Where are the Greens going?

I haven’t had time to do a proper economic analysis of Labor’s proposals on dividend imputation credits. But you don’t need an economic analysis to see that making an overt appeal to conservative voters on the issue, as Richard di Natale has just done, is a very bad move if the Greens party wants to present itself as a left alternative to Labor.

Perhaps this is poor judgement in the heat of a by-election campaign, the significance of which seems to me to be greatly over-rated by all.

Alternatively, perhaps it indicates that di Natale is taking the Greens in a different direction. The obvious choices are

(i) A soft liberal centrist party in the mould of the Australian Democrats under Don Chipp
(ii) A serious push to displace Labor as the main alternative to the LNP

I don’t think there’s a real constituency for (i) and, to the extent that there is, it’s very different from the existing Greens support base.

I also don’t think (ii) has any chance of success. But, if it does, it will involve a lot of the kind of grubby compromises that are inevitably entailed in an attempt to put together an electoral majority. Labor’s shuffles on Adani and refugees are obvious examples, which have driven a lot of people to support the Greens. But now it looks as if the boot may be on the other foot.

A lower profile, but similar, example came up with the Senate inquiry into SA Tafe, which was a stunt by education minister Simon Birmingham intended to embarrass Labor ahead of today’s state election. It backfired both procedurally (because the Labor majority on the committee refused to take its ostensible purpose seriously) and in policy terms, since the submissions (including mine) focused on the disastrous state of vocational education in Australia generally. Despite this, the Greens joined the LNP in a minority report which tried to defend the whole sorry process.

84 thoughts on “Where are the Greens going?

  1. @derrida derider

    Yes and no. Before the 2006 (not 2009) changes there was still cash back on excess franking credits, just not as much.

    The great irony of the government’s plan to cut the corporate tax rate is that this will reduce franking credits for everybody including reducing the cash back for domestic shareholders who pay zero or little tax. It is assuming to see ministers attack the Labor policy on dividend imputation when at the same time they are saying the Labor Party must support corporate tax cuts which will have the same effect on the same people, at least directionally. ( Of course it is always possible that ministers don’t understand the implications of their policy.)

  2. @Smith

    The great irony of the government’s plan to cut the corporate tax rate is that this will reduce franking credits for everybody including reducing the cash back for domestic shareholders who pay zero or little tax.”

    Yes, but presumably they will have full compensation because the gross dividend will be commensurately larger.

  3. @Smith

    A former Greens official, Grahame Bowland, has taken to Facebook to denounced Richard Di Natale’s purge of the plotters and the leakers in the Batman Greens who sabotaged their campaign.

    Even though I am unhappy, as many in NSW Greens are, with having a parliamentary party leader and with it being DiNatale, I have no particular problem with tossing out those who deliberately subverted our election campaign UNLESS (and this is important) their complaints of malfeasance (branchstacking, bullying) are demonstrably legitimate.

    I was listening to a now ex-Green from Darebin branch on Monday who was interviewed on the matter, and she strongly affirmed that the claims were unfounded and implausible on the face of it. She’s only one person of course but no credible organisation will tolerate within it those who deliberately subvert its mission.

    Some years ago. The Australian declared that it was determined to destroy our party. These folk have gone to the Murdoch Press attempting to destroy our candidate. There could scarcely be a clearer prima facie case for expulsion than that.

  4. @Fran Barlow

    Yes, but presumably they will have full compensation because the gross dividend will be commensurately larger.

    This depends on the companies’ dividend policies. They might keep the tax cut in the company and invest it. This could work out well for the shareholders, eventually.

    Or it could work out badly.

  5. @Fran Barlow

    These folk have gone to the Murdoch Press attempting to destroy our candidate

    But the Greens are all nicey nice collegial, unlike the major parties.

  6. @Smith

    We are. “Collegial” (in places where collegiality is relevant) implies respectful dealing, personal integrity, and commitment to the mission of the organisation for which you work. When people join The Greens, it is expected that this is how we will deal with each other even when we sharply disagree.

