Labor to Deliver Living Wage in Australia?

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The cost of living debate took a serious turn lately with the Labor Opposition Party declaring its intent to deliver a living wage for working people in Australia if it gains the 2019 election. Just what that means is not yet clear.

This is how this developing news is covered by some of the media such as the Sydney Morning Herald, the the ABC, and the Conversation. Also take a peek at the Guardian article. We are told Labor will ‘increase minimum wage’, reinstate ‘penalty rates’, deliver pay equity for women, tackle sub-standard labour hire and independent contracting practices.

Broadly Labor has made a strong case for wage enhancement for months, but has not put forward persuasive policy strategic measures to deliver a living wage for all working people.

Many of us support higher wages. But it is equally true that the nature of Australian economy has been significantly transformed from the days when the nation had a centralised wage-fixing system. To make a policy difference you have to grapple with the structural change that has taken place.

We have witnessed massive changes in the way goods and services are produced; government business operations and service delivery have been long hollowed out. The technological revolution and globalisation has transformed some of the spaces within which work takes place. Innovation

Quite rightly some commentators are now asking Labor to spell out exact measures it will use to deliver aliving wage for all Australians if its pronouncements are to be taken seriously.

My article tries to highlight through use of some examples the workings of a modern economy that must be understood and taken into account if all the talk about a living wage is to be meaningful.

For readers new to social policy you may first be interested in a quick glimpse on the history of the living wage and centralised-wage fixing in the below, or if familiar you can skip and go to the next heading.

A Historical Context

The concept of living wage was established well over a century when Justice Higgins President of the Commonwealth Conciliation and Arbitration Court made a momentous decision known as the 1907 Harvester Judgement. The thinking to this decision is reflected in key judgement phrases such as:

‘…The normal needs of an average employee, regarded as a human being living in a civilised community’

‘…framers of agreement would have to take, as a dominant factor, the cost of living as a civilised being’

Resource Link

You can find informative historical details from these links:

        

https://www.aph.gov.au/binaries/library/intguide/law/harvester.pdf

https://collections.museumvictoria.com.au/articles/15931

https://trove.nla.gov.au/newspaper/article/5098461

As the global neo-liberal economic project took hold in many parts of the world during the 1980s and 1990s, gradually the idea of a living wage waned. By 1991 Australia was shifting from centralised fixed wages to enterprise bargaining. To be fair, the Labor Government at this time integrated neoliberal ways of running a modern economy with a strong safety net and industrial welfare (ala introduction of superannuation for all working people).

A Transformed Economy

In its heyday it appears the living wage was not just consolidated through centralised wage-fixing measures. Once upon a time the Federal and State Governments were huge public sector employers. And they run many Government Business enterprises. These spaces played part into securing professionals and trades people into salaried jobs paying a living wage and above.

Remember when the Federal Government used to own the likes of Telstra (then Telecom), the Commonwealth Bank, Medibank, just to name some? It sounds like a very different lifetime (as they say, laugh out loud!)

Likewise State Governments have contracted out, commercialised and privatised a substantial part of their own public sector operations and Government Business Enterprises since the mid-1990s. Electricity, gas generation and distribution are case in point.

The Telstras and their kind are still around but with less monopoly power due to new market competitors. Businesses make profits for their shareholders and their executives, that’s what they do. Off course when you sell off assets you have less control over employment objectives over any privatised entity. We see Telcos running product shops perhaps with substantial sales people and maybe franchisees.

Reluctantly we have now accepted that if we ring Telstra about most operational matters we will be attended by overseas staff that takes care of issues digitally – you can get a new or revised plan connection, you can sort out your account and so on. Telcos may maintain some local staff, contractors, and franchisees, but also it can be safely presumed a good chunk of their jobs are globalised, right?

My question is - if Governments have long flogged off many public-owned businesses, what methods or strategies Labor will use to influence higher wages and job security?

Whether your politics are of economic Centre, Left or Right is not the point here. If we are talking about living wage we have to factor in structural changes to the economy and employment patterns amidst this globalised world. To me, it doesn’t make sense to debate wage adequacy in a vacuum. I keep coming to this point.

Government Contracting-Out & Living Wage?

For over two decades Federal and State Governments have contracted out massive levels of service operations to the Not-for-Profit sector and private operators. Examples include Job Active (formerly Job Networks), disability services, aged care services, Migrant Settlement Services, etc. We are talking billions and billions of dollars.

