The IRD’s significant research proves that the rich (on average) are taxed on their income at less than half the rate paid by ordinary wage and salary earners. They also pay a far smaller proportion of their income in GST. Even worse, the research demonstrates the snowballing nature of wealth. Only if you’re wealthy can you invest your income in the barely-taxed capital gains that make you even wealthier, while also hiding the income in trusts and shell companies and offshore havens. All of this not only compounds the injustice, but widens the income gap even further.
Naturally the parties of privilege – ACT and National – have been in denial about the implications of the IRD study. Given the wealth being generated by unrealised gains, it is absurd to argue that such wealth exists only on paper. As an aside, this premise would actually make a case for death duties/estate tax to help to level the playing field, but – of course – taxes on inheritance were scrapped in 1993.
Yesterday, National party leader Christoper Luxon tried to claim that the IRD study was all about the Labour government wastefully pumping up the value of assets. Huh? Luxon then called for more tax cuts that (on past performance) would only make the problem detected by the IRD even worse.
Since ACT ignores the existence of privilege (and the advantages that pre-existing wealth confers) it came as no surprise yesterday that ACT was shifting the goalposts by talking about what share of the overall tax take is paid by the wealthy.
Yet that’s exactly what you would expect in even a mildly progressive tax system, and it still doesn’t address the injustice revealed in the IRD findings. The wealthy pay a higher share of the tax take because they are wealthier – but what the IRD research is talking about is how much of their overall income is left over, virtually untaxed.
ACT’s stated policy would put rich and poor alike on a 17% flat tax starting line, and then let the richest prevail. In that respect, ACT’s message to the poor doesn’t go much beyond: “Make sure you get yourself born into a wealthy family.”
For over a year now, Revenue Minister David Parker has signalled that he would like to address the unfairness. Eventually. Yet to date, the Hipkins government has said little more than “We told you before that the tax system was unfair” while being disinclined to do anything about it any time soon. Raising taxes – even on the already rich and privileged – seems beyond the political nerve of this centre-left government, despite its parliamentary majority.
Finally, Labour continues to be unsympathetic to the Green Party’s call for a wealth tax, which the IRD data virtually screams out for. Chances are there will be lots of head-shaking and foot shuffling before the IRD study is quietly buried in the political equivalent of Tutankhamun’s tomb. Later generations may disinter the IRD study, and gaze on it in wonder. Such riches, amid such poverty.
The pressure to spend on the military
We’ve seen this movie before. Kid grows up in the shadow of a bigger, more charismatic older brother, and watches that older bro fall in with the wrong crowd, which is under the sway of the Big Man in town. Question: will the younger brother follow the same path, or will he stay true to the moral code that his Momma taught him?
That’s pretty much the story of New Zealand’s attempt to hold onto its independent foreign
policy, despite the unrelenting pressure from Australia to play an “interoperable” role to the AUKUS military alliance. On Monday, Australia published its latest Defence Strategic Review, a blueprint for how Australia can best “defend” its own interests, by developing (among other things) the missile capability to attack China from further offshore.
Hmm. Will the West’s expanding arsenal and its regular displays of military force induce China to bow its head and accept that only the US has a legitimate right to pursue its interests in every last corner of the globe? Probably not. It seems more likely that these upgrades of an attack force that has the express purpose of hitting more targets located ever deeper within China’s borders might provoke Beijing into fighting its bully. Especially since the West is talking and behaving as if it sees armed conflict as being inevitable, sometime within the next ten years. We’ve all seen that movie, too.
Living (and dying) in the missile age
Australia’s 112 page Defence Strategic Review outlines a “re-posture” whereby Australia will deliberately shift its focus from defending the homeland, to projecting power far afield. “In the contemporary strategic era, we cannot rely on geography or warning time … more countries are able to project combat power across greater ranges in all five domains: maritime, land, air, space and cyber. ” according to the Review.
China is singled out as the prime source of threat. “China’s military build-up is now the largest and most ambitious of any country since the end of the Second World War …” As a nation, the Review claims, “Australia [faces] the prospect of major conflict in the region that directly threatens our national interest.”
Really? This reads more like a self-fulfilling prophecy. In reality, China has nothing like the military capability – let alone the political will – to militarily threaten Australia’s interests, or those of the United States or Britain or New Zealand, or the smaller Pacific nation states. As this detailed assessment concludes, China’s military is not in the same league as the United States, let alone of a US-led coalition of the West’s traditional allies. Here are some of the reasons why:
The United States has spent $19 trillion on its military since the end of the Cold War. This spending is $16 trillion more than China spent and nearly as much as the rest of the world’s combined expenditure during the same period.5
The US spent vastly more on its military over the past 30 years. This has enabled it to develop and maintain several massive military bases within striking range of China. From these bases it can deploy far more sophisticated weaponry. Crucially, US troops and their commanders also have had far more extensive real-time combat experience:
The United States has been fighting conventional and unconventional wars on every continent. The United States has war-fighting experience in World War II, the Korean War, the Vietnam War, Panama, Grenada, the First Gulf War, Kosovo, Iraq, and Afghanistan. The US military can be deployed at short notice anywhere on Earth. The United States maintains strategic peace through military bases and defense alliances in Europe, the Middle East, and Asia. In the post–Cold War world, the United States achieved dominance through Air /Land Battle. Now the United States is shifting its military assets to the Indo-Pacific as it prepares for a Sea/Air Battle.