    It may well be that more relevant and reliable information will emerge which could cause me to change my mind, but at this very early stage it does seem as if Alex Bhathal’s detractors — frustrated at their failure to have the branch behave as they preferred, decided to sabotage the campaign by resort to the resources of the party’s enemies.

    If that’s what they did and without adequate ethical cause, then expulsion is the right course, even in a thoroughly inclusive, respectful and collegial party. No party can function effectively if its members don’t at a minimum, agree to accept with equanimity if not act in concert for things the party considers important.

    I would agree that it was unwise for RDN to fulminate about this in public, but that’s a separate matter.

  7. @Fran Barlow

    Well, as you say, the party does have some ex-CPA and ex-SPA. Sabotage, betrayals, accusations, expulsions – it must seem like the good old days to them.

  8. @Smith

    Well, as you say, the party does have some ex-CPA and ex-SPA. Sabotage, betrayals, accusations, expulsions – it must seem like the good old days to them.

    Richard Di Natale has never been in any of those. AIUI, in or about 1992 — when The Australian Greens was formed, he was voting Liberal.

    It may be a coincidence, but those of leftist background tend in my experience to be amongst the most robust enemies of Stalinist conduct. We know how that goes.

  9. @Smith Changes were in 2006 (announced) or 2007 (took effect) under Howard/Costello, not 2009. Previously, changes would have helped low to middle income self-funded retirees as you say.

    @Ernestine Gross There are substantive problems beyond your ‘minor’ ‘irrelevant’ incorrect numbers. Franking credits don’t subtract from taxable income in the way you describe. As a result, your conclusion that there is ‘no change under the Keating system’ is wrong in all three cases, as are several of your other conclusions. (Which is not to say I oppose the policy or think the SMH framing is fair/balanced.)

    @Smith Mostly correct, but the company rate is 30% for large companies, and is/will be 27.5% for ‘small to medium’ companies. Totally fair to use 30% rate as bulk of FCs will be from such companies (and the computation is easier!).

  10. @EconoManOz

    You have totally missed to read or understand the question by Fran to which I provided an answer.

    You write: “As a result, your conclusion that there is ‘no change under the Keating system’ is wrong in all three cases.”

    This is not my conclusion nor have I written by mistake what you wrongly and ascribe to me.

    Go back to step one and come back only if you actually have something to say that isn’t a falsehood.

    Incidentally, I don’t care if you oppose the policy proposal or not.

  11. I was an active in the Darebin Greens branch in the early 2000s but I let my membership lapse and took out an ALP membership a couple years back. I can only recall one active Greens member in my Branch who was ever a member of any socialist party and I do not recall anyone ever talking about socialism.

    I recall plenty of bickering in the Branch about all the usual things, such as folk volunteering to do something then not doing it, boring meetings and of course the personality based squabbles that happen in all groups.

    As to the Left – Right distinction, my view is that, generally speaking, Left parties seek a more equitable distribution of wealth, status and power whereas Right parties oppose same.

    Clearly Ged Kearney is on the Left of politics because she favours a more equitable distribution of power between capital and labour, men and women and a fairer distribution of wealth/income through the welfare system.

    In classifying Kearney as centre-right, Fran Barlow is mirroring the Modus Operandi of those partisans on the right, who classify Malcolm Turnbull as centre-left (I see this all the time on right wing blogs). That may be OK for partisan polemic but it is not a serious or meaningful analysis.

    As to s-cialism, its *praxis* has always concentrated power in the hands of the few and occasioned tyranny for the many. At least for the present, it does not offer a way forward. I would like to hope that the failure of socialism is because it has been deployed before the appropriate ripening of productive forces. I hold out hope that technological advancement will in the not to distant future make socialism workable and indeed superior to capitalism. We’ll see.

  12. @Hugo

    I didn’t classify Kearney as “centre right”. Feeney, like Shorten, is centre right. Personally, Kearney seems to be left of centre. I said she was a better advocate for RW policies — which is the best description of the current ALP consensus.