Use of contracted Third Parties by Government is believed to bring about greater efficiency. Government require Third Parties to carry out specific contracted deliverables. Governments have long moved away from funding salaried positions to funding specific deliverable tasks and outcomes.

So Governments say the get to deliver more efficiently with less. But also in offloading operations to Third Parties that’s how the size of Government agencies is kept in check. It is not practical for cash strapped Not-for-Profit Organisations to make substantial wage increases for services they deliver on behalf of Governments. Where is that money coming from?

Needless to say the sectors mentioned above are female dominated, receiving minimum wage and possibly some a bit more. But even the OECD acknowledges that ‘Across countries, including Australia, women are much more highly concentrated in service jobs, which tend to pay less.’ OECD Source

It is not clear if Labor will increase funding to its contracted Third Parties to fund salary improvements (NGOs & private operators). Centralised wage-fixing makes sense in this instance if Feds recognise the part they play in this dynamic. It is also not clear what financial capacity exists for the Feds and State Government to increase funding levels so that the contracted parties mentioned benefit from salary increases.

So it makes sense to puzzle about what measures Labor intends to use to boost wages for the services it contracts out to Third Parties?

Digital & Automation

The growing digital and automated economy is transforming the way a range of goods and services are produced, as seen in the transformation of major ‘old’ industries that can now operate digitally from local, global and virtual sites, and save some wage costs.

This also includes new industries such as rideshare and food delivery. A young person could be working in a food outlet serving hamburgers or latte – another could be classified an independent contractor facilitating food delivery across the city through the new digital food delivery platforms.

I presume the flexible mode of production (i.e. ways goods/services are produced and accessed) is what is making possible for this economy to gain ground. It is fascinating to see the rising popularity of services such as UberEats across geographical areas.

The way I think about this is that when you think less young and not-so young people in the at present and in the future are likely to be employed at Coles, Woolworths or McDonalds because of automation, then it is sensible for them to engage in emerging digital economic platform.

Basically the architecture of capitalism is evolving. As reported in the Australian Financial Review, redundancies have been in the making as Coles automates. 

This SMH story also explains how major supermarkets have succeeded using automation to significantly reduce wages costs as per link.  

Now it seems to me for any future Government pursuing a minimum or living wage, it is important to recognise that not all measures around these objectives are achieved through centralised wage-fixing. Where people are employed of course centralised wage-fixing, collective bargaining or enterprise bargaining can be the way to go.

But if people work as independent contractors, in some cases different policy instruments can be helpful in enhancing incomes by taking account of the contractor’s costs of production and that their earnings enable them to maintain a ‘cost of living as a civilised being’ (to use Justice Higgins' expression from a century ago). I suppose that means their earnings as contractors capture basic costs such as super and holiday pay.

These days you keep hearing from some media and political commentators that people must be classified as employees and not independent contractors. Instead of being too preoccupied about classification in the case of rideshare, why not simply work on policies that ensure regardless of classification business cost operation models capture basic standards of living?

It is hard not to recall the genius of the Hawke-Keating era when Labor thought big and managed to take account of the workings of the global economy, while balancing this with a sophisticated social wage and superannuation system.

I was watching a program the other day which indicated 60,000 independent working people (driver-partners) in Australia have joined one of the major rideshare platform, and four million service-users are utilising this particular platform. The practical me was thinking this means less people on the Centrelink queues. Some will say “What are you saying? ‘Why don’t they eat cake?’”(follow my drift?)

It’s not like Australia is about to unscramble the project of neo-liberalism in a hurry, if that. I mean the public sector has shrank; the Government Business Enterprises are far less than what we used to have; the contracted Third Party Not-for Profit and private operators are no longer funded salaries per head, but on deliverables. Private businesses are globalised with local and offshore digital operations – and this is all part of what makes a flexible capitalist economy.

Before anyone gets me wrong, I support improved incomes. The point I have laboured to make is that grasping the workings of a modern economy is a step towards thinking how to address ideas about income improvements without undermining the existence of new economic activities.

One Dollar Litre Milk!!

As I am about to complete this article I hear news on Tele that Aldi is joining Coles and Woolworths in abolishing the $1 per litre milk supplies. I don’t know anyone who will complain about paying ten or even twenty cents extra per litre to ensure farmers are paid to cover the cost of production.