Given that any war in the Indo-Pacific region with China would (initially at least) involve sea/air conflict, the same vast gap in capability applies there as well:
The US Navy (USN) has established maritime supremacy. It operates 11 carrier groups. The United States is in a familiar terrain in the Indo-Pacific, having fought during World War II, the Korean War, and the Vietnam War. INDOPACOM accounts for 60 percent of USN, 55 percent of the US Army, and 40 percent of US Marine Corps.
To repeat: The US can bring 11 aircraft carrier groups armed with formidable airborne capabilities to the battlefield. China, in stark contrast, has only three carriers and reportedly, it has only very limited ability to train its pilots on how to fly planes off of any of them.
The Iraq Lesson
Keep in mind that, at the time of the First Gulf War, Iraq had the fourth-largest military in the world, full of seasoned veterans from the 1980s war with Iran. Yet the Iraqi military was quickly decimated by the United States forces. Currently, China is estimated to be the world’s fifth largest military power, behind the US, Russia, Japan and France. Beijing is well aware of what happened to Saddam Hussein’s military during the First Gulf War. Also, apart from a few border skirmishes with India and Vietnam, China’s forces have had no modern combat experience whatsoever:
In a full-scale war, China would be decimated by the nuclear and conventionally superior US military. China has not dealt with any external crisis, nor has fought full-scale wars in modern history. A technological gap exists between the United States and China. They definitely are not in the same league.
Prepping For War
In other words, we don’t face a credible military threat from China either now, or in the foreseeable future. In the meantime, China’s genocidal actions against the Uighurs and its suppression of human rights, plus the doubts expressed this week by China’s European envoy Lu Shaye as to whether the former Soviet republics really are genuine countries all serve to make China its own worst enemy on the world stage.
This doesn’t alter the fact that the West’s military-industrial complex is whipping up public fears about China by playing on vulnerabilities that barely exist. If anything, China is far more militarily vulnerable “in the missile age” than we are. Basically, China has far more credible military reasons to fear us, than we have to fear China.
Because the West already possesses more than enough of a military edge, there is therefore, no rational justification for a vast increase in our defence spending in order to further intimidate China from taking the kind of military adventures that it knows would be suicidal for now, and in the future.
Regardless, our military boffins routinely talk up the threat posed by China to our crucial trade routes in the South China Sea. However, China’s economy is equally, if not more dependent, on maintaining those same trade flows across the Indo-Pacific region. Why would China cut off the trade lifelines on which its own economic prosperity currently depends?
As for China’s rhetoric aimed at Taiwan, any serious invasion attempt would be just as suicidal. As the Australian academic John Quiggin recently pointed out, “To achieve the kind of numerical superiority seen on D-Day, China would need to land nearly a million men in the first days of an invasion.”
China has no ability to mount such a force, and it would lack the advantage of surprise that the Allies had in Normandy:
With modern technology, any attack would be detected before the ships left port. They would have to travel 170 kilometres across open water, within range of air attack and anti-ship missiles for the entire voyage. On arriving, they would have a choice of eight small beaches, all of which have been fortified over many decades. Assuming the troops somehow got ashore, they would deal with terrain that makes the “bocage” [i.e. Normandy’s hedgerows and small forests] look like an open plain.
Currently, the Chinese Navy has only about 70 operational landing craft. As Quiggin concludes:
Any attempt at grinding down defences with a preliminary bombing campaign would be doomed to failure. Taiwan’s air and missile forces are dug deep into mountains… A variety of other strategies (decapitation attacks, blockades and so on) have also been canvassed. All were tried by the Russians in Ukraine and all failed.
What Quiggin is getting at here is that a concerted campaign is being waged by sections of the Aussie media (Fairfax and Murdock alike) with the aim of scaring the pants off the Australian public about the imminent threat from China in the Pacific, in the South China Sea and with regard to Taiwan.
The aim of this campaign is to justify a sky-high level of new defence spending by the Australian government. It is intended to send us scuttling into the arms of AUKUS for protection. New Zealand is at risk of being carted along by the same momentum into authorising increases in our own defence spending that we don’t need, and that we can’t afford.