    I agree with you that the jurisdictions that are usually identified historically as ‘socialist’ did come well before the productive forces permitted anything that could supprt inclysive governance leave aside socialism. A better descriptor would be communitarian autarky or similar. For the moment, we are indeed stuck with variants of capitalism because inclusive societies — and socialism if it is to emerge — must be built through the conscious and collaborative agency of working folk and their allies. It’s as much a political challenge as a technological one. Labor is a centre-right party because it asserts that this js all there can be, and is framed purely around a customer service model of adaptation to what already exists and js committed to protecting existing privilege.

    I hope that clarifies.

  13. @Hugo

    I was an active in the Darebin Greens branch in the early 2000s […] I recall plenty of bickering in the Branch about all the usual things, such as folk volunteering to do something then not doing it, boring meetings and of course the personality based squabbles that happen in all groups.

    It has been regularly pointed out that Batman had at this time been the safest ALP seat in the country. We Greens are, by definition, inter alia radical optimists but unless you are also enormously resiliant doing greens activism in such a setting is testing. Feeling powerless, irrelevant and at risk of abuse tests all but the most resilient, so your description of branch meetings at the time doesn’t sound odd.

    That Alex Bhathal contested every election, campsigning hard with whoever would support her from 2001, attests to her resilience. That this is now a marginal seat and the branch is now in good measure down to folk like her, and those who have supported her from those early days. I have never met her, and perhaps she and I would not be on the same page but knowing what it’s like to do that, I respect her and those around her. It was this as much as my party solidarity that moved my disappointment at the result and my disgust at those who sandbagged the campaign.

    I don’t know the branch, and perhaps they don’t talk much of socialism — it is Victoria not NSW. We are a centre left party even in Victoria though.

  14. @Ernestine Gross I’ve read the back context:Fran asked for an explanation of the ‘the actual structure of the transfers pre- and post- the Howard amendments’. The distinction you’re drawing is either elusive or not relevant in my opinion

    You specifically say the following in #39:
    In relation to Case 1, and relative to Costello system: “No change under the Keating system”. That is wrong. If I’m misinterpreting that that is a conclusion, frankly, I’m not sure you can blame me.
    In relation to Case 2: “both the Costello and the Keating system have identical solutions.” Wrong. Same as above.

    In the following, step 4 (Minus franking credits -$1800) is wrong under both systems

    Case 1: Wage income $18600 p.a., portfolio of shares paying fully franked dividends of $4200 p.a. The corporate tax rate = 30% and the lowest marginal tax rate is 15%.
    Costello system:
    Income from wages $18600 (tax free amount for income tax purposes)
    Fully franked dividends$ 6000 ( grossing up of dividends received: $4200/.7)
    Taxable income before imputation$24600
    Minus franking credits-$1800
    Taxable income $22800
    Minus Tax payable (22800-18600)*.15 $ 630
    After tax income $22170
    No change under the Keating system.

    Finally, your explanation (#39) contained numerous “falsehoods” (basic tax errors), which you brushed off as irrelevant – yet you seem particularly keen to focus on other’s. Please point out any specific falsehood you are accusing me of. (Re: using the word ‘conclusion’, see above.)

  15. @EconoManOz

    1. Fran’s question @16, which you have quoted, follows from my post @14. In my post @39, I made precise how I interpret her question @16 (this was necessary to make the task manageable in a blog post).
    2. You, like Smith, criticise my parameter values (Smith was even wrong on the corporate tax rate). Your criticism would be valid if someone would have asked me to use the current exact parameter values or if I would use my calculations for the purpose of making projections as to the total tax revenue for the government involved. But this is not the case. Hence I could have chosen from a large set of parameter values without affecting the conclusion as to what is the critical difference between ‘losing dividends’ versus ‘losing imputation credits’ and the difference between the tax paid on wage income and tax paid on income from dividends (a point often ignored in discussions).
    3. You assert that my calculation in Case 1 is wrong but you don’t say why.
    4. You assert that my calculation in Case 2 is wrong but you don’t say why.
    5. You now ignore my Case 3 (which shows the difference in the systems), while in your post @60, you wrote: “As a result, your conclusion that there is ‘no change under the Keating system’ is wrong in all three cases.” This is false.

