The PM ticks many Labor boxes, with a few key misses
Her social changes are sound, unless you are jobless or a sole parent.
Her social changes are sound, unless you are jobless or a sole parent. HAVING observed Julia Gillard's government for more than a year, I must say she is hard to pigeon-hole. Is the woman who changed the government's mantra from "working families" to "hard-working families" a typical Labor prime minister, as many business critics of Fair Work believe, or a pale imitation of a Liberal leader, as her willingness to sell uranium to India and her opposition to same-sex marriage lead many critics on the left to conclude? Does she stand up to powerful industries or kowtow to them?You can make a surprisingly long list of social changes you would expect the Labor heartland to be pretty happy about (even though it seems far from enamoured of its first female federal leader).The introduction of paid parental leave (which, admittedly, occurred under Kevin Rudd) is an important step in reforming the institutions of the labour market to make them more suited to the needs of the better-educated sex.Equal pay for women in the community sector remedies an age-old injustice.Plain packaging for cigarettes is preventive-health reform that leads the world. The international tobacco industry has few friends but very deep pockets to fight the Gillard government with advertising and legal action.But global tobacco has a fraction of the power the licensed clubs have in opposing compulsory pre-commitment for people using poker machines. Although this issue was forced on Gillard by her lack of a majority, she has yet to waver in her determination to get it passed by Parliament.Rudd should get most credit for several other social improvements: the national homeless strategy, the national rental affordability scheme (tax breaks for investors in affordable housing) and the first injection of funds into social housing in many a long day.Rudd started, but Gillard has continued, Labor's many measures to pare back John Howard's middle-class welfare by declaring a family on $150,000 a year to be not rich, but comfortable.And Gillard has defied the powerful private health insurance industry by continuing Rudd's efforts to get means-testing of the health insurance tax rebate approved by Parliament.Gillard has committed herself to making the introduction of a national disability insurance scheme her top social reform in the rest of her term. By providing help to people who inherit their disability or acquire it from an accident around the home, this would fill a longstanding gap in our social safety net. It would be a historic advance.But against all that, there are a couple of areas where Gillard's performance has been anything but what you would expect from Labor.The first is her education "reforms" copied from the American Republican Party. Trying to "incentivate" school teachers as though they were as money-hungry as chief executives merely insults their professionalism. Providing parents with greater information about the performance of schools is fine, but doing so before summoning the courage to correct the bias in federal school funding in favour of well-off schools risks hanging under-resourced public schools out to dry.The tax concessions attached to superannuation have long been heavily biased in favour of high-income earners like yours truly. To call them middle-class welfare would be an understatement.Rather than using the opportunity provided by the decision to phase up compulsory employee contributions from 9 per cent to 12 per cent of salary (a multibillion-dollar gift to the financial services industry) to shift the tax benefit from high to middle and low-income earners, the government will merely use some of the revenue from the mining tax to correct the position where workers on the 15 per cent income tax rate gain NO concession on their contributions.But the most puzzling and indefensible aspect of Rudd policy continued by Gillard is the mistreatment of sole parents and, more so, people on unemployment benefits. Both groups were explicitly excluded from the over-generous pension increase in 2009.For many years, age and invalid pensions have been indexed to average earnings, meaning they rise faster than inflation, whereas the dole has been indexed only to inflation. In consequence, the dole paid to single adults is now less than two-thirds of the single pension, a shortfall of $131 a week.It is also just 45 per cent of the after-tax minimum wage meaning there is little risk its generosity is deterring people from taking a job.One defence of low unemployment benefits is that most people are not on them for long. But more than half the people on the dole have been on it for a year or more. And the government is also limiting the assistance it gives the long-term unemployed to help them find a job.This discrimination against the unemployed is now so extreme that the Henry tax review recommended it be corrected. And even the Business Council agrees.Perhaps Gillard's lack of sympathy for the unemployed arises because, being unable to find a job, they are not hard-working.
Want access to our latest research and new buy ideas?
Start a free 15 day trial and gain access to our research, recommendations and market-beating model portfolios.Sign up for free