THE GREAT TAX DEBATE

by Jeremy Lee
The election - as far as the national media is concerned - has degenerated into an interminable argument, with claims and counter-claims between two individuals, about taxation. Despite endless news copy and television space, not to mention paid advertisements funded in part by the taxpayer, the main principles regarding taxation have been avoided.

In the last Federal election it is estimated $36 million was spent on political advertising. This election the figure is expected to rise to about $50 million. The use of millions of tax-funds to push the GST case by "Honest John" is a new low, which doesn't surprise a disenchanted electorate. The same media, which reports 'ad nauseum' the contest in deception, which passes for modern elections, is producing a few articles indicating that it recognises the charade.

A major feature in The Australian magazine (September 26th-27th, 1998), headed "Trust Me, I'm a Politician", summed it up thus:
"As Australia prepares to go to the polls, the evidence is clear that most of us will do so with little enthusiasm, never mind any expectation that what has been promised will ever eventuate. Metaphorically speaking, we'd like to take that old lady's stick and whack it across the heads of MPs from all sides. Cynicism tops the ticket…"

It was the Communist Manifesto, Karl Marx's brainchild published in 1848, which stressed that heavy, progressive taxation was a vital ingredient of the drive to a centrally controlled sovietised state. John Maynard Keynes claimed that, once a nation taxed more than 25 percent of the income of the people it was well on the way to a socialist system. Yet, in the debate, which Prime Minister Howard claims to be about the greatest reform in Australia since Federation, there has been no mention about the limits to taxation. In one interview he claimed to have always been an advocate of low taxes, which must have caused bitter merriment among his audience.

The essence of the Coalition's GST proposals was summed up succinctly by the Sydney Morning Herald's Alan Ramsay:
"Along with the $13 billion tax cuts from July 1, 2000, comes a new tax that will cost you $27 billion. Thus, on average, for every one dollar in lower income tax, you'll pay two dollars in the new goods and services tax..." (SMH, August 14th)

Adding together the taxes taken by the three tiers of government, direct and indirect, each Australian now pays an average $9,300. Thus an average family of father, mother and two children has a tax impost exceeding $37,000 per annum. All of this ultimately finds its way into prices. As incomes increasingly fail to cover the price of essential living requirements the demands for welfare increase. Government is thus able to justify the tax increases, which cause the dislocation and misery in the first place.

A society under Labor or Coalition which fails to rectify a situation where over 40 percent of the nation income is taken in direct and indirect taxation has a very limited future. It has sounded the death-knell of more than one civilisation in history. There is no sign that either of the major parties in this election has the knowledge or intention to face up to this issue.
It may gain a brief breathing space by continuing the sale of Australian assets to cover an ever-growing shortfall. But, like old Mother Hubbard, Australia's cupboard is almost bare.

The only certainty in this election is that the polls are almost as confused as the electorate. There is little doubt that the protest vote is being down played. Commentators would have us believe that Pauline Hanson's One Nation is slipping into insignificance. But the hypocritical appeal from both John Howard and Kim Beazley for the first preferences of One Nation voters indicates that both believe Pauline Hanson's party could yet be the decisive factor. A volatile protest vote is going to be a feature of this election.

AN APPALLED WORLD TRANSFIXED BY FINANCIAL CHAOS

So far the United States and Western Europe have withstood the financial crisis in S.E. Asia, Eastern Europe and parts of Latin America. They have partly done so by the use of the International Monetary Fund to rescue western lenders from the crisis for which they bear a heavy responsibility.

But a new phase is beginning with the narrowly averted collapse of America's largest hedge fund, Long-Term Credit Management, with a $90 billion exposure. Only direct intervention by Federal Reserve Chairman Alan Greenspan saved the hedge fund from collapse. This has drawn attention to the 1,300 hedge funds in the world, which face the same exposure. Most hedge funds have lent money to fund the massive speculation 'bubble' on the world's stock markets, now having no connection with the world's productive systems.

