Editorial
Destroying Australia

And so it passes, the greatest assault on the safety net from which Australian life is built. Scott Morrison’s tax cuts are through and the revenue base that provides for health and education and social welfare is shredded. The legacy of the 46th parliament is there in its very first week: the destruction of the social compact that made this country stable.

On analysis by the Grattan Institute, to pay for these cuts at least $40 billion a year will need to be trimmed from government spending by 2030. The Coalition argues it will not cut services. It says jobs growth will reduce spending on welfare. A surplus will mean less interest paid on debt.

The assumptions are heroic and unsustainable. They show an extraordinary indifference to reality. More than that, they are indifferent to need. People will be worse off under these cuts. They will face greater hardship, have less access to health and to quality education. The people worst affected did not vote for Scott Morrison. Half the country didn’t. The damage done is near irreversible. It is infinitely easier to cut taxes than to raise them. This is a triumph of greed and political cowardice. The Labor Party waved it through.

The principles of this policy were first written on a paper napkin in 1974, when the conservative economist Arthur Laffer sketched out his famous tax curve for Dick Cheney and Donald Rumsfeld. That serviette is one of the most pernicious documents in modern politics. It made the case for what became trickle-down economics. It became the lie through which governments gave money to the rich and pretended they were helping the poor.

The year Scott Morrison became treasurer, the Australian Chamber of Commerce and Industry brought Laffer to Australia for a speaking tour. He met with Josh Frydenberg. His doctrine has its most explicit contemporary expression in the cuts passed this week.

We know this doesn’t work. In 2012, the United States Congressional Research Service found no correlation between tax cuts for the rich and economic growth. It had 65 years of real data on which to draw. All but the most optimistic readers of the Laffer napkin agree on what is self-evident: giving money back to the rich serves only to increase inequality. It makes the rich richer.

In his first major speech as prime minister, Morrison said he didn’t believe people should be taxed more to improve the lives of others. He said people had to work for it: they had to have a go. “I think that’s what fairness means in this country,” he said. “It’s not about everybody getting the same thing. If you put in, you get to take out, and you get to keep more of what you earn.”

This is a fundamental misunderstanding of the purpose of taxation. You don’t pay tax in exchange for services. You pay tax for a society. Under Morrison, you pay less tax and you have less society. The obliterating self-interest of this week will be felt for generations. Morrison’s victory is a huge, huge loss. 

This article was first published in the print edition of The Saturday Paper on Jul 6, 2019 as "Destroying Australia". Subscribe here.