    I trust this clarifies matters for you.

  16. @Ernestine Gross

    1. Thanks. Yes, I followed that. I interpret Fran as asking how the two systems differ in terms of ‘transfers’ – which to me would cover tax payable and any tax refunds. Is your interpretation different?

    2. Personally, I think that when someone is asking how a system works, such as tax technical issues, reasonable accuracy generally helps with the illustration. You might have a different view – which is fine, transparent assumptions/parameters is sufficient – but me stating my opinion isn’t a ‘falsehood’. (My comment #60 also noted that re Smith and rates, and endorsed your chosen company tax rate.)

    3 & 4. I told you why/where your calculations were wrong, which affects all 3 cases. Step 4 – subtracting franking credits from taxable income (before then calculating tax payable) – is wrong. In fact, everything after Step 2 is wrong. (Taxable income ‘with’ imputation is $24,600)

    5. Case 3 is also wrong, for the same core reason, and also extremely confusing (confused?). It incorrectly shows a difference in the systems (there is a difference, but not how you calculate it). My phrasing was loose, so apologies for that.

  17. @EconoManOz

    1. I did exactly that for the specific case where wage income is the only income beside dividends.

    I wrote: “The difference between the tax free amount and the taxable income amount, namely $400, is the imputation credit that is foregone under the proposed Keating system. It is refunded by the ATO (the so-called dividend imputation cash refund) under the Costello system.”

    2. You forgot the question I answered. It is different from what you write. Yes, you did correct Smith on the current corporate tax rate on a post somewhere. You seem to have forgotten exactly what I identified as a falsehood. See my item 5 above and below.

    3&4. You mean your habit of writing down something is different from mine. There is no unique way of writing down and labeling the logical steps in an analysis of two systems. The conclusion regarding the problem is unchanged.

    5. I accept your apology.

    I do believe the matter is settled now. I don’t regret the exchange because readers and commenters on blog posts have different educational or practical backgrounds and words often get in the way.

  18. @Ernestine Gross
    1. I can’t tell what point you are trying to make, or if you are making a point of substance.
    2. IMO you are playing pedantic word games here, and/or being intentionally obtuse.
    3&4. My point is not logical order of steps. You are making a fundamental error on how franking credits work (the tax steps are in fact crucial and germane) and hence reaching an incorrect outcome. In all 3 of your cases, the financial outcome for the taxpayer is different under the two systems.

    A gratuitous observation: You might be interested to know that your posts come across as an odd mix of defensive, abrasive and patronising – the last being particularly amusing since you make key errors (and refuse to acknowledge them).

  19. Fran said “Labor is a centre-right party because it asserts that this js all there can be, and is framed purely around a customer service model of adaptation to what already exists and js committed to protecting existing privilege.”

    I think the reality is a little more nuanced than this. Many ALP members, such as myself, as well as many of the parliamentary members, would like to nudge Australia much further to the Left. However we have a frustatingly conservative electorate and much of the working class (my old man included) believes what it reads in the Murdoch rags.

    You say the ALP is “committed to protecting existing privilege”. Shorten’s planned tax changes that would remove some of the privilege from wealthy self-funded retirees shows your claim is untrue. The kickback from the Murdoch Empire also shows just how hard it is to take on privilege in this country.

    Also note the ALP’s mooted changes to the Fair Work Act 2009 aimed at increasing the power of labour relative to capital.

  20. @EconoManOz

    You repeat your assertion that I have made ‘fundamental errors’ and my conclusions are wrong.

    Not convincing, EconoManOz.

    You have failed to provide your solution to the original question and the stated assumptions about low wage income (excluding tax minimisation strategies), amount of fully franked dividends, tax free amount, corporate tax rate and minimum income tax rate. Your task is to show the difference between two dividend imputation systems, one labelled Keating (original) and the other one Costello (since about 2000) for ease of reference.

