Introduction by Croakey: In the face of three converging global crises – climate change, inequality and the COVID pandemic – surely you’d need to have rocks in your head to think that now is the time for cutting public services.
And yet that appears to be what the Federal Opposition is promising as it backs away from supporting a progressive taxation system just when these challenges demand visionary policy development.
Croakey asked a range of experts about the health implications of Labor’s support for the Coalition Government’s inequitable tax cuts.
Hitting the poor and disadvantaged
Sharon Friel, Professor of Health Equity, Director of the Menzies Centre for Health Governance in the School of Regulation and Global Governance (RegNet) at the Australian National University
Q: What is your response to Labor’s move?
Disappointment. I would have liked to see a courageous and ambitious policy platform. It is now hard to see much difference in policy agendas between the two main parties.
Wouldn’t it be exciting to have a party that spoke about principles and offered upfront un-ashamedly socially progressive policy agenda. What we have is a Labour policy platform that is so timid and reeks of ‘please just vote us in and then we will do something’
Q: How will this tax system affect the health and wellbeing of the community, in particularly health equity?
Adequate public finance to fund action across the determinants of health is fundamental to improved health and health equity. Key to strong domestic revenues are efficient and effective tax systems.
Taxation influences health and health equity by reducing income and wealth inequality; it influences health and health equity by providing funding for public education, housing, social services, social welfare, employment supports. All of these matter for people’s health, and it will really matter for people lower down the social ladder. Not just the poorest of the poor but people in precarious employment, with lower levels of education, people with disabilities, those living in housing stress, and many Indigenous Australians.
Q: What are the implications for our longer term capacity to rebuild equitably from the pandemic?
COVID-19 will increase health inequities in Australia, and will reinforce the existing inequitable trends. Going forward, we will need investment in social protection, quality education, affordable quality housing and jobs. Without adequate revenue, governments are compromised in what they can spend on these social determinants of health equity.
Q: What are the implications for our capacity to respond to the climate crisis, including through adaptation and community development measures?
Policy is needed in Australia that helps both with adaptation to the damage already done and mitigates making climate change worse. Good social and planning policy is good climate adaptation policy and will support community resilience. Again, adequate public revenue is essential to ensure quality social and planning policy and programs.
Q: Any other related issues to highlight?
An essential element of a robust tax system includes the effective taxation of trans-national corporations. TNCs lower their taxation by investing in offshore tax havens, evading taxes, and lobbying for and using tax exemptions for core activities – discussions about Amazon, Google and Facebook has shone a light on the problem of how to tax the world’s largest companies. The recent agreement at the July G20 finance ministers meeting to make multinational companies pay more tax must be implemented by the Australian government.
Essential services at stake
Associate Professor Lesley Russell, Menzies Centre for Health Policy, University of Sydney, and Croakey columnist
There will always be arguments about taxation policy – not just the substance (what are the rates, how progressive is the system) but also the ideology (what does society expect in return for paying taxes).
A taxation system is only fair if every individual and business pays what is required. Currently too many of the richest Australians and corporations manage to evade paying taxes while reaping the benefits of Australian residency.
In 2018-19 there were 15,385 people in Australia who had a total income of over $1 million (that’s about 0.1 percent of the 14.68 million people who earned an income that year).
Most of these millionaires paid an average of 44 percent tax on their income, but 55 paid nothing, presumably by paying tax experts large sums of money to avoid doing so.
ATO data for 2018-19 show that 32 percent of business entities paid no tax. These are more likely to be publicly and foreign owned, and a list compiled by Michael West Media shows these tax dodgers include some very well-known companies.
Many of these tax-avoiding individuals and businesses have the Government’s ear on issues that often extend well beyond their remit and expertise. The most egregious example here is News Corporation which has paid no Australian taxes in recent years.
But meanwhile the Morrison Government is seeking to use the tax-exempt status of charities and advocacy groups as a muzzle on their ability to speak out.
A series of natural disasters and the coronavirus pandemic have highlighted how important government funding is for the provision of essential national supports – emergency response systems, universal public healthcare, a safety net that catches everyone in need, assistance for affected businesses, affordable housing, and international aid to developing countries.
