09/06/2011 - 00:00

True reform goes beyond the political

09/06/2011 - 00:00

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Opinion on the carbon and mining taxes vary, and depend on how one views ‘reform’.

ROSS Garnaut talks of the carbon tax proposal as a notable reform, something akin to the changes that took place in Australia’s economy in the 1980s and 1990s, which allowed our nation to compete and win in the rapidly globalising environment.

Last year, former Treasury secretary Ken Henry also talked about reform when he spoke out in support of the mining tax, which had been surgically removed from a broader tax review document that made numerous other recommendations.

The whole Henry Tax Review might have led to real reform if Wayne Swan had done more than pick one bit out of it.

Ironically, as the federal government’s carbon tax adviser Professor Garnaut was viewed as the architect of the mining tax, which he had pushed since the 1970s, having refined and developed a rougher model conceptualised decades earlier.

In dressing up his carbon tax in reform clothing, he went one step further by suggesting that Australian governments had dropped the ball on reform in recent times. While he did give some credit to the introduction of the GST, he was clearly having a dig at the Howard government.

The concept of reform is always in the eye of the beholder. There are few who would argue that the deregulation of Australia’s economy in the Hawke/Keating Labor era was anything but reform under its strictest definition.

According to the Macquarie Dictionary, reform is the improvement or amendment of what is wrong or corrupt; the amendment of conduct; to restore to a former and better state; improve by alteration, substitution, abolition; to cause (a person) to abandon wrong or evil ways of life or conduct; to put an end to (abuses, disorder); to abandon evil conduct or error.

Arguably the word covers a lot of subjective territory because one person’s reform is another’s upheaval.

In the days of financial deregulation, the government’s reforms were resisted by many vested interests, which saw themselves as losers.

By that definition, in the current context, a tax on carbon emissions would be part of a reform, as it’s at least designed to amend behaviour. Of course, the tax is only the instrument (presuming it works), not the reform.

The same could be said for the mining tax, which Professor Garnaut also called reform. For those who believe great wealth should be shared, the mining tax is an instrument of reform to transfer that wealth. For those who believe a deal is a deal, whether you like it or not, the proposed mining tax is actually the thing that needs to be reformed.

But the interesting perspective for me is the purely economic view Professor Garnaut has of reform, and the narrow range within which he applies this.

To suggest the last period of the Howard government took no part in reforming Australia would be to overlook two important policies that came after the huge political challenge of bringing in the GST.

One was the WorkChoices industrial relations laws, the other was the Northern Territory intervention.

Again, these are subjective and many people were opposed to them, but no matter how much you challenge the validity of the intervention process there is no doubt it was put in place to rectify a huge social problem. The instrument may or may not have been right, but the intention was without doubt a significant reform.

WorkChoices is even more subjective. Even I believe the Howard IR laws went too far, too fast, repeating the mistakes of the Court government in Western Australia in the 1990s.

Nevertheless, both Liberal governments were attempting to give the employees some power in the workplace because refusing people the right to negotiate contracts for themselves as individuals is wrong.

Conservatives believe that unions abuse their power, while Labor believes employers abuse theirs. Both employers and unions are, at times, guilty of such claims. Reforms should be aimed at ending such abuses, not handing power to one side or the other, which only fosters more of it.

The fact that Labor has turned back the clock 25 years and handed power to its mates in the union movement is not reform, it is the opposite of this. Prime Minister Julia Gillard oversaw this, so to suggest she is a reformist is just plain wrong.

Fair share

ANOTHER point Professor Garnaut makes in his promotion of a carbon tax is that Australia ought to do its fair share.

Opponents of Australia’s participation in globalisation seem to think the opposite.

On the immigration front, for example, many Australians think we ought to cut our intake and put up the barriers to entry for foreigners. That it’s not just about refugees, but skilled people from very crowded and economically challenged places who would add to this nation’s ability to survive and compete.

Australia produces more food than it can eat and has plenty of space to house more people, especially if they were encouraged not to populate our existing urban centres. But no, Australians at both ends of the political spectrum want to slow the numbers of people coming here to a trickle.

This is selfish. We live in a land of plenty and we want to deny others the opportunity to share in that. Is that fair? Why should we be allowed to have our cake and eat it too?

If the fair share argument works for carbon emissions, why doesn’t it work for population too?

The same argument could be applied to minerals. The federal government’s tax grab has used the same language – about ensuring all Australians get their fair share of this state’s mineral wealth. Part of the argument is that we are selling our assets too cheaply while, at the same time, the enormous profits being made are going to foreign shareholders.

I find this intriguing indeed. Why is it that Australians are allowed a fair share but no-one else is?

Surely a nation that was doing its fair share in the world would not hoard the mineral wealth that other, poorer, countries need to improve their standard of living. And if others, who helped finance the development of those minerals, were profiting now, would that not be fair? After all, they did the heavy lifting when it came to funding this development.

Instead, this government – acting on an idea of Professor Garnaut’s – has retrospectively decided that the deal they’ve had with foreign investors is off and we need more. That is a selfish act aimed at featherbedding a few million people who already have a good life. To do so will raise the cost of minerals to the developing nations, setting back the aspirations of people not just for a fridge and a washing machine, but for longer life expectancy and lower infant mortality rates.

How is that doing our fair share?

• mark.pownall@wabn.com.au

STANDING BY BUSINESS. TRUSTED BY BUSINESS.

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