There is a lesson here about Governments working with business stakeholder and relevant parties. Obviously such progress cannot be achieved through centralised wage-fixing which works for some groups. The challenge for Labor is to think about policy instruments that fit particular contexts.


Franchisees

Recent stories about the plight of some franchisees are a reminder that notions of a living wage no longer make sense if only understood in terms of employee-employer relationships.

A few decades ago policy-making took account of the working poor and Labor led in generating policy instruments around social wage and beyond to ensure wage adequacy and ‘civilised living’. Alas, how things shift. Increasingly we are hearing some franchisees joining the ranks of the working poor due to asymmetrical franchising arrangements.

It turns out we are talking pizza chains, petrol stations, cafes, you name it. The SMH coverage on these issues is an eye opener. See this article  and further info here.

To me this reinforces the point that any notion of a living wage can only be achieved if policy instruments are not reduced to a single solution.

Of further interest is the fact that perhaps more than before growing numbers of people are engaging in income generating activities in areas where industrial laws regulating employment practices are not applicable. The economy has been transformed and very much subject to further changes. The political and policy elite can support the country better if they grapple with the architecture of the modern economy in in-depth way.

Much More

There is much more that can be said about the transformation in Australia’s economy and patterns of employment and unemployment. For the purposes of this article, the examples used to illustrate the change simply serves to indicate the need for nuanced thinking in terms of how the political elite may approach issues about a living wage.

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Cost of Living Musings

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Cost of Living

Of recent the notion of Cost of living has gained an important place in Australian public debates. It evokes different experiences for different people! From rumblings about exorbitant electricity and gas bills, affordable housing, inadequate wages, inequitable taxes and so forth.

Take your pick. To my list I thought I will add the following:

•  Improve methods and scope for Council Rates levy as part of tax reforms
•  Questions on Government delivering wage adequacy in a contracting capitalist era?
•  Questions on Government delivering wage adequacy amidst exploding autonomous technologies?
• Musings on cost of living and ‘Real Australians’
• Enforcement of non-traffic infringement fine payment & cost of living

On Council Rates & Tax Reforms

For me, Council Rates are one of the things that exercise my mind when I think of cost of living. Before anyone gets the wrong idea, I like the concept of Local Governments in our suburbia. I’m no supporter of Council amalgamation and such. This safely on record, I can turn back to my musings.

When I saw my last council rate account rightly or wrongly I was at a loss as to why Council rates seemed on the rise when the WA economy had relatively declined. The price of housing has fallen in many WA suburbs over the last few years, I told myself. The rental incomes have gone down compared to the boom years, so why the rate rise, I wondered.

I value the role of Local Councils and the part they play as a Third-Tier of Australian Government. I value the demonstrable developments in my area and all that enhances local liveability. For all I know, a mark of a good council includes providing and maintaining local roads and libraries, great walking paths, reserves, parks and gardens, safe children playgrounds, community and recreational spaces, etc.

Money has to come from somewhere to make our suburbs liveable, right? This is not a point of contention. We should all pay our council rates. And I suspect Local Councils also benefit financially from other State and Commonwealth financial arrangements to support making our localities liveable.

Garvey Park Reserve with great walking path and family recreational areas maintained by City of Belmont

Locals enjoy the Garvey Park greenery by the Swan River

                                 

Still, in my puzzling about how these rates are determined I learnt that in WA, the State Landgate plays a role in providing information underpinning determination of property rating valuations (other States may have similar authorities under varied names).

These valuations reflect property market based on equivalent average rental values regardless of whether or not the property is owner-occupied or used for rental. Valuations also take account of age of the property, building material and how many carports you have. The WA Landgate web link explains in more detail:

               https://www.youtube.com/watch?v=HB9wGPIYHxw&feature=youtu.be.

Also, 

             https://www0.landgate.wa.gov.au/for-individuals/land-values

So Councils utilises this info from Landgate to formulate their particular unique rate levels taking account of local service requirements.

Extend scope of levy as part of tax reforms – For me as I think aloud this is what goes on in my mind, surely there should be more to factors we consider in levying council rates.

If we are serious, we know these are taxes except the notion of levy rates gives them a different name. And surely there should be more factors to consider in the size of this levy than just the size of dwelling, age, number of carport and shadow rental value.

These Council rates are essential, but as we know they are only levied from home owners. Nothing wrong with taxing these home owners, but this leaves out many people who have ability to pay.

