[Land-and-Labor] [Land-and-labor] Labor's History of Land for Public Revenue

Thu May 6 15:09:51 UTC 2010

Thanks Lev

Very well written and very sensible.

Best wishes

Lyle

On 07/05/10 00:55, Lev Lafayette wrote:
> Origins and Early Days of the ALP
>
> The last decades the nineteenth century was a turning point for the
> Australian labour movement. The preceeding twenty-five years to the
> crash of 1890 and the subsequent "bitter fight" had been one of relative
> prosperity for Australian workers with an expansion in capital
> investment. Trades Councils were formed through most of the colonies in
> the 1880s with Intercolonial Trade Union Congresses held in Sydney,
> Melbourne, Adelaide, Hobart and Brisbane. There was a strong move
> towards a federation of union bodies, and historians note the influence
> among the working class of books such as Bellamy's "Looking Backward",
> Gronlund's "Co-operative Commonwealth" and Henry George's "Progress and
> Poverty".
>
> It is from the latter that this essay is based; for most who have even a
> modicum of knowledge of Australian labour history, the distatesful
> racism that permeated working-class organisations at the time is well
> known. Consider the following motion put by one Mr. H. Barnett of the
> Bootmaker's Union of South Australia at the 4th Intercolonial Trade
> Union Congress in Adelaide in September 1886:
>
>
>      "That in the opinion of this Congress the time has arrived when
> immediate steps should be taken about the total abolition of Chinese and
> Coolie immigration because - first, the competition of Asiatic against
> European labour is entirely unfair; second it is well known that the
> presence of Chinese in large numbers in any community has a very bad
> moral tendency"
>
>
>
> The fact that this motion was carried unanimously at that Congress
> should serve as indication as the strength of opinion towards
> "non-White" labour. It served as the first item in the "fighting" and
> "general" platform of the Australian Labor Party in 1902, and was
> repeated in the 1905 platform, through to the 1919 platform, the 1921
> platform (where the "socialisation of industry, production, distribution
> and exchange" was adopted) and so on, well into the 1940s and beyond. As
> immigration minister, Arthur Calwell remarked in 1949: "We can have a
> white Australia, we can have a black Australia, but a mongrel Australia
> is impossible".
>
> At the same time however, there is a less well-known history, one that
> is far more noble. Returning once again to the 4th Intercolonial Trade
> Union Congress of 1886 we find that there was another motion that was
> passed unanimously, this time moved by Mr. A.G. Vagg of the Progressive
> Society of Carpenters and Joiners, Brisbane:
>
>
>      "That it is the opinion of this Congress that a simple yet sovereign
> remedy which will raise wages, increase and give reminerative
> employment, abolish poverty, extirpate pauperism, lessen crime, elevate
> moral tastes and intelligence, purify government and carry civilisation
> to yet nobler height, is to abolish all taxation save that on land
> values".
>
>
> The socialisation of land values was supported by a variety of different
> organisations in different degrees; the Land Nationalisation Society of
> the late nineteenth century and the Single Tax League being two obvious
> supporters. As a means to more progressive changes, the Knights of
> Labour also gave their support. When the Australian Labor Party was
> established these values first saw their expression in item four of the
> "fighting" and "general" 1902 platform with support for the
> nationalisation of monopolies. In the 1905 platform this was separated
> into support for nationalisation of monopolies as the second item and a
> progressive taxation on unimproved land values as the fifth item;
> notably this was the only element of the platform at the time which
> indicated support for any sort of taxation - interstate tariffs were to
> be determined by referendum.
>
> In 1910 the Fisher Labor government introduced a Commonwealth Land Tax.
> In the words of the Australian Tax Office:
>
>      "In 1910 a land tax was introduced by the Commonwealth Government to
> provide for the defence of the nation and to prepare for a major
> increase in migration. The land tax was also introduced to encourage
> large landholders to subdivide their land and sell it to settlers. Many
> large landholders were wealthy Englishmen who would rarely visit or use
> their land. Introducing a land tax encouraged them to sell to settlers
> who would use the land productively."
>
> In other words, the purpose of the land tax was precisely what Mr. A.G.
> Vagg had intended some twenty years prior; to end speculation, to break
> up the large holdings, to encourage productivity and therefore increase
> wages and so forth. The influence of this idea was widespread; even the
> opposition Liberal Party (as it was then called) lead by Alfred Deakin
> remarked, quite correctly:
>
>      "The whole of the people have the right to the ownership of land and
> the right to share in the value of land itself, though not to share in
> the fruits of land which properly belong to the individuals by whose
> labour they are produced."
>
> Initially it was widely considered that this would be the only tax.
> Prior to that the Commonwealth gained finances through a customs and
> duties, which contradicted the political objective of free trade between