One of those most affected by the rocking hedge funds is Japan, whose banks have a huge debt exposure in the speculative bubble. One estimate is that Japan needs somewhere in the vicinity of $A3.4 trillion to stave off the collapse of its entire banking system.

The bailout in the United States has sent shockwaves through international stock markets. The collapse of one hedge fund would have a domino effect capable of going through its 1,300 fellows. Banks, stock markets and industries would keel over in its wake. The Australian Financial Review in its weekend edition (September 26th-27th) devoted several pages to the dangers of the current position, quoting on its front page as follows:
"One senior equity market strategist, speaking anonymously because of his firm's participation in the LTCM bailout, said: 'My feeling is that there is a lot more to come. This is the biggest financial crisis this market has seen for a long time.'

Describing the crisis in Japan, Tony Boyd, in the same issue, concluded: "The situation in 1998 is more serious than 1927 - when 34 banks closed in two months - because banks now play a much larger role, with total lending equal to 130 percent of GDP..."

There is now no doubt that, in a few short months, Australia will be faced with a complete collapse of its traditional export markets, with a heavier burden on industries, workers and consumers than we have seen for a very long time. Yet there has been no indication that either of the contenders for Federal office have any sort of strategy to safeguard Australia in what lies ahead.

VICTORIA'S GAS EXPLOSION

The tragedy of the ESSO gas explosion at Longford, which has thrown the State into chaos, with the closure of factories, services and catering facilities, is one more example of a flouted principle. It was the revolutionary architect of Communism, V.I. Lenin, who saw the enormous advantages for political and economic control, which lay in centralised energy systems. He stressed that a unified electricity grid was an essential mechanism for the 'hands-on' direction he required.

Only older Australians would remember the time when even small towns produced their own energy as an organic feature of decentralisation. Local communities took pride in the local power station. The first town with street lighting in Australia was not one of the capital cities, but the small northern New South Wales town of Tamworth. Victoria's Nagambie produced its own hydro-electricity from the water flowing over the weir. Many towns in every State had their own gasworks.

A breakdown in a local community had a negligible effect on State economies. The deliberate policy of massive central energy systems has produced a vulnerability, which should never have happened. Australia is now contemplating one electricity grid covering the whole Eastern seaboard. Increasingly, these are being privatised, predominantly under foreign ownership. The results are not encouraging. Auckland's lengthy power shutdown in New Zealand is a case in point. Queensland has now had a series of power failures, the latest producing blackouts in much of the State due to a failure in the Rockhampton power station. Political inquiries, and promises that "it won't happen again", have not produced increased confidence.

The situation in Victoria, where hotels and restaurants hundreds of miles away cannot cook a meal or heat water because of the Longford explosion, is a potent argument for "Small is Beautiful". Back to small local councils, self-sufficient communities and genuine decentralisation is a message which even leaders as obtuse as Jeff Kennett may have to consider before long.

WHAT WE SEE IS NOT WHAT WE'LL GET

by David Thompson
The last Federal election campaign of the millenium (we hope) has been more "presidential" than ever before. This is a function of both centralised government and voter disgust. As more and more decisions are taken at a higher and higher level, the office of Prime Minister becomes ever more important. The entire campaign has focused as never before on the "leaders". This is also partly because it has become progressively impossible to finance election campaigns from the "grassroots."

Public funding for election campaigns was introduced long ago - the reason (or excuse) being that it makes the political party less susceptible to bribery and corruption by well financed special interest groups. In fact, the reverse is the case. The public, being disgusted at the compulsion to finance a process with which they identify less and less, have virtually stopped donating to political parties at all. When was the last time a party fundraiser knocked on your door?

As a result of grassroots disgust, most of the money spent on the election campaign will be contributed by big business, or borrowed from the banks. Same thing really. This is one reason why the blight of "economic rationalism" has such a strong grip on both major party groups: if big business is paying the pipes, it is also calling the tune. Perhaps the most blatant example of this is the big business backing for Mr. Howard's GST.