See, Council rates include many things like partial cost provision for our libraries in all our local areas that we all enjoy and our children benefit from. As already noted, rates also include Bin Collection fees. Why should the cost continue to be simply met by home owners and exclude local residents who earn high incomes, benefits from local services but are not subject to these taxes or levies?

In WA a substantial State Government Emergency Levy is also incorporated in Council rates. Presumably we all accept the State Government wisdom that the Emergency Levy is essential to support our Fire and Emergency Services. According to the State government, it ‘benefits all West Australians as emergency response involves a cohesive approach from across the state’. Fair enough.

However, many residents in suburbia living on good solid incomes don’t pay emergency levy and most probably have never heard of an emergency levy. They are largely able to escape such charges simply because they don’t own properties – and most likely they choose to invest their monies elsewhere.

We also have a sizable population of transient FIFOs (Fly in Fly Out) from interstate and across the globe who are benefiting from the WA economy. They too benefit from the security that our State Emergency Levy. This is whether they use AirBNB, hotels or house rental share. They have ability to pay, so how can we ensure they contribute to the likes of emergency levy? Whether we think about emergency to do with floods, fire and we all value these services right?

Casting a wider net so that everyone with ability to pay will mean we are fairly and equitably minimising free riding, and also are doing so by taking account of people’s ability to pay. As we all largely benefit from the economy and the living environment in our local area, it is fair to give something back in our localities. There are many of our regional towns that could benefit such changes. It could add to regional and remote liveability especially for mining towns.

If you apply a principle of ability to pay in levying these kinds of local indirect taxes, then surely there is scope to modernise our levy practices.

Why bother to modernise? Well, the economy is changing. The middle and working class are squeezed and ‘are crying cost of living’. A fair tax base benefits from keeping abreast with economic change.

This is where the tax reform can also come in. Clearly, under the Constitution only the Feds are vested with powers to levy taxes. But there are clear gaps here. Is it not possible to spread the burden of levies we pay at local? It seems to me these could be some of the creative ways that we address issues of cost of living.

But to do so obviously the Feds may need to come to the party. And importantly, if ever the scope of local levies was extended to capture a wider net as in payers, then the money should stay at local and State level to serve the purpose for which such monies were intended. If not, it defeats the whole purpose.

Living Wage in Contracting Era?

After the triumph of neo-liberalism, who would have thought sooner than later a public debate will once again be raging on connection between cost living and wage earnings! And this comes not long after changes to Australia’s weekend penalty rates. I had a good laugh as I heard some make a reference to the historical Harvester Judgement.

One can’t also be blind that the political shock of Brexit and the Trump elections may have influenced emergence of a space where cost of living can now be discussed in public fora. Who knows what’s ahead as we strap our seats in this fast changing world?

Historically, the Unions and Labor movement led the charge on living-wage. In their recent public pronouncements it sounds like wage adequacy is to form part of their push to address cost of living in Australia.

But the world has changed and fast changing since the days we used to understand and make sense of capitalist economy and wage-earners welfare.

Now this is where it gets really interesting. It is no secret that Federal and State Australian governments have long contracted out their provide-delivery roles to private entities and NGOs. The policy underpinnings were put in place long ago under National Competition Policy (including contracting and tendering practices).

So when we talk about wage adequacy, this has implications for billions and billions of $ that the government contracts out. To cite a few examples, this includes NDIS operations, Job Active (former Job Networks), wide ranging human services funded by State and federal governments that are delivered by NGOs.

So in an era of government contracting out for programs that are short-lived often changing every three years (if that), it remains to be seen how wage adequacy is going to be fostered.

Who wouldn’t welcome wage increase especially to the NGOs carrying out work in these areas? Here, I get a bit sceptical about political rhetoric when I look at the context of modern day economic realities.

How are our Australian governments able to boost wages for sectors such as those mentioned here unless they boost their own expenditure as part of their contracting out practices?

Governments have also long sold significant assets such as public utilities or implemented reforms that limit their role in these areas. Remember the days when State Governments owned and run electricity and gas? Remember when they split them up, sold off or commercialised public utilities?

We were told these reforms would bring efficiency, reduce costs, foster innovation and good value for tax-payers and consumers. It seems something didn’t work to plan (perhaps a subject for another day). Or whatever good came out of it, it did not quite include the rising cost of energy.