> the various states. For a few years it seemed that indeed this could
> indeed become the case, as the Fisher government successfully
> introducing a number of significant reforms such as the the first child
> maintenance scheme, the establishment of a Commonwealth bank and a
> Federal control of the money supply, and a citizen's militia.
>
> However with the advent of World War I, the irrational loyalty to
> British imperialism over German imperialism led to excessive
> commitments. Now in opposition, Andrew Fisher infamously dedicated
> Australia to "the last man and the last schilling", a bill that would
> have to be paid in both money and blood - and eventually, with power as
> military adventurists in the Party caused a split over conscription.
>
> To make up extra income, in 1915 Commonwealth introduced personal income
> tax and tax on company profits. The name of the Land Tax Office was
> changed to Taxation Office to reflect the wider sources of public
> revenue, which was followed with an "Entertainment Tax" in 1916 - which
> remained in force until 1953, and a War Tax on postage stamps, which
> remained in force even after the legislation was removed in 1920.
>
>
> Forgotten Promises
>
> Labor's opportunities to continue or expand this policy remained rare
> after the split during World War I; indeed there was no real opportunity
> at all. Conservative forced ruled throughout the second half of the
> 1910s, and throughout the 1920s. There was the brief Scullin government
> of 1929 suffered not only the effects of the Great Depression, but also
> the political fall-out which saw the Party split into three directions,
> with the entire New South Wales branch under the leadership of J.T. Lang
> being expelled, and the former Labor treasurer, Lyons, leading the
> conservative United Australia Party. Labor was in opposition for another
> ten years after that only again to regain power in the midst of the most
> terrible war the world has known. Again there was little opportunity to
> further something so supposedly prosiac as a land tax on site values.
>
> Opportunity did exist after the war of course, and during that period
> the Labor government engaged in a series of substantial reforms; such as
> physical infrastructure investment such as the Snowy Mountain Scheme,
> social infrastructure investment such as the free medicine program,
> national unemployment and sickness benefit. Whilst the attempt to
> nationalise the banking monopoly - carried out after a Royal Commission
> determined that the private institutions did not engage in any serious
> competition - contributed significantly to the downfall of the Chifley
> govenment it is notable at no time did Labor even consider to remove its
> commitment to a Commonwealth taxation on unimproved land values.
>
> As Labor lurched in crisis in the 1950s, the ever cunning Prime Minister
> Menzies took the opportunity to give the landlord class a free gift and
> remove land tax from a Federal to state jurisdictions where they could
> compete among themselves for the most appropriate rate - and thus also
> provide interstate landlords the ability to acquire multiple properties
> acorss different states each below the individual state threshold for
> taxable values. Arthur Calwell was provided the opportunity to respond
> to the Menzies' government decision in parliament and in his thirty
> minute speech he condemned the government, reasserted the right of the
> people to own the land and swore that Labor would return a Commonwealth
> Land Tax when elected.
>
>
>      "We of the Australian Labor Party have always believed that the land
> is the patrimony of the people and that nobody has a complete and
> absolute title to it. ...The land belongs to the people, and its use
> must be safeguarded and protected at all times... We have always
> believed in the land tax, and when happy days come again we shall
> restore the measure imposing the tax to the statute book of this
> country."
>
>
> Devastatingly, it was the Labor Party itself which removed this
> commitment. In the 1961 Platform, whether by administrative incompetence
> or malice, the sixty-five year committment of the Australian Labor Party
> to a commonwealth land tax on site values was removed, without the
> deletion ever being taken to Conference for approval.
>
> Some however were not so easily fooled. With the election of the Whitlam
> government in 1972 there was perhaps the first opportunity for decades
> for a Labor government to act without the pressures of an
> all-encompassing war, post-war reconstruction or economic depression.
> Clyde Cameron, Minister for Labor, raised in the very first pre-budget
> meaatings the need to introduce legislation to collect the economic rent
> of land instead of direct and indirect taxation on labour and capital.
> The following year he wrote to Frank Crean, then Treasurer, again for
> the introduction of Calwell's promise and a Labor platform item that had
> never been defeated on Conference floor. It was, of course, conviently
> forgotten with the the crisis of the Whitlam government in 1975.
>
> With the election of the Hawke government in 1982 the opportunity once
> again arose to lift the tax burden from productive labour and capital
> and shift it on the use of resource holdings. Of course, Cameron had
> long since retired and there were no strong advocates in the
> parliamentary party who could advocate such a position. Economic