They also highlight the imperative of long-term investments in critical areas such as education, research and development, aged care and mental health services, environmental protection, tackling climate change, disaster preparedness and addressing national and international inequalities.
The consensus is that when the pandemic is over, Australians will need to pay more taxes.
Their ability and willingness to do this depends on the inherent fairness of the system and the capacity and competence of the government of the day to spend taxpayers’ dollars to the benefit of all Australians.
Bad for health equity
Assistant Professor Ian Li, Senior Lecturer in Health Economics, School of Population and Global Health, UWA
Q: What is your response to Labor’s move?
The decision to support the stage three tax cuts seems at odds with Labor’s past approaches for more progressive taxation structures.
Q: How will this tax system affect the health and wellbeing of the community, in particularly health equity?
The tax cuts will reduce the funding base for all things funded by the taxpayer, including education, welfare and health. Health expenditure is the second largest item funded by taxes, exceeded only by Social Security and Welfare. The tax cuts and move away from removal of negative gearing tax incentives will mean less revenue for publicly funded activities.
The stage three tax cuts (and negative gearing concessions) benefit very high income earners, and therefore once they come into effect, the tax burden of all publicly funded programs such as Medicare effectively shifts towards lower income earners.
Another point to consider is how the reduction in taxation revenue will impact on program/service delivery. Will the government have to resort to further borrowing and therefore widening the budget deficit (and burdening future generations), or increase out of pocket expenditure for healthcare access, such as the mooted out of pocket payment for GP consultations in 2014 (which was abandoned) or the Medicare rebate freeze since 2014, which effectively means health professionals including GPs are being paid the same as they were in 2014, if they did not pass additional costs on to patients.
All signs point to the proposed tax cuts as being detrimental to access to healthcare, intergenerational equality and health equity.
Q: What are the implications for our longer term capacity to rebuild equitably from the pandemic?
The pandemic has already resulted in the need for lots of funding. Vaccination rollouts, quarantine programs, and dealing with the economic fallout from lockdown and other restrictions means that there has had to be increased expenditure in health and welfare, all funded through tax. The funds for this increased spending need to come from somewhere.
If the wealthier are getting tax breaks, then funding will have to come from the less well-off, future generations or both. The recently released 2021 Intergenerational Report projects a steady increase in income tax rates from the mid 2020s onwards, while also projecting a declining proportion of taxpayers due to Australia’s aging population. It is likely that the youth of tomorrow will bear the brunt of the increased tax burden.
Q: What are the implications for our capacity to respond to the climate crisis, including through adaptation and community development measures?
The only thought I have here is that when the budget is getting squeezed with other immediate term pressures, issues such as climate change tend to fall down the list of priorities quite quickly given the (mis)perception their impact are “far in the future”.
Exactly the wrong time to offer tax cuts
Fiona Armstrong, Executive Director, the Climate and Health Alliance
The announcement by the ALP to wind back commitment to a progressive taxation system is disappointing and undermines Australia’s ability to recover from the economic impact of the COVID pandemic and invest in a low carbon future.
By supporting a suite of inequitable tax cuts, under which Australia’s wealthiest individual pay less tax, the Government and the ALP are proposing major structural changes to our ability to raise funds to spend on vital public services, such as health, housing, education and welfare, as well as invest in transformative climate change policies.
The COVID pandemic has provided fresh impetus for Australia’s political leaders to focus on investing in a better future – this is more important than ever given the existing inequalities in our society thrust into the spotlight by the pandemic.
And while all eyes (understandably) are on COVID, the climate health emergency continues apace, which will further deepen divides between the haves and have-nots.
This is exactly the wrong time to offer tax cuts when the need to invest in services and infrastructure for collective benefit is greater than ever, not to mention to pay off the huge debts being accumulated.
Across the world there is a clamour for public investment to lock a future which is healthy, regenerative and just. But this requires the transformation of our energy and transport systems, housing and infrastructure, urban planning, food systems, and governance. To make it happen, we need a progressive and fair tax system which can raise the necessary revenue to provide the services required for a healthy, equitable society.
With public health so prominent on the public and political agenda, it is breathtaking that our political leadership are contemplating underlining our ability to continue to provide the kind of income support and public health protection that the pandemic has demanded.
It would be far more helpful for an alternative government to advocate a shift from fossil fuels to clean energy, investment in climate-resilient communities, and a strong social net to lift us all up.