Presumably the government role (across most States) as an employer has largely diminished as it no longer exercises as much control as employer/provider in public utilities. I presume some in the trades in these industries found some opportunities as contractors. It is not clear though how governments are going to bring about greater wage adequacy as some seem to be talking in recent debates.

Then we have an expansive private economy itself experiencing significant changes as partly digital technologies are re-working the nature of our capitalist economic production.

Automation is everywhere. Someone was telling me recently a majority of his IT team lost their jobs because their IT Help-Desk services can be done from Bungalow. ‘You mean Call Centres?’ I naively asked. No, a lot of substantive IT work we do in supporting the company is gone, was his response.

Growing semi-professionals and professionals roles alike are gradually being automated. They can’t be wished away, they are here. Businesses that deploy these technologies appear to be driven by cost saving, efficiencies, safety and profit imperatives. Just to cite some new technologies gradually being introduced:

•        Autonomous hauling trucks in some mining centres
•        Autonomous surveying drones
•        Autonomous drilling
•         Emerging software that  over time may replace some accounting and legal practice functions
•         Rail automation in some mining centres
•         Serve-self supermarket checkouts
•         Automated airport check-in systems
•         Automated kiosk orders at food outlets such as McDonald’s

I will let you add your own examples to this list.

When you consider the masses of young people that historically work in supermarkets and fast food outlets such as McDonalds (albeit on minimum wage), you can start to appreciate the economic transformations before us.

When you consider the number of blue collar and white collar workers that may be impacted by autonomous drilling, surveying drones, autonomous trucks and rail automation in mining centres, you realise technology is matching fast.

But it is hard to see evidence of how policy makers and politicians incorporate their understanding of the massive technological revolution at hand as they engage on debates about incomes, let alone adequacy.

It doesn’t seem to me like we can just solve this through regulation. These changes are phenomenal. Perhaps some deeper engagement and understanding are necessary so that future policies align with people’s experiences with the emerging economy.

Real Australians, Patronising Venues & Cost of Living!

There is always something to laugh about even when lamenting about cost of living. Not long ago I bumped into a couple of people who asked me if I didn’t mind them checking out if I fitted the notion of what they call ‘Real Australians’. Before I could respond questions were flowing. They had been to one of the ‘last’ cricket games at WACA Stadium.

They asked questions like ‘do I go to see cricket games? Which team do I support?’ Another insisted visiting various venues is something all migrants should do as a demonstration of their integration in Australian society. They emphasised that this is part of social norms here.

I laughed my head off. And confessed it’s a while since I saw a match. And not cricket for that matter, but a Hopman Cup Tennis game. Even as we joke about these things, it came to mind that these dominant social norms leave many people out. In my mind I couldn’t help laughing – the thoughts went like this:

•  If you have not been regularly eating out at restaurants with friends or family are you a fair dinkum Aussie?
• Did you visit Embargo and many pop up bars recently?
• How often have you made it to Perth Arena or the new Perth (Optus) Stadium to attend events?
• What notes have you been swapping with friends on your sampling experiences at Elizabeth Quays or Freo’s Little Creatures Breweries, Burswood Towers, Riverside 506, Coffee shops around Yagan square and so on and so forth?
•  Did you make it to community cinemas at Burswood Park, UWA, Murdoch or ECU?
• And perhaps you took a holiday to the country or nearby Bali or far off overseas?

As I think of cost of living in these terms, I am reminded of our traditional notions of relative and absolute poverty. For example, if young people, families and individuals are not partaking in the sorts of events and spaces mentioned above, what does that say? Should we be able to capture this as part of cost of living debate (i.e. absolute VS relative poverty)?

Cost of Living & Enforcement of Non-Traffic Infringement

Generally we assume all those suspended from driving on our roads are serving a fair penalty for breaking traffic laws and endangering people’s safety on the road. So perhaps we worry less about how driver’s licence suspension impacts their livelihood – we focus on the common good - safety.

But did you know Australia’s government authorities use driver license suspension as tool to nudge people to pay their outstanding fines for reasons completely unrelated to driving. You don’t need to break traffic laws to lose your license – if you don’t pay some government Infringement Notices you could lose your license. Many easily lose their license with consequences on cost of living.

This is not new. Many years back I came across info on effects of Driver License suspension for non-traffic infringement while undertaking research on job-seekers at Job Network service. So I know this issue is real and there are patterns to it if our politicians decide to look at it.

