetoric that started the mining dispute of 2010 must cease. It is doing the Labor Party no good and we must reclaim the legacy of Hawke and Keating.”
Crean and Ferguson, both former presidents of the Australian Council of Trade Unions, can clearly recognise a class war, but they can't recognise its actual victims.
Ferguson, known for his complete subservience to the mining industry, wants us to believe that the rich are the victims of the class war.
One simple graph released by the Australian Greens on March 26 shows how absurd that is. The graph showed that the Minerals Resource Rent tax, introduced by the Gillard government to replace Kevin Rudd’s Resource Super Profit tax, raised $126 million dollars this year — far less than the recent $207 million cut from benefits paid to single parents.
There's a class war is taking place but it's the rich, and espcially the mining companies, who are winning.
This “class war” being waged by the Gillard government also explains why the wage share of the economy has declined since the Howard government was in office, while the profit share has risen.
According to the Australian Bureau of Statistics, from 2007 to 2012 wage share went from 54.6% of the economy to 53.8%, while profits increased from 27% to 27.8%.
Now, Labor wants to wage class war through superannuation.
Currently, contributions to super are taxed at a flat rate of 15% until a person earns $300,000, when the tax rate jumps to 30%.
All earnings on super are taxed at a flate rate of 15%, so currently the super tax system benefits the rich at the expense of the poor, who suffer the most when public spending declines.
The government flagged the possibility of changing the super earnings tax rate for the “fabulously wealthy” believed to be the top 1% or 2%.
Spooked by the initial reaction of the super industry, who promised to run a mining-industry style campaign against the changes, the “class warriors” in the Gillard government retreated before the war began.
The tax on super earnings will remain at a 15% flat rate. Instead, the government has now proposed a tax on withdrawals, which will affect those who withdraw more than $100,000 per year from their super.
It is believed that this will only affect those who have more than $2 million in their super accounts, which Treasury estimates to be around 16,000 people in 2014-15 or 0.07% of the population.
But for some of the class warriors, even this is too much to handle. Opposition leader Tony Abbott said the plan had “shades of Cyprus” in it — where the government planned to tax all savings accounts — and in a bizarre nod to the quote made famous by Martin Niemoller said, “if it comes for you today, it'll come for your neighbour tomorrow”.
The super tax debate has revealed the strange tendency of politicians from Labor and Liberal, as well as the mainstream press, to identify the rich as the real battlers that need to be protected.
Joel Fitzgibbon, another recently sacked minister in the Gillard government, said in response to the super tax changes: “In Sydney’s west you can be on a quarter of a million dollars family income a year and you’re still struggling”.
In one sentence Fitzgibbon managed to single-handedly redefine the word “struggling”.
Even with all the inadequacies of the super tax, it does show the potential of what could happen if the rich and companies were taxed at a higher rate. The super tax will raise $900 million. Super tax breaks overall are worth $159 billion, of which the top 10% of earners receive $60 billion of tax breaks.
Even this just scratches the surface. The Australian Financial Review reported in February 2011 that the original Resource Super Profit Tax would have raised $20 billion a year. However, if the Australian government taxed mining companies at the rate that Norway taxes oil companies, it would raise $38 billion a year — enough to fund a 10-year transition to 100% renewable energy under the plan by Beyond Zero Emissions.
If the four big banks in Australia — the most profitable in the world according to The Bank of International Settlements — were taxed at 80%, it would have raised $20 billion last year. To put this in perspective, currently, federal government spending on education is $29 billion.
This illustrates how most Australians miss out on the wealth generated from our national resources, as it is hoarded by a small number of wealthy individuals.
A government committed to class struggle on behalf of ordinary people would implement a higher tax rate to fund social programs, and if companies refused to accept it, all their assets would be transferred to the public.
Instead, we have an entirely false debate about the class warfare of the Gillard government. Factional opponents of Gillard within the Labor Party are using this accusation to gain support of big business for themselves.
What do most Australians think about this class warfare rhetoric? A poll released by Essential Research on April 3 showed that 91% of Australians agree that class divisions in society exist, with 33% of respondents identifying themselves as working class and 53% as middle class.
The politics voiced by Crean and practiced by the Gillard government, the politics of “consensus”, has been a complete disaster for working people in this country.
It has led to a situation in which there is an awareness that class exists, but no widespread struggle against the rich by those who identify as working class. This can only benefit the wealthy.
The bitter truth is that the class struggle is constantly being waged and, at the moment, the rich are winning. Implementing higher taxes for the rich is a good way to start fighting back.