By supporting these tax cuts, the ALP joins the Federal Government in hollowing out our public funding and entrenching existing inequalities, which, rather than positioning us well for the future, will limit public spending, drive inequality, and undermine our ability to invest in the critical transition required to act on climate change.
We urge Labor to return to supporting a progressive taxation policy which will benefit all Australians, rather than those who need it least.
Watch homelessness worsen
Associate Professor Lisa Wood, School of Population and Global Health, UWA
My comments are through the lens of widening income disparity and the repercussions for already escalating housing unaffordability and homelessness in Australia.
Even under the current tax system and income differentials in Australia, a growing number of Australians cannot afford to rent a home, let alone purchase one.
As shown in the recent Anglicare Australia rental affordability snapshot, nationally there was less than one percent properties affordable to people on jobseeker, parenting payment (single), the age pension and DSP. There were NO properties affordable for a single person on jobseeker or youth allowance.
In WA, a resurging economy, shortage of housing supply and lifting of the rental eviction moratorium has seen a rise in the number of people sleeping in streets, parks, cars because they have lost their tenancies due to rent increases, or cannot find anywhere affordable to live. It seems highly likely that if already well off people have additional discretionary income to spend thanks to tax flattening, more and more houses will be purchased by investors; increasingly out of the grasp of those who most need a roof over their heads.
Wide-ranging concerns
Paul Dutton, from the Barkindji Nation, and a contributor to Croakey’s #JustJustice and #JustClimate projects
Q: What is your response to Labor’s move?
Labor’s response is weak and virtually follows what the LNP want of the taxation system.
However, you can understand their approach if you consider how the media favour corporate and individual wealth protections over common sense taxation rules and policies to ensure equitable access to health, housing, education, justice and the holistic impacts to environmental protections.
It is extremely difficult to lay out a logical policy for an entire nation without having that policy pulled apart by media who it feels have significant control of the message that is ultimately delivered to voters and the public. Ultimately it appears those media interventions change the best intentions of a political policy to suit the needs of their media owners, their corporate sponsors, friends and the wealthy. Australia seems to be losing its credibility as a democracy and Labor have increasingly lost their identity as the workers’ party.
Q: How will this tax system affect the health and wellbeing of the community, in particularly health equity?
This is a negative regressive tax system which only benefits the wealthiest. Meanwhile, Job Seeker payments again being slashed back to below poverty levels. Add Centrelink and Employment Services’ overly strict reporting requirements and access to service limitations. These have resulted in many Aboriginal individuals, especially young people, who don’t even bother applying for Job Seeker payments because the system is deliberately setup make it extremely complicated to lodge basic paperwork.
Q: What are the health impacts?
Significant. People are already living in isolation within their communities, primarily Aboriginal people living within Cultural communities within their town communities for protection, comfort and access to basic services through the financial and social capabilities of others within the family units. Ultimately, this community care for all impacts significantly on those providing that financial, housing, educational and emotional supports for people who cannot manage their lives within this deliberately negative taxation system.
Aboriginal communities are already dealing with the drastically negative impacts of the Cashless Welfare Card, which means entire communities are unable to live the lives of ordinary Australians and access basic welfare payments to do as they wish. Not only is a significant amount of their money sent to specific businesses but this means that are unable to use their own money to travel to different locations or use in shops that may provide a financial bargain over the shop that are forced to use. This is another capitalist system to protect the wealthiest and the working over those who live in isolated communities living in Country
Q: What are the implications for our longer term capacity to rebuild equitably from the pandemic?
The implications are massive because of the basic payment systems this LNP have implemented, again all set up and protected for businesses to profit and for individuals to be tied to rather than having direct access to payments for their own use as citizens, taxpayers, electors and contributors.
Job Keeper went to businesses, Job Seeker has been drastically reduced, rent protections are no longer in place, mortgages are again needing to be individually argued for those with limited funds, those without social payments or have penalties or just need help to survive within their family units are competing with others to access to services that have had increasing fund reductions since 2013. And increased needs mean workers are being burnt out trying to deliver services such as housing that are simply not accessible for community members with long held jobs due to the significant lack of general housing let alone social housing which governments seem completely bereft of wanting to address.