Here is a recent anecdote. A hard working gentleman recently told me he lost his Driver’s License because of non-traffic Infringement Notice. This also meant he could no longer keep his job as a Driver’s License is an essential requirement. I asked him, why didn’t he contact the Infringement Registry in his State to make alternative payment arrangements? Too late, he said.

According to him, when the notice arrived, he was in Europe. It has impact on some trades people for example those whose jobs require a worker to be mobile. Security jobs can be easily affected, he said. How, I asked?

He told me he has taken up a good job at a pub that pays $500 per week. This is means his fine repayments to the Enforcement Registry take longer to pay. How much can you do with $500 a week? There is rent or mortgage, food for Xmas, transport, he cited examples. I can’t even renew my passport, he added.

The story he told me this is how infringements can make cost of living circumstances worse: First because he lost his license, he can’t secure a better paying job in area of his expertise. And when seeking a new job in those areas, his training must be current. His 1^st and 2^nd Aid Training, his security training must be updated. He also needed current documentation such as passport.

So even when eventually he finishes the fine repayments, it will take him a long time to go back into training and find money to pay for all those courses. Talk about cost of justice!

If even a handful of Politicians take up these seemingly simple causes to improve policy and the rigid bureaucratic processes, we could go some way in tackling cost of living. Why should a penalty for non-traffic infringement go beyond fine payment to effects that extend to loss of career and better paying jobs?

Middle class are probably more easily managing to negotiate their way through infringement enforcement processes. Those less versed with bureaucratic processes appear to be paying a far higher price.

End

As the debate and contestation on cost of living continues, hopefully it can only assist Australia as it charts new paths in this transforming economy, and simultaneously maintain an inclusive and cohesive society.

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Regressive Rideshare Tax?

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Regressive Rideshare Tax?

Introduction

The obligation to contribute towards our tax system is something most reasonable people agree as a sensible part of running a functioning economy and cohesive society. The spread of technological innovations raises questions about how we tax the digital rideshare economy as more ordinary Australian people join into this collaborative peer to peer economy. Is fairness and equity given attention in the emerging tax arrangements?

Rideshare Tax Obligations and Compliance Costs

In early 2017 the Australian High Court ruled that rideshare services are subject to the 10% tax as defined under the GST Act on basis that their operations are equivalent to taxi services. It dismissed assertions that rideshare providers don’t use taxi rank infrastructure or carry out spontaneous roadside pick-ups.

The High Court also rejected concerns that Uber providers (Partners/drivers) were “unjustly singled out…for different tax treatment than truck drivers, bike messengers, Air bnb hosts or any other participant of the sharing economy”http://www.abc.net.au/news/2015-07-31/uber-launches-legal-challenge-to-overturn-atos-directive/6664234

A reader may be surprised though to learn that this tax seems regressive. Under the GST Act tax is levied on businesses with earnings over $75,000 except for the taxi industry where GST must be paid without regard to the level of earnings – this puts rideshare peers in precarious situation as they earn low incomes.

The public is also largely not aware that actually individual rideshare drivers (partners) pay their normal income tax (similar to government or private sector employees). The difference here is that on top of their normal income tax a ride-share driver must also pay an additional 10% as a GST levy. While some may simplistically talk of crackdown on multinationals, the application of a GST on work performed by low income ride-share folk has hallmarks of a regressive tax. And there is more.

Aligned with the GST law rideshare providers are subject to extensive business administrative obligations – like those involving the ins and outs of making BAS Statements. They may require book-keepers at exorbitant costs relative to their low incomes; and engage accountants to manage their tax obligations. Oops, not the realm of an informal peer to peer exchange of services.

Rideshare partners seem to earn low incomes especially in the face of GST levy. The operational cost alone are not a simple matter – the essential mobile phone necessary to operate an App,  fuel and vehicle maintenance,  insurance, to name some.

·     There also multiple State government compliance costs. For example in states such as WA these include those related to gaining market entry and ongoing operational requirements:

• ·        Cost of government’s F extension
• ·        Cost of acquiring Omnibus Charter Vehicle License
• ·        Cost of government-approved Annual Full vehicle examination in compliance with the Omnibus Charter License
• ·        Police clearance (same as those required in mainstream employment and contracts
• ·        Medical assessment aligned with existing National Medical Standards set out in the Assessing Fitness to Drive Guidelines (including eye test, BP, sugar level and other relevant medical conditions).