All that the West’s war-mongering and the forward projection of its military powers will achieve will be to increase the risk that a war in the Indo-Pacific might start by accident. Where is the New Zealand peace movement now that we need it, just as much as we did back in the early 1980s?
Footnote: The Australian Strategic Defence Review will enable the Australian army to expand its missile strike range from the current 40 kilometre range – after billions of dollars in spending – to 500 kilometres. Why? Because it can. Apparently, as the ABC reports:
There will be immediate investment in [nuclear powered and potentially nuclear armed] submarines, developing long-range missile capability, upgrading northern base operations, lifting capacity to rapidly integrate new technologies, growing the defence workforce and deepening partnerships in the Indo-Pacific.
To an outsider, the lack of independence in this process is striking. For example, and as the ABC also reports: “The future shape of Australia’s naval fleet will be decided later this year in a “short, sharp” review to be led by US Navy Vice Admiral William H Hilarides.” Huh? So a senior American naval commander will be telling Australia what its Navy needs to buy from US arms dealers to get Australia up to speed with US strategic priorities in the Indo-Pacific. Neat. But very weird in any national sovereignty sense.
Footnote Two: One of the fig leaves regularly used to justify New Zealand’s defence spending is that hey, this stuff can also be useful for humanitarian relief here at home, and in the Pacific. PM Chris Hipkins was hammering this point again yesterday:
The New Zealand Defence Force over time has a number of different roles and defence in the traditional military sense is only one of them. We also need to have the capability to respond to significant natural disasters, not just in New Zealand, but across the Pacific,” Hipkins said.
Leave aside that, if you’re doing cyclone relief work or trying to find a sailor lost at sea, you don’t really need $3 billion worth of Poseidon aircraft jammed to the gills with highly expensive anti-submarine detection gear. There are better, cheaper, and purpose built ways of doing disaster relief work.
More to the point, the Australian Strategic Review actively disparages the use of defence forces for humanitarian relief. The chapter on climate change (p 40-41) makes it clear that doing disaster relief at home or in the Pacific should be the ADF’s very lowest priority. That’s because the ADF indicates that it needs to spend the money on the hard geo-strategic priorities, and not on this girly stuff related to climate change mitigation. That’s maybe why at chapter 5, para 5 we find this:
Defence must be the force of last resort for domestic aid to the civil community. This is critical, given the urgent geo-strategic risk that the nation faces and the need to lift ADF to be in a position to respond to the regional contingencies.
Got it? China, and not climate change, poses the immediate risk to Australia and the Pacific, and China is Canberra’s spending priority. Suck it up, Pacific Forum.
Footnote Three: New Zealand does rate a mention, but interestingly this is not as part of the forward projection planning for the “missile age.” At paragraph 6: 8 ( p47) of the Aussie Strategic Defence Review, we find this:
The Pacific is critical to the security of Australia and the region.. Australia’s positive work in development assistance, disaster response and multilateralism remains essential. New Zealand is a key partner for Australia in the region.
Note how, in that last sentence, New Zealand is described as being key “for” Australia, and not “with” it. A useful reminder that we’re seen by the Aussies as their deputy in the Pacific, and not as their equal partner.
Footnote Four: In the coming months, Act and National parties will be banging on about the “need” for New Zealand to lift its defence spending to at least 2% of GDP, regardless of the lack of any credible reason for doing so. For Labour, it has to thread the needle. The immediate problem facing NZDF is to stem the outflow of its trained, uniformed staff. It doesn’t really need fancier weapons to combat a non-existent offshore threat. Yet because our ANZAC buddies are getting high on their own supply over the Chinas threat, we have to do something, while still frantically signalling to our largest trading partner that we’re not about to join the AUKUS cavalry that’s currently galloping in their direction.
Ultimately… And because the NZDF has always been part of a job creation scheme for Australians, we’ll probably promise Canberra that we will buy some new ANZAC frigates to be built by Aussie workers at the new and refurbished shipyards envisaged by their Strategic Defence Review.
No matter that in the missile age, a guy with a launcher mounted on a truck could probably take out those wildly expensive frigates in a flash, if things ever did get serious. Defence spending is mainly about keeping up diplomatic appearances. It is not about making us any safer.
On the sunny side of life
For people who remember the name Judy Garland, this tends to be either the child star of The Wizard of Oz, or the tragic, still beloved ruin she later became. Yet in this radiant clip from the 1946 film Til The Clouds Roll By, a 23 year old and newly pregnant Garland sings “Look For the Silver Lining” and conveys all of the beauty, charisma and talent that the Judy Garland legend was based on.
Footnote: There seems to be a curse attached to this song. In successive generations the artists who have held this song most dear – Judy Garland, Chet Baker and Alex Chilton – all saw their careers (and their personal lives) crash and burn. Garland died at 47, Baker at 58, and Chilton at 52.