  21. @Ernestine Gross

    Since you almost acknowledged you might have been wrong, challenge accepted. Corrected example for ‘Case 1’ below (using your tax parameters for ease of comparison). You could apply the same correction to the other cases if you want.

    Under the Costello system:
    Income from wages: $18600 (tax free amount for income tax purposes)
    Fully franked dividends: $ 4,200 cash (with imputed franking credits of $1800)
    Taxable income before imputation: $22800
    Taxable income with imputation: $24600

    Tax payable (24600-18600)*.15 $ 900
    Value of franking credits $ (1800)
    Net tax payable/(refund) $ (900)

    After tax income (or cash outcome): $23,700

    Under the Keating system – all the same except until:
    Tax payable (24600-18600)*.15 $ 900
    Value of franking credit $ (1800)
    Net tax payable/(refund) $ 0

    After tax income (or cash outcome): $22,800

    Difference: $900 (funnily enough, the same as the ‘refund’ under Costello system).

    Note: This is obviously a simplified example, ignoring other income, deductions, offsets, medicare levy.

  22. @EconoManOz

    Well, finally I guessed the right approach to elicit why you did not agree with my illustrative answer to the original question by Fran. I wanted clarification because you accepted my argument about the parameter values. Hence there must be something else – what is it?

    I thank you for your reply.

    The difference in ‘cash outcomes’ turns on how taxable income is calculated. (Aha, the term ‘imputation’!)

  23. Why not use sortition? You have advocated it before. It seems to me that the Greens should endorse candidates by sortition from eligible, competent and willing members of the branch. This would help move matters away from personal ambition and personal dynasties. People who are mainly self-ambitious will not be attracted to such a party and that would be a good thing.

  24. @Ikonoclast

    It’s a reasonable idea but I doubt in this case it would have made a difference. The disaffected minority were not going to accept any result that didn’t suit them.

    In the case of the 2018 ballot for the preselection there was no other candidate and the 19 who said ‘seek other candidate’ clearly had no ody specific in mind. Sortition coulldn’t fix that.

    In almost every seat in the country, there is one obvious candidate but occasionally either nobody wants to do it, or none of those who might are qualified (see s44 on this — many of us are public servants) but otherwise it’s all very amicable, in part because you’re certain you won’t win and you are doing the party branch a favour by waving the flag.

    Batman was an exception because there was a good chance the candidate would win — especially if it was Alex because everyone knew her or at least of her — she’d campaigned there for nearly two decades — most of the time when there really was no prospect of winning.

    That earns you respect within the branch and beyond. Most people you meet in The Greens are decent folk, largely because there is no reason to be a Green except to stand up for principle, but sadly, as this episode shows, we are not entirely free of folk who are self-seeking and vindictive. Thst is one of the problems of success I suppose. If you become relevant, you are going to attract more of the wrong kind of people. We are going to have to think harder on how we manage to protect our integrity as we grow.

  25. @derrida derider Couple or more of points;

    it was generally understood that if the retiree put enough away they could live off their ‘nest egg’ and not be a burden on the govt (that was the BIG argument for super)

    it was also understood that when the people retire their pension was not regarded as income and was therefore tax free,

    company tax is tax prepaid on behalf of its shareholders. The principle behind imputation was to adjust any tax owed by the taxpayer to the correct amount.

    If the shareholder is a superfund in accumulation mode there is a tax on contributions but not on earnings so there is no need to prepay tax.

    If the shareholder is a superfund in pension mode there is not tax on earnings so there is no need to prepay tax.

    Similarly if the member of a superfund is retired and on a pension their is no tax obligation.

    The system became distorted when, for a time, there was no limit on the size of non concessional contribution to SMSFs. Massive transfers were made from trust to SMSFs.

  26. @Fran Barlow

    I take your points. The pragmatic reality is that Greens and Socialists will never gain much traction until capitalism commences the process of extensive collapse which ineluctably follows from its unsustainable nature. A wave cannot be caught until it has nearly crested.