If the WA government medical exam forms are anything to go by, the medical exams that Uber Partners are subject to are assessed under the category of commercial vehicle standards (same category used for heavy vehicle drivers, class MR and above, F Extension holders,  Tax drivers, Dangerous goods vehicles drivers, Driving Instructors).

These factors (not exhaustive) further affect take home earnings.

Reconsidering Equity and Fairness in Rideshare Taxation

Obviously the High Court interpreted the law as it stands.  However, issues of fairness and equity in how Australia structures its taxation system going forward need to be examined well beyond the Court sphere. The federal political class cannot escape its responsibility to monitor that this levy does not severely conflict with other established taxation principles of fairness and equity – as this can be the case when the GST burden is disproportionately borne by a group largely on low income.

Fairness and equity were once upon a time important part of principles in the structuring of Australia taxation. Even the GST political contestations of yesteryear appear to have been settled with some regard that the regressive nature of this tax structure was not intended to get too far out of hand.

The establishment of a GST system went through unprecedented examination which served to limit its regressive impacts on low income earners – remember the debates around the earlier GST Fightback Policy to the eventual Howard’s GST. As an instance, the thorough discussions that ensued and settlement reached on the then food exemptions (if not the cake) in attempt to factor in equity!

In practice the GST levy for rideshare providers also means not much (if at all) is left to put towards superannuation for future retirement. Where is fairness and equity in such a tax system? Why not factor in some integrated policy thinking into this. And on the previously raised question, what differentiates share ride drivers from truck driver business contractors and air bnb hosts as the latter are not subject to a GST?

As technology is reshaping the economy at unprecedented speed, political leaders need to continually examine when graduated tax is more appropriate (i.e. income tax as currently structured) – and when imposition of a regressive tax such as a GST can lead to unintended consequences entrenching poverty and inequality.

It is hard to imagine how we could start to address issues of equity (let alone inequality) if the political class is not in touch with everyday experiences of how the rideshare economy is experienced.

Peer rideshare providers are everyday folk from all walks of life trying to participate in the modern digital platforms. The shared economy has some attraction due its flexibility and ease of market-entry. It offers chance to monetise existing assets and opportunity for self-employment.  While disrupting old forms of economy, at least it marginally ‘democratises’ economic opportunity to participate in ‘on-demand transport’. 

    

As innovation on digital economies gain momentum the political class can take opportunity to look at rideshare taxation not as stand-alone item, but at least examine this as part of integrated economic policy.

Opportunity to address equity concerns relies on our preparedness to grasp that issues of poverty and inequality are not separate from everyday business and work experiences. This area can benefit if the political class make effort to gain understanding of lived and material experiences of those that operate in the shared economy sphere. While we can learn from the past, the present digital set up and economic dynamics are very different from how old forms of economy are/were organised.

The political elite tend to agree about the importance of technology and innovation in driving economic wellbeing, but it remains to be seen how future tax structures interact with the digital economy and pays attention equity and fairness and fairness characteristic of some of the existing principles that has underpinned Australia taxation system.

And needless to say the writer supports the continuation of tax on rideshare services – but the point made in this article is that ‘what sort of tax’ should be levied?

It seems odd for example that a ridershare provider on gross $40,000 is charged a GST plus income tax while another person could be earning three or ten-times as much, and not be subject to a GST because the latter is classified as an ‘employee’. And all the time ignoring that the low income earner here is not even left with disposable income to put into a super fund!

I am not suggesting employees be charged a GST on their income. I am simply pointing out the inequity in the structural application of the GST tax design on rideshare providers. At the very least instead of redistributing wealth from these low income folk to the top, the tax design could be structured to ensure in place of this levy, that shareride providers put this money towards their superannuation.

For now though it seems the political class is yet to genuinely engage in in-depth analysis on workings of rideshare economy and the need for fairness and equity (let alone equality) in levying GST from providers. In my view, such consideration is not about special treatment for rideshare providers – it is about treating this group as would you treat the rest of Australia’s income earners.

In an era of the digital economy disrupting old models and at a time when governments wants to be seen to be cracking down on multinationals, the under-employed and the precariously employed that are monetising their assets are unintentionally or otherwise caught in the crossfire. How future politics is affected by this growing class of self-employed contractors remains to be seen.

*The author maintains interest in the modern shared economy

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