> problems causes by monopolistic acquisition of resources don't go away
> however and the Hawke government introduced a Capital Gains Tax which at
> least partially mitigated against the most obvious rent-seeking
> incentives. It was strongly opposed, of course, by the conservatives at
> the time, but not reversed when the Howard government came to power.
> Indeed the former Prime Miniser once wrote: "I do not deny that all
> taxes, with the exception of those on economic rent and inherited
> wealth, have some [adverse] employment and economic growth effects."
>
> Of course, a capital gains tax is a far cry from a site rental. Land is
> a different factor of production to capital, despite the attempt of
> vulgar neo-classical economists and equally vulgar Marxists to conflate
> the two. Stocks and bonds, collectible artworks and antiques are not the
> same as natural resources. Not surprisingly, capital gains tax also
> comes with a deadweight loss insofar it restricts trades (a "lose-lose"
> situation), and increasingly comes with significantly administrative
> losses as well with a collection of some 52 Capital Gains Tax "events",
> a slate of exemptions and semi-exemptions, and variations in calculating
> the amount owed.
>
>
> Practical Effects
>
> There are real and practical effects to creating an incentives to
> acquire natural resources both in a fiscal sense and in a physical and
> social environmental sense. Neither of these can be said are
> particularly good for the Labor Party, let alone society as a whole.
> Regardless of tinkering and the piling of complexity (and transaction
> costs) a general principle can be stated; if you tax an item, you create
> a disincentive for it to be produced or acquired. Thus, if the relative
> taxation of natural resources is low compared to labour and capital,
> then there will be a tendency towards monopoly as (a) it is fixed in
> supply and (b) demand (or rather requirement) is relatively inelastic.
> This itself contributes significantly to a boom-bust cycle, as
> investment is encouraged in areas which do not result in the provision
> of goods and services, leading to a crash in real estate prices, which
> is gradually rebuilt.
>
> On a fiscal level, if production is distributed between rent, interest
> and wages (P = R + W + I) then wages and interest must suffer in
> proportion as rent increases. This relative impoverishment creates a
> public demand for government intervention to assist those at risk, but
> when the private expropriation of resource rents has already been
> accepted politically, taxation on wages and interest are required, which
> further suppresses economic activity due to deadweight losses in trades
> and compliance costs. According to the Land Values Research Group, since
> 1972 the total loss to the economy as a whole since 1972 has been $1
> trillion further "[u]nder existing taxation arrangements, labour and
> capital fight over the 40% of GDP remaining from earned incomes after
> 28% of GDP has been taken from them by taxation and after 27% of the 32%
> of GDP comprising publicly generated resource rents has been creamed off
> by private interests."
>
> These destructive fiscal effects have a very real effect on Australian
> demographic culture. The quest for economic land, or location, drives up
> land prices and reducing housing affordability. Working people then
> retreat to the suburban fringe, places which are notorious for their
> lack of community and physical infrastructure. In splendid isolation an
> "us and them" fortress mentality becomes a norm which was most clearly
> displayed in the 2001 "Tampa" election. Labor's surprising loss is
> indisputably a result of swings against the party in the working-class
> suburban fringe, which was most prone to racist fearmongering.
>
> There are two schools of thought about what Labor should do about this.
> One argues Labor must adapt to these circumstances and engage in
> populist condemnation of asylum seekers, downplay commitments to
> multiculturalism, the environment and so forth and, in general,
> encourage and seek "aspirational voters" - whose aspiration is private
> wealth and public poverty. The other body of opinion argues that Labor
> should seek to change those conditions as they are destructive to both
> the party and to the country. Trivial economic analysis over the past
> elections shows that Labor's vote has been increasing where there is
> existing social infrastructure and a relatively higher population
> density.
>
> But will the Australian Labor Party do this? Will they create the right
> incentives to encourage cities to become more compact, with high quality
> buildings and a high density of physical infrastruture, all of which
> help develop a civic consciousness? Will Labor offer a massive shift of
> the public tax burden away from the working class and on to the landlord
> class? Will Labor ever re-instate its sixty year policy of a
> commonwealth land tax on unimproved site values, so that those who hold
> a resource must pay the community the privilege of that exclusion?
>
> Sadly, I believe it may be some time before this occurs. As the famous
> American civil libertarian and rights lawyer Clarence Darrow wryly
> remarked:
>
> "The single tax is so simple, so fundamental, and so easy to carry into
> effect that I have no doubt that it will be about the last land reform
> the world will ever get."
>
>
>
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