    The point is to be ready for the wave front of the collapse. Being ready means having a strategic plan ready. The current important work is the theoretical work necessary to develop a strategic plan to survive and manage the collapse in a green and socialist manner.

    I think left intellectuals can give themselves the permission to be theoretical rather than involved in praxis at this point. It is still the time to think and develop plans. It is not yet the time to act.

    The dynamics of appeals to the masses for action will change greatly as the collapse manifests. The current situation in the West is of majority incredulity or complacency (about the criticality of the sustainability issue) plus a few who intellectually understand it but still do not viscerally feel any of its effects. The eventual situation will be one where the masses viscerally feel the pain and mortally dangerous nature of the collapse crisis every day. There’s a world of difference between these two modes of existence. Cries for change and willingness to act will be quite transformed at that point.

  27. @Ikonoclast

    You need to read some Marx. He said that capitalism would collapse because the profit rate would fall. Well, the profit rate ain’t falling. If anything the tendency is for the profit rate to go up. It certainly has been for 30 years.

    Dream on, Iko. Capitalism is not going anywhere, not in your or my lifetime, or for a long time after that. Feudalism lasted 700 years. Capitalism in comparison is in the prime of life.

  28. @Smith
    Demographics say that with a rapidly declining pool of consumers (those aged 25 to 55) and a rapidly increasing pool of dependents (the aged over 65) on a global scale, Capitalism has a problem……..

  29. @Smith

    Crisis theory is a complicated arena. Crude Marxism takes TRPF (Tendency of the Rate of Profit to Fall) as a universal “Law” applicable at all stages of capitalism and in all geographic locales. Marx was anything but a crude thinker. His paragraphs commonly called “The Fragment on Machines” from The Grundrisse can be read as a prediction that the labor theory of value itself would eventually be obsoleted by automation. Thus, whilst the Labour Theory of Value was substantially valid (a reasonable approximation) for the era of crude industrial capitalism, it would cease to be so in an era of complete automation. However, even at the present time, we are a long way from a global economy of complete automation so TRPF and its counter-tendencies still apply to some considerable extent. See “Internal contradictions of capital accumulation” on Wikipedia.

    What tends to be forgotten by some is that capitalism has external contradictions as well as internal contradictions. Marx and Engels did not forget these contradictions and referred to the “metabolic rift” between man and nature. These external contradictions can be summarised now by the phrase “environmental unsustainability”. Capitalism could conceivably solve its internal contradictions by further progress to completely automated production. Human labour would only be minimally necessary for production. Human intellectual labour, at the highest end of scientific and technical research, would likely remain necessary for further scientific and technical progress. Voluntary human labor would go into social, cultural, recreational, craft and artistic endeavours. This would be a vision of a kind of socialist utopia IF ownership of automatic production and its products was evenly distributed.

    However, capitalism’s external contradictions with the environment are now seriously manifesting themselves well before progress to the above hypothetical socialist utopia could be realised. We are in the situation where the internal and external contradictions and limitations of capitalism will play out via complex interactions. Smooth progress to a socialist utopia or to a capitalist utopia, if either could be possible, can now be seen to be impossible to achieve in practice from this point. It was still possible, in theory, at some point in the past before excessive damage had been done to the environment and before excessive investment in the wrong technologies had been made. Now, it is not possible except perhaps after a quasi-managed hard-landing of the crash of capitalism (the crash being inevitable now) followed by a long period of socialist reconstruction at a much lower level of global population and with much constrained resources and technological options.

  30. @Ikonoclast

    You sound just like one of those fire and brimstone eternal damnation preachers. Your theology is just like their’s, with its promise of punishment for sins, except you are promising Hell on Earth. How times change. The old comms used to preach Heaven on Earth. That, for all its illusions, was a doctrine of hope.

    You need to lighten up. She’ll be right, mate.

  31. Ikonoclast gets it. there is whole dumpster load of stuff provided from one contributor that is way too close to McCarthyism to raise anything contempt from this observer.

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