Add these 2021 impacts of COVID-19 on Australian society to the poor policy development currently being enacted on the nation. The planned changes, placing even greater limits on Treasury reserves, will cause significant social isolation and desperation for many. And there is no urgency coming from our Federal Government to ensure this is addressed.
Yes, the tax system needs to change, financial experts have being saying this for a decade or more – but not by cutting taxes for the wealthy. The taxation system needs to be simplified.
Now, as part of the response to the increasing impacts of this pandemic, is the right time for a Whitlam-style drastic change to how government and society act. To continue handing out unaccountable billions to businesses without ensuring cost effectiveness and bringing everyone along will destroy the fabric of democracy.
The political message people see is, it’s about self. This is already dragging back the opportunity to work towards equality and diversity within the nation. It will take a dramatic escalation of humanity over capitalism to drag that back to a united people of the Lands we are currently living within.
The current political parties are not delivering that connection for a vibrant voice to echo within society as they are too tied to corporations and individuals, and continually filter the needs of the many to protect the greed of the few.
Q: What are the implications for our capacity to respond to the climate crisis, including through adaptation and community development measures?
The real implications of capacity to respond to climate crisis will be a complete overhaul of how Australians vote in their elected Members. It is now the time for every electorate to consider their local needs over the historical beliefs of major political parties and install local people who are there to work for the best possible outcome for their community, to work towards that same outcome for a nation of local communities – not for the privileged few.
A national reality check is what is required. Are people will to make that leap?
Only then will real change be implemented or through one strong leader willing to implement change primarily over the voices of a media who drives the political discourse in this country.
Q: Any other related issues to highlight?
The current housing crisis and again outrageous housing prices being experienced in this country continues to horribly negatively impact the very people in this country that drive it; the workforce of a nation is struggling to meet their basic needs starting with housing. This is because of the failure of the rental protections set up at the beginning of this pandemic, where all rental and mortgage debts were put on hold instead of directly being financially secured by the Federal Government and implementing a basic repayments scheme back to the Commonwealth. All those individuals are now verging on financial and personal disasters, which ultimately impacts them directly as well as their towns, regions and local councils and communities.
Where is the vision?
Dr Arnagretta Hunter, Consultant physician and cardiologist; Human Futures Fellow ANU College Health & Medicine
Q: What is your response to Labor’s move?
Disappointment. The Labor party is generally relied upon to address inequality and support those with less financial resources, this decision suggests they feel they cannot defend those traditionally reliant on the left of politics.
Q: How will this tax system affect the health and wellbeing of the community, in particularly health equity?
The tax changes do not address the challenge of financial inequality. Socioeconomic status can have deep influence on the social determinants of health and wellbeing with long term impacts on health and wellbeing of populations with less financial resources. This is seen through increased rates of chronic non-communicable disease, decreased quality of life and life expectancy.
COVID infection and mortality follow socioeconomic variables with those with less resources less likely to have health literacy that increases vaccination rates. Precarious housing and employment drive people to risk virus exposure they would otherwise be protected from with different resources.
Q: What are the implications for our longer term capacity to rebuild equitably from the pandemic?
Are we thinking or talking about rebuilding equitably from the pandemic?
It’s a tremendously important time to think about our future – yet we seem stuck in the ‘snap back’ mentality. Wouldn’t it be great to see that discussion emerge? Does our political narrative enable this discussion at the moment?
Q: What are the implications for our capacity to respond to the climate crisis, including through adaptation and community development measures?
Socioeconomic variables magnify vulnerability to ill health, to adverse outcomes and to adaptation and community preparedness for the changing climate. To adequately prepare Australians for the increase in extreme weather events, there is a great opportunity for government led investment in community resilience activities.
Cuts to government revenue through income tax reduction and failure to address the inequities within our tax system leaves the government with less resources to contend with what we expect to be an increasingly expensive burden of natural disasters.
Q: Any other related issues to highlight?
Much to learn from Australia’s experience with COVID. In 2020 with JobKeeper and JobSeeker providing a living wage at a dignified level we eradicated childhood, and much other, poverty.
This is an extraordinary achievement for government – and yet one we seem to have given up without a second thought. There are such remarkable health, wellbeing and environmental gains to a radical rethink of our economic and taxation system.