The Business Council of Australia spent millions of dollars promoting the GST as the only worthwhile tax reform. Not only that, but around the nation chambers of commerce and industry are advertising heavily to discourage a vote for minor parties (read "One Nation"). In their advertising, the Chamber of Commerce & Industry in WA is stressing the need for foreign investment, importance of the global market, the need for more exporting, the folly of tariffs, and how essential immigration is to provide a demand for housing, etc. The Chamber concludes with a warning: "There's no future in a vote for minor parties." If anything, such humbug is likely to result in even more votes for minor groups!

Alongside the big business "pitch" for even more "economic rationalism" is the carefully stage-managed campaign. It is estimated that $15 million will be spent on television advertising alone in this campaign. The "image" of the leaders has been massaged and moulded. Mr. Howard has had his teeth capped and eyebrows trimmed. Mr. Beazley has been forced to lose weight, comb his hair and tuck his shirt in. The interviews are also carefully rehearsed, with the party "spin doctor" selecting the best phrases for the TV "sound bite". No wonder the politicians look phony, sound phony, and are regarded as phony by suspicious and sceptical voters.

The truth is, as we have known all along, the election campaign has no bearing on what will happen subsequently, no matter who is "elected" to govern. The present stage-managed performance is overtly designed to move a sceptical and resentful electorate to a point of suspended reality for long enough to get their marks in the "right" boxes. After that, the bill will be in the mail, and business as usual.
All election comment authorised by David Thompson, 145 Russell Street, Melbourne, Victoria, 3000.

REPUBLIC BY ANOTHER NAME

As the stage is being set for the battle to preserve the Australian Constitutional Monarchy, it is important that Monarchists watch carefully to ensure that republicanism is not introduced under another name. The following editorial in the Daily Telegraph, London, indicates the type of tactics the republicans may well resort to. Let us be warned.

"Self-declared radicals can be surprisingly conformist Demos, the think tank credited with inventing Cool Britannia, has published 'Modernising the monarchy' which, according to one of its authors, breaks out of the sterile old royalist/republican debate. In fact, the report largely recycles demands which have been fashionable on the Centre Left for years: the Monarchy should be 'slimmed down', decoupled from the English and Scottish churches, paid less, and so on.

"Years ago, bien pensant liberals used to call this the 'Scandinavian model' - which was always rather unfair to the King of Norway, who assiduously attends meetings of his own Cabinet. In reality, the scheme amounts to little more than an acknowledgement by republicans that they must work within the constraints of public opinion. The Demos paper admits that 'there is one overwhelmingly powerful argument against abolition', namely that the vast majority of the public want to keep the Monarchy. Yet its proposals, wittingly or otherwise, would have the effect of eroding that majority.

"When asked why they support the Monarchy, most people say something to the effect that it represents the nation. The reason it does so is that it is the fount of legitimate authority, above party or faction. Servants of the state, military or civilian, act in the Crown's name: in other words, they act for Britain's government, not for Blair's government.

The idea of removing the Queens residual constitutional role is presented by Demos as a tidying-up measure that would free the Royal Family to spend more time on 'active symbolism'. In fact, it would gravely weaken the balance of our polity. Without the Monarch, politicians would operate within rules set by themselves and interpreted by their own nominees. The threat of proportional representation, and its accompanying kaleidoscope of coalitions, makes the need for a neutral referee greater than ever. Could a former politician nominated by his own colleagues ever take the Queen's place?

"Most subversive of all is the proposal to subject each new Monarch to a popular referendum. The objection to this proposal is not so much its breathtaking discourtesy as that it would remove the justification of having a Monarchy at all. What is a king chosen by his own people if not a president?

