Like Mark Bahnisch, Eva Cox and a number of others, I’ve resigned as a Fellow of the Centre for Policy Development. It’s a sad day, since CPD has done a lot of great work, and I’ve enjoyed being involved in it. But the leadership of the Centre has taken a decision to move to the right in the hope of being more relevant to the policy process. The most recent outcome has been a paper on tax policy that broadly accepts the Treasury view of the issue, and pushes for a broadening of the GST base, which means taxation of fresh food. This isn’t a new or innovative idea. Rather, it has been part of rightwing orthodoxy for decades. CPDs endorsement allows its advocates to claim some “left” support. That claim obviously gained credibility from having Fellows like Mark, Eva and me. So, we had no alternative but to resign.
I should clarify that, apart from a nice title and a publishing outlet, I wasn’t getting any direct benefit from being part of CPD. So, I’m making a statement rather than a sacrifice.
John Quiggin 
That is sad. I believe we not of the right have massive fight ahead of us.
Perhaps you weren’t getting any direct benefit from being part of CPD, but the reverse is not true. Sorry to see good people (so many, it seems) departing.
So being relevant to the policy process means moving towards whatever policy the government has? Surely to god we can do without this kind of relevance.
Rightly or wrongly, I always perceived the CPD as a fig-leaf for whatever the ALP wanted. A leap further to the right (along with the ALP) doesn’t dispel that perception.
How interesting and challenging that you have to be so conscious of what your name is associated with. It’s certainly the case that is see the name Quiggin as a fellow and think that a centre or institute might be alright, especially when trying to decide my position on something I don’t understand (which is to say everything)
This paper is nowhere to be found on the CPD website.
Funnily enough, in the news today is the story that the Australian Democrats have been de-registered as a political party, due to lack of members. Their demise, of course, began when Meg Lees did a deal with John Howard to get the GST legislation through the Senate.
The GST certainly has proven to be an IED within the centre-left. It’s the eternal conflict between wanting a lot of revenue but only wanting to raise it from a small number of (rich) people.
I don’t know much about the CDP but this sounds very bad. Have they made any statement on this (the decision by yourself, Mark Bahnisch and Eva Cox to leave them, I mean). Are they accepting what is happening as a “move to the right”, as you describe it, or are they giving it some other name?
Saw part of an episode of a show called “The Librarians” last night: the public library staff have been called in to a meeting with the minister, and he informs them that the public libraries must now make a profit to the tune of 20% of their annual funding, or they get snipped. I had to turn it off.
There is no respite from the right’s worldview, even in comedy. With the shift of the CDP which you describe, the space for socially aware economic analysis is shrinking to a small dot.
@Uncle Milton
In fact, the fallout of the deal Meg Lees made with John Howard on the GST should be a signal lesson in why shifting to the right on economic matters is not a good strategy for groups with a socially aware and alert base. In the very act of trying to (re-)gain relevance, they lose their base.
The ALP dogmatically adheres to jobs before everything else, and yet in the early 1980’s they made quite a big shift to the right on economic matters. Being so bloody-minded on jobs, and jobs of a certain kind (i.e. where unionised workforce is possible), puts the ALP in conflict with the needs and wishes of many inner city living people, as well as many rural people. At least in the early 1980’s the ALP found it in their soul to fight for some environment and social causes. The current invocation of the ALP has alienated so many supporters on green issues, that the Greens have reaped the benefits, and good on them. With the ALP’s last known policy for dealing with asylum seekers journeying here by boat, I see little evidence of the socially aware and fair ALP of my early adult days.
Perhaps the CDP have chosen the same option as the ALP: chase relevancy at the expense of being correct.
@Donald Oats
I question the concept “chase relevancy” (I know JQ used it first). I see it more as “adherence to neocon ideology”, or something like that, rather than there being a zone of policy outside which lies the irrelevant.
Refugees is a good example. The ALP has chosen to be identical on the policy using the excuse that it must be what 10 fictional voters in Penrith want and therefore must be ALP policy.
The truth is that neocons have taken over both duopoly parties and THEY set policy for Australia on all those key issues.
JQ, it seems to me your blog is your insurance policy, paid in time you give up. The libertarians could learn from you (if they were to give up measuring costs in dollar terms and rewards in dollar denominated profits).
This morning I read a comment in the smh saying in Europe GST is between 20 and 30 per cent. This is total nonsense. Firstly, there is no uniform GST ‘in Europe’ (even excluding the European part of Russia and focusing only on the EU). Second, I checked the data for Germany. The equivalent of GST (VAT) is between 7 (or 7.5) and 30 per cent. Germany is a relatively high tax country. Furthermore, Germany is not a major meat and food producer (in contrast to Australia), but has a wide range of manufacturing businesses (allowing local supply chains; GST keeps production costs untaxed). For more or less essential manufactured items the GST is 19% (the local manufacturer’s cost is not affected). The top rate is essentially for luxury items. Enough is said to reject the stated assertion. I suspect refuting one by empirical evidence isn’t going to make an end this zombie to raise its head many more times.
Why would one wish to put GST on unprocessed food, produced in Australia? It makes no sense on the micro level (producers and consumers) and it makes no sense on the macro level because it is regressive on the most fundamental level of human needs.
A medium size businessman (economist) told me if GST would be raised (on existing taxed items) by 1% one could get rid off payroll tax. This information is about 1 year old. If this information could be verified – even 2% – then it would be a reasonable proposal IMHO. The caveat is that payroll tax is one of the very few taxes (including rates, levies…) one can be sure to collect from multinationals.
@Megan
Relevancy is not even a word.
@Uncle Milton
Yes it is. At least according to my ‘Australian Oxford’ and ‘Heinemann’.
