Tag Archives: Labor

Australia’s Dangerous Myth of ‘Taxpayer Money’

  • This is a remix of the article by Raul Carrillo & Jesse Myerson for an Australian audience. The links are different (most, but not all). The original can be seen here.
There is no such thing as public money, only taxpayer money.” — Margaret Thatcher, 1983

“It’s all taxpayer money, it’s all debt, and it’s got to be paid back,” Prime Minister Scott Morrison speaking about the end of JobSeeker and JobKeeper COVID support scheme.

Australians would agree that taxpayers’ money can’t be used endlessly to run the Australian economy,” the Prime Minister told reporters in central Queensland on Thursday.

The Prime Minister by using the “taxpayer money” frame, they were spreading, however unwittingly (perhaps dog-whistling), a racist, sexist, classist myth.

Although most of us pay taxes of some kind, every time we say “taxpayer money” we prolong the illusion that society depends on certain kinds of people so we can have nice things.

Delton Clark: Transgender Aboriginal Sistagal
Delton Clark: Transgender Aboriginal Sistagal

One quick exercise shows why. Picture a “taxpayer.” What does one look like? A homeless Aboriginal trans teen? A Sudanese immigrant day labourer waiting to get on at the local abattoir?? A young mother trying to cobble together enough income to feed her family, while languishing on the Centrelink disability backlog? Unlikely. Let’s be honest: We know what sort of people “taxpayers” are supposed to be, and they’re not the ones we should be casting as the aggrieved parties.

Calling public money “taxpayer money” implicitly affirms that taxation is theft: If the money is taxpayers’ by right, what business does the government have using it for healthcare, jobs, or clean water? If we’re looking out for “taxpayers” and not the public as a whole, we are favouring wealthier groups over poorer ones—white people over Black people, men over women, Australian-born people over immigrants, and so forth. We’re hiding how the economic order relies not merely on the sacrifices of “taxpayers,” but the contributions of debtors, tenants, workers, and countless other actors. We’re perpetuating the politics behind the 1970s and 1980s demonization of “dole bludgers,” and Pauline Hanson’s One Nation movement—faux-populism that suggests the great majority rely on the wealthy, rather than vice-versa.

Not only is the “taxpayer money” frame damaging, but it doesn’t reflect how public spending actually works. A household or a business may have to stash or borrow money before it can spend any, but we are users of the currency. The Australian government, which is the issuer of the currency, works differently: Parliament votes to spend “new money” on something, then the Treasury and the Reserve Bank credit the relevant bank accounts, and…that’s it.

The government has spent new money into existence. Later, Parliament may tax “old money” back out of existence, but it isn’t collecting money in order to spend it. It’s “offsetting” earlier spending.  It may also “offset” spending in various other ways. Although Parliament taxes everyday people too heavily, calling public money “taxpayer money” makes as much sense as calling it “student debtor money” or “suspicious driver money.”

Look at a dollar bill, and you will see the signatures of its creators: not taxpayers, but the public officials who let the taxpayers hold it in the first place. Money doesn’t grow on rich people. We should heavily tax the billionaire class so we stop living in an oligarchy, but we don’t need private capital for public spending. The federal government doesn’t confiscate dollars and redistribute them. It uses its legal power to create and destroy them. 

Margaret Thatcher’s mantra was backwards: There is no such thing as “taxpayer money,” only public money. Modern money is a creature of the public, and we should use it for public power. We are all the public, and we each deserve a clear, equal say in how our economy and society work, no matter how much we each pay in taxes. It’s time to claim our democratic rights.

There is more than enough housing for the homeless, food for the hungry, and medicine for the sick. There is enough low carbon-emission technology to transform our energy system, quit exacerbating the climate crisis, and hire unemployed people all in one fell swoop. And there is more than enough public money to manage it all. 

Exposing hypocrisy may feel good, but it does little actual good. The people who primarily identify as “taxpayers” are Morrison, McCormack and the coalition’s base. Constantly repeating that their “taxpayer money” is being wasted only pressures them to violently defend their property, as the system encourages us to do under stress.

For over 40 years, Australian Laborhave chided the Liberal-National coalition for fiscal hypocrisy. What do they have to show for it? For over 40 years, the Coalition has controlled the conventional wisdom around budgets, successfully using the “taxpayer money” myth to force Labor to “starve the beast,” i.e., cut social spending to actually starve children, veterans, and many others. 

When we reinforce the right wing’s racist, sexist, classist frames in an attempt to expose hypocrisy, we lose. If instead, we root our politics in what is good and bad, just and unjust, moral and immoral, we can win.

Labor: Good Vision but Wrong Direction

By now you have probably noticed Australian Real Progressives has a rather heavy focus on jobs.  This is because 2 million Australians are looking for work or more hours.

Anthony Albanese

Labor party leader Anthony Albanese gave a great speech in a vision statement about jobs.

Labor will always be better on health and education than the Coalition. That’s true. We actually believe that education is about creating opportunity, not just entrenching privilege. And we believe that health should be accessible to anyone regardless of their income. You should get proper health care. So, that’s a given. Specific policies, we’ll work on. We obviously will work on, in terms of the funding, that will be available. If we don’t have the same level of revenue, you can’t have the same level of expenditure. That’s just a fact.

Translating:

We obviously will work on [specific policies] in terms of funding that will be available.  If we don’t have the same level of revenue, you can’t have the same level of expenditure.  That’s just a fact.

Labor is often better on education and health, however, Albanese is mistaken in how modern macroeconomics works.  Australian Real Progressives uses the Modern Macroeconomic Toolkit (MMT) and knows that revenue raised by the Australian government is little more than an accounting artefact.  It does not shape funding.

Albanese and active members of the Labor Party would do well to take a look at Five (5) Things to Read about MMT or if that is too much of an overload then – at least – How MMT is NOT printing money!

The very fact that the government imposes taxes has an automatic tendency to create high unemployment and unemployment leads to lack of access to services and bad behaviour.  This unemployment is a buffer stock and a feature of the economic system.  Should it be?

Albanese offers a solution:

One option would be to investigate the barriers to business offering fulltime employment.

Thankfully, he says that is one option.  I would very much like to know what the other options are as that sounds very much like microeconomic reform that insiders have been calling active labour market policy.  That is exactly what got us into this situation.

What we need is a much larger structural reform in the form of a Job Guarantee.  It will provide work for the underemployed, it will allow unemployed workers to transition into quality work and best of all it will operate as a buffer stock of employed people and act as an additional macroeconomic stabiliser.  It won’t fix all employment-related issues but it will go a long way to remedying many injustices caused by the current system.