Once we accept the principle of an elected head of state, we become a republic. We suspect that the Demos authors know this only too well. Taken collectively, their suggestions would remove the Crown's most important functions and undermine public support for the institution. Despite their insistence that they want a more popular Monarchy, they must realise that, if impoverished and emasculated, it would command little public support.

Were the Monarchy ever to become wholly decorative, the argument for its retention would be weakened. This newspaper has always accepted that there is a case for a republic. We disagree with it, but many of its exponents are respectable and serious. What is discreditable is to advance a republican agenda while protesting loyalty to the Crown."

ALTERNATIVE TO MONARCHY

The self-imposed travails of President Clinton may be one reason that there has been no discussion whatever about the republican issue during this campaign. Just the suggestion of an Australian president, together with the marital inconsistencies of recent Prime Ministers like Mr. Hawke, are probably enough to make even the most ardent republican wince. The republican defence, such as it is, draws attention to the infidelities of the younger royals, comparing the morality of republican offenders with that of royal offenders. Of course, they miss the point entirely. The point is that Prince Charles' marital disaster had virtually no effect on the quality of British government. Nor would it have done if the offender was the Queen herself.

In the USA the Clinton administration could be paralysed for years with the prospect of impeachment of Mr. Clinton. The strengths of Monarchy are daily more evident in comparison with the only alternatives.

SHOOTERS HAVE LONGER MEMORIES

VICTORIAN GAS TRAGEDY

HOW SAFE IS SUPER?

A feature of recent times has been the introduction of compulsory superannuation, an attempt to compel Australians to save for the future. This has now delivered hundreds of billions of dollars into the hands of fund investors. The funds are invested in what are deemed to be profitable investments. More and more find their way onto the stock market. In a "bull market" (boom) situation everyone is happy. But the signs are ominous for those solely dependent on their superannuation for the future.

The growing turmoil and crisis on world markets is beginning to hit Australia's $340 billion in superannuation funds. There have been negative returns for the last three months of between minus 1 and minus 2 percent. For someone with $100,000 invested in a super fund, a loss of$ 1,000 to $2,000 over the last 12 weeks would have resulted. If as many now expect the share markets of the world continue to self-destruct, the future for superannuation savings does not look bright.

FASTEST-GROWING POPULATION

If the figures are to be believed, the growth-rate in Australia's Aboriginal population is greater than any other nation on earth. Kenya has always been regarded as the fastest-growing country with a 4 percent annual growth. The Australian (September 25th, 1998) claims: "The proportion of Australians identifying as Aborigines or Torres Strait Islanders has increased by a third and hit the 2 percent mark for the first time. . . The Australian Bureau of Statistics report shows 352,970 people identified as indigenous in 1996 compared with 265,371 in 1991. This represents an increase of 33 percent..."

By way of comparison, the 1996 census showed 150,000 Australians had been born in Vietnam, 103,000 born in China, 98,000 in Hong Kong and 94,000 in the Philippines. These figures, obviously, do not include those of Asian descent subsequently born in Australia. And we still do not have a clear definition of who is an Aboriginal!

AMAZING PREDICTIONS

The election has produced its usual share of far-fetched predictions. We've become used to Treasurer Costello's oft-repeated mantra that Australia's 'fundamentals' are in good condition - presumably because he cut areas of essential government spending to produce a surplus, increasing the number of Australians living in poverty - now one third of the population - and sold a lot of Australian assets to overseas investors to reduce Commonwealth debt. This must have struck a chord with his counterpart, Shadow-Treasurer Gareth Evans, who grudgingly conceded, to the embarrassment of Kim Beazley, that the economy was 'fundamentally sound'.

The cake goes to National leader Tim Fischer. The Australian (September 25th, 1998) reported: "The National Party's leader and Trade Minister rejected predictions of impending economic gloom, saying the Coalition had created a 'safe harbour' for the Australian economy amid regional and global turmoil… Well, well! Thank goodness for that. And to think we never knew!