What was the relevancy of your comment?
Not necessarily the digital ones though who produce, market, manage and sell everything offshore, and they’re growing in their proportion of the economy.
The CPD list of fellows appears to be out of date http://cpd.org.au/people/fellows/
@Troy Prideaux
Your point about my caveat is taken and it is an important one. Multinationals who do not have even one local employee would not pay payroll tax (or a reduced amount). Thank you for your response.
How are call centre employees in foreign countries treated? I assume they are the employees of a company in a foreign juristication and no payroll tax is collected locally.
This references broadening the GST
https://cpd.org.au/2015/04/responding-to-hockeys-call-for-a-national-conversation-hurley-in-a-new-report-advocates-budgeting-smarter-not-harder-15-april-2015/
On the topic of ‘moving to the right’ the Govts gift of $4M to UWA and Bjorn Lomberg to set up a research centre to ‘frame the debate’ seems a slap in the face to existing Australian science.
http://www.news.uwa.edu.au/201504027455/events/new-economic-prioritisation-research-centre-uwa
It seems that after being ‘defunded’ just about everywhere else the Abbott Govt has come to Lomborgs rescue (lifters/leaners? discuss).
http://www.theguardian.com/environment/2015/apr/17/abbott-government-gives-4m-to-help-climate-sceptic-set-up-australian-centre
Today we learn that dumbing down is not just to do with press and media, but think tanks.
No doubt the thinking behind it is zombie thinking, presaging an undignified entrance into the melee that is the battle over the spoils of defeat. How are intelligent people yet so witless, where is life without self-respect??
@Donald Oats
What do you mean comedy? Are you sure that was not a news report? It sure sounds like ‘cost recovery’ in the Canadian Federal Govenrmen—translation : have the people pay again for what their tax money paid for.
I am not at all a fan of the GST. However, where companies avoid tax perhaps their goods and services could have a GST of 100% put on them. The government could simply legislate a set of guidelines for companies to follow to ensure openess, transparency, full declarations of earnings and the meeting of all tax obligations in good faith. If a company is unwilling to meet these guidelines it can be declared a non-compliant company and GST levied at 100%. In addition all salaries and wages paid by the company in the jurisdiction could be taxed at 99% over the first $100,000.
Thanks Professor Q, for the continuing intellectual leadership you continue to show through your brilliant writing and through principled actions like this one.
BTW @Megan
Labor did not cut $11.2 billion from foreign aid. The Coalition did take that money from the poorest people in the world and looks set to take even more.
Therefore the Coalition are essentially bad people and Labor are not. Too simplistic for some but there it is IMHO.
I dunno about this. I always think that in the long run a thnk tank has more influence – certainly more influence for good – if it tolerates a fair amount of heterodoxy among its thinkers. That’s why, for instance, people on the left welcomed the way the Koch brothers demanded message discipline at Cato a few years ago – Cato’s stuff hs been much less interesting since and is already less influential.
Now extending the base of the GST to fresh food may or may not be a good idea (I can see sensible arguments both ways, though in any case it will never happen now so why worry about it), but it hardly seems sufficently heretical for people to want to refuse to associate with such heretics.
Sorry, John, but I reckon this looks like petulance. A better response would have been to publish a counterblast.
@jrkrideaku
It was comedy in the vein of “Yes, Minister”, in that the situation is funny precisely because you can imagine—or even have examples of—the situation happening for real. Satire. Sadly, the older I get, the less amusing such satire becomes, simply because history overtakes it.
@Megan
It is perhaps more revealing than at first sight: if they can’t get the coverage they wish to get in the MSM and other “relevant” media (economics mags, financial mags, political parties), then it shows up the modern MSM/media landscape for being unable to deal with a diversity of opinions, or of competing ideas each supported by evidence. It would be nice to see some MSM articles of some length, which contrast different ideas for solving particular policy issues, delving in and teasing out some of the subtleties, rather than just barracking for a particular team.
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@derrida derider
DD, although the food tax was the sticking point, my objection was to the entire paper and to the vision of the future for CPD that it represented. The analysis (by a former Treasury officer) accepted the Treasury line on the entire issue, most notably on the supposed need to shift from income tax to direct tax
As regards heterodoxy, this paper was so orthodox that it didn’t even mention the standard left proposals for tax reform (wealth taxes, Tobin tax etc). In fact, since it ignored profit shifting and tax avoidance, it ended up to the right of Joe Hockey.
Earlier discussions made it clear that this wasn’t a one-off but a new direction for CPD.
Based on my understanding, ‘wealth taxes’ would fit squarely within Treasury orthodoxy – particularly land taxes and estate taxes, e.g. Henry review recommendations. A Piketty style global wealth tax perhaps hasn’t been explicitly considered, but if it’s hard to avoid and not overly complex, it would be consistent with orthodox principles (equity, efficiency, simplicity, stability, sustainability). I would think right-wing arguments against discouraging ‘wealth creation’ are heterodox.*
Lack of adoption (or even mention) of wealth taxes is driven by politics, not policy.
Tobin taxes on the other hand are one of those ‘evil’ transaction taxes.
* Not that there’s no effect of taxes on incentive to save, but the idea that these effects are worse than discouraging labour or investment via incomes taxes (including company tax).
(Not to be taken as disputing your core point Prof. Q…)
It’s a bit late, but Ernestine Gross said “Germany is not a major meat and food producer (in contrast to Australia)”. a couple of years ago, Germany produced 5M tonnes of beef. In the same year, Australia produced 2.5M tonnes. The point is, Germany has a lot of value-adding industries, we don’t. Hence, we think our industries are big, even when they’re small.