AUSTRALIA DAY

The day when Australia acknowledges the need to tax away economic rents/unearned incomes (including spectrum rents) – instead of wages and wealth-creating profits?

AFR LETTER

We don’t have to look further than Adam Smith, JS Mill and Henry George to know that the increasing extent of privatised land rent comes at great cost to wages and profits. This letter in the Australian Financial Review today makes the point. Is it ignorance or complicity with the 0.1% that silences the modern economist on this point?

Neutralise the unfair privileges of land tenure arrangements

Jennifer Hewitt (“Pay rises for all is the mantra of the moment”, January 18) correctly stresses the importance of productivity improvements as a necessary foundation for wage increases. But it seems that the harder the workers row and the more water they bail from our economic lifeboat, the bigger grows the hole in the hull. Despite labour productivity steadily increasing in recent years, wage growth has stagnated. Meanwhile, if we look at land prices, it appears that the economy is booming. ABS figures reveal that in the past decade total Australian land values have approximately doubled (to be now worth nearly $6 trillion) and last year alone they grew by around 13 per cent ($660 billion).

An increasingly large proportion of ballooning corporate profits is attributable merely to the capitalisation of rising land values. These gains accrue without effort by landowners (even while they sleep) at the expense both of the rightful wages of labour and fair returns on productive investment. One-dimensional proposals to cut company tax for big business would only exacerbate this disjunction between effort and reward. To boost overall economic efficiency and to free the market to facilitate fair rewards for producers, we must neutralise the unfair privileges that pervade our land tenure arrangements. This can be achieved by removing all taxes from labour and its products and instead relying upon community-generated land values for public revenue.

Ronald E. Johnson
Charnwood, ACT

AFR LETTER TODAY ON WAGES

Leyonhjelm promoting industrial slavery

Senator David Leyonhjelm (“The great rollback of industrial relations reform”, January 19)¬†asks: “How is anyone motivated to do their best when one-size-fits-all wage deals are on the increase?”. The Senator’s article fails to mention that modern awards already include scope for making Individual Flexibility Agreements (IFA). These IFAs allow individual employees and employers to agree to vary award conditions including allowances, penalty rates, hours, leave loading and overtime rates, provided that the employee is left better-off overall.

Low-paid workers on modern award rates work hard for wages that are often insufficient to meet basic needs. The Senator seems to imagine that if only the industrial relations safety net were abolished and trade unions were disempowered, unemployment would disappear and the general rate of wages would then rise. This theory ignores the primary problem that our labour market is rigged such that wage levels are increasingly stunted by the effects of unjust privileges accorded to the rentier class, especially land speculators. If the senator’s lopsided notions were implemented, this would merely accelerate the drift towards a 21st Century type of industrial slavery.

Ronald E. Johnson

Charnwood, ACT