But I worry we don’t have the politics to achieve meaningful change.
Invest in health equity
Professor Evelyne de Leeuw, Director, HUE (Healthy Urban Environments) Collaboratory, SPHERE Maridulu Budyari Gumal, Director, Centre for Health Equity Training, Research & Evaluation, UNSW
The existence of a social gradient in population health has become irrefutable: the higher your socioeconomic status, the better your health (or rather, most disease-related indicators, including mortality). Socioeconomic status (SES) is an expression of a range of factors, including disposable income. And disposable income is a function of public policy intervention, including taxation.
So – in the logic linking a nation’s GDP and taxation policies to equitable health outcomes, there are a number of steps that either enhance or worsen the chances of achieving better, and more equitable, health.
Yes, statistically any progressive taxation (where the richer you are you pay proportionally more tax) will have, as a consequence, a flatter social gradient.
But this possibly hides more perverse mechanisms that entrench existing health equities.
For instance, a programme of work from the City Futures Research Centre looking at the Australian rental market challenges the standard rhetoric that ‘public housing’ creates concentrations of disadvantage and thus health inequity.
This turns out to be a gross oversimplification.
In fact, worse disadvantage can be identified in the private rental market – with small investors (possibly with no other option to secure an old age income) exploiting the lower end of marginalised communities even further – by not investing in maintenance, an inability of engaging with valuable place-making and green space in the public realm, etc.
This is a consequence of a badly designed public sector effort and misappropriated tax revenue.
Or – a perception of misappropriation. In research that we carried out with Canadian colleagues in the context of COVID-19 pandemic interventions (lockdowns, closure of public and private facilities, social and physical distancing) we found that for most people it is not raw poverty that creates and exacerbates health inequities – rather, it is the perceived and experienced financial strain that makes life for many disadvantaged communities unbearable.
The worry that you will not have the resources to survive until the end of a pay period clearly is impacting on mental and physical health of families and communities. And we have found that simply throwing money at this issue (through changing tax regimes) is not solving a deep social chasm – one that is rooted in neoliberal corporatism, a belief in hard cash and the market, and a social policy that drives many into what has come to be known as ‘the precariat’.
The reality for many disadvantaged communities is not that they are taxed too high or too low – the challenge is that the architecture of the system simply does not allow you to have a steady income from one reliable job. This has very little to do with the tax system, but rather with the underlying paradigms about the role of the public sector, accountability, and what money shall be spent on.
We know very well, for instance, that public monies invested in behaviourist (and potentially blaming-the-victim) policy interventions entrench existing health inequities, and worsen them.
Upstream systems interventions (e.g., securing proactively equitable access to education, training and coaching; to culturally safe and systems embedded job creation; and to cool, active and green environments) yield much more for better health and health equity than communicative interventions.
So – better and more accountable progressive taxation is only a minor step on the long road to making Australia a health equity champion.
It is not just how you get the money but how you spend it, Labor!
Worsening inequality
Dr Simon Judkins, Emergency medicine physician, Croakey columnist
Although I’m not an economist, my view is that governments should be doing all they can to improve equality and close the wealth gap. These decisions will not do that.
We should be lowering the tax burden for lower incomes and taxing high incomes earners…and anyone earning close to 200K is a high income earner.
However, the bigger change we need is taxing the mega wealthy and the multi-nationals etc who pay no or minimal tax in Australia. If we, as a society, want to pursue a community which looks after each other, which is less likely to be involved in civil unrest, extreme politics, discrimination, racism, radicalisation – then we need policies which support the reduction in inequality.
These lessons should have been learnt through COVID. As the rich got richer, big business kept job-keeper, while small businesses suffered, social unrest, conspiracy theories and the distrust of government has risen.
Governments need policies which make life better for all its citizens…not just those who donate to parties, have connections and influence.
Inequality is worsening and this tax position does nothing to address that.
BUT, as I said, I would be tempted to let this slide if Labor pursued a tax reform agenda to address the millionaires, the billionaires and the multinational who take so much…
Further reading
By Michael Keating
https://johnmenadue.com/what-does-labor-offer-part-1/
https://johnmenadue.com/what-does-labor-offer-part-2/
See Croakey’s archive of stories on health in all policies.
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