One of the ALP’s better performers, Jim Chalmers, was on ABC “Insiders” this morning pushing the debunked myth that government deficits are “borrowed money” [which inferentially must be paid back].
I suppose he was only regurgitating a longstanding Liberal Party meme that’s come back to bite them on the bum at the moment–and in Tuesday’s federal budget–but it’s so boring: and completely wrong. Government plays an important role in assisting business, and government deficits translate to private sector surpluses. In fact, govt surpluses are rare and usually send economies into recession, even though they may purport to be ‘paying back government debt’.
But let’s go with the myth: let’s shut low wages, marginal small business profits and incredible levels of private debt–real debt that was in the process of crippling the economy ever before COVID-19 appeared on the scene–out of the equation, eh, folks?
Don’t mention the real problem, the bubble in land prices Australia has managed to keep inflated since 1996.
The conservative parties and Labor used to be able to talk about the ills of property speculation, and although there was resistance, Australia once had the wit to have land values taxed at all three levels of government. But the Menzies Liberal Party government changed an unspoken agreement on the point when it abolished the federal land tax in 1952, ostensibly ‘to leave land tax the province of state and local government’.
The ALP had been out of power for 14 years when its new national secretary, Cyril Wyndham, decided to write the federal land tax out of the 1964 policy platform of the Australian Labor Party. It was never voted out as required.
Wyndham was a smart bloke. He knew that home ownership had blossomed under the Menzies government, so why confront an increasing number of Australians with what earlier Labor Party supporters had though was a significant matter of principle? “This might be one of the things keeping Labor out of government?”
So, when Gough Whitlam achieved the first Labour government in 23 years in 1972 (since Ben Chifley’s which ended in 1949) on the slogan “It’s Time!”, a federal land tax was on nobody’s mind.
A federal land tax is now something no political party may mention. Too may Australians are into property speculation – and you wouldn’t want to offend them and lose votes!
So, let’s keep our mouths shut about what Australia’s extended property bubble has done to our socio-economic fabric, eh?
As for the thoroughgoing Henry Tax Review advocating an all-in federal land tax – bah, humbug!