Wayne Swan blasts meagre debate on reform and short-term business policies
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Version 0 of 1. The former Labor treasurer Wayne Swan has blasted the poverty of Australia’s reform debate, arguing business is continuing down a “well-trodden path” of pursuing economic policies that will concentrate wealth and increase inequality at the expense of long-term growth. On Thursday Swan will meet fellow participants in the inclusive prosperity commission attached to Labor’s official thinktank, the Chifley research centre, to consider results of a reform summit being spearheaded by two national newspapers this week. The former treasurer is also due to attend the United Nations in coming weeks as part of Australia’s parliamentary delegation to the general assembly, and is expected while in New York to speak about “inclusive growth” at thinktanks and universities. Related: Better equality in Australia is tainted by high jobless poverty rates The inclusive prosperity commission has been established by Chifley in an effort to kick off an Australian conversation about the risks that entrenched inequality poses to economic growth – a policy debate which is more prominent in Europe and the United States than in this country. In June, the International Monetary Fund managing director, Christine Lagarde, linked the objective of producing durable economic growth with addressing societal inequality. She noted reducing excessive inequality “by lifting the small boats is not just morally and politically correct, but it is good economics”. Lagarde referred to IMF research which showed that lifting the income share of the poor and middle class by 1% increased GDP growth by as much as 0.38% in a country over five years. By contrast, if the income share of the rich was raised by 1 percentage point, GDP growth decreased by 0.08 of a percentage point. A new paper produced by the inclusive prosperity commission and released before the recent ALP national conference found that inequality in Australia was on the rise, middle Australia faced an income squeeze and the gender pay gap had widened significantly since the mid-2000s. Swan said he welcomed a national conversation about economic reform, but argued that if boosting growth was the ultimate objective, the Abbott government needed to focus on policies that improved the position of low- and middle-income earners. If fiscal repair was an objective, then the government also needed to increase its efforts to retrieve revenue lost through multinational tax avoidance. “Of course we all want reform,” Swan said. “But the Business Council of Australia is continuing down the well-trodden path of pursuing policies that will increase inequality.” He said the structural changes to the Australian economy undertaken during the Hawke and Keating years – often cited by experts and politicians as a case study in productive structural reform – were predicated on a social contract. “Those reforms relied on a social wage, people had access to Medicare, there was superannuation.” Swan said the current policy narrative from the government seemed to cut across IMF thinking. The government’s ambition was to reduce the tax burden on corporations and the well-off and increase tax for lower income earners through a rise in the GST. He said it was a “bloody nonsense” to think budget repair could be achieved through a GST increase, given that it would have to be accompanied by compensation for lower income households. He said research indicated $1.15 was handed out in compensation for every GST dollar raised. Chifley’s inclusive prosperity commission project is being undertaken in partnership with the Clinton-linked US progressive thinktank the Center for American Progress, and is headed by an advisory group of seven commissioners, which includes the former group chief executive of he National Australia Bank, Cameron Clyne, trade union boss Dave Oliver, social researcher Rebecca Huntley and the executive director of the Brotherhood of St Laurence in Melbourne, Tony Nicholson. |