Australia is heading down the road towards Trump’s America, Wayne Swan has warned – but the former Labor treasurer says it is not too late to reverse course.
Naming inequality as one of the biggest threats to Australia’s way of life, Swan said Scott Morrison’s latest push for further company tax cuts, which would see the headline tax rate cut from 30 to 25%, would only serve to widen the growing gap between the rich and poor.
Morrison has pointed to the United States, as well as the United Kingdom, as examples where cuts to company tax rates, a continuation of trickle-down thinking, has improved a country’s economic outlook.
Swan too pointed to America as an example – of how it can all go wrong.
“Inequality is the growing concentration of wealth at the top, which suppresses the income and wealth of the great bulk of people,” he said.
“And as that gets worse, as inequality gets worse, as the income wealth concentration gets worse, it suppresses living standards.
“It poisons society and it destabilises democracy. And we now have, around the world, a lot of evidence that as the concentration of wealth got worse, you see a polarisation in the politics, and the rise of the more extreme right.
“Exhibit A in this whole process is the United States where over the last 30 years, the incomes of the middle class has not moved.
“They have substantial cuts in living standards and increasing concentration of wealth at the top, so it has hollowed out their middle class and created a vast army of working poor. And that is a product of what you call trickle-down economics, which essentially is really about tax cuts for the wealthy and the large corporates, deregulation of the powerful, destruction of social safety nets and the suppression of wages.”
The Turnbull government has named achieving their suite of company tax cuts as one of their goals for 2018. Labor, already in election mode, is expected to make inequality and insecurity within the workforce part a foundation of its policy platform. Pushing back against the company tax cuts, Swan said, was paramount.
“The claims he [Morrison] makes that corporate tax cuts will lead to a surge in investment, and therefore growth in jobs, is not matched by the historical reality in the United States at all,” Swan told Guardian Australia.
“It is a failed experiment there over 30 years and what we have seen around the world in the last 10 or 20 years, is when the profitability of a cut is increased, it doesn’t go into long-term investment, it goes back to shareholders through share buy-backs and into the pockets of the chief executives for outrageous executive pay.
“Australia is an example of an economy that didn’t go down what you call the neoliberal road. We have done a far better job in our country over 30 or 40 years of preserving the middle class and protecting people on low and vulnerable incomes. That doesn’t mean to say there is not inequality here – there is.
“But I’ll give you this figure: in the last 30 years middle incomes in Australia increased 50%. In the United States, they went backwards. But the problem we have here is that in recent years we have seen a widening of the gap [and] a lot more insecure work. But we are not seeing the revival of private investment that Morrison would claim his policies should be producing.
“Now Morrison is saying: ‘Let’s do more and more even extreme trickle-down stuff,’ – you know, the definition of insanity is when you keep doing the things that you have done in the past that didn’t work.”
Next month Labor will host a conference aimed at highlighting the growing global dissent created by inequality, and the wider implications of its impact.
Leading progressives, including president and CEO of the Centre for American Progress, the largest progressive thinktank in the US, Neera Tanden, and former UK Labour deputy leader Harriet Harman, will speak to offer the global experience, and potential solutions.