One policy that drew me to the Liberal Democrats is their “30/30″ Negative Income tax, which they have formally released today:

“The Liberal Democrats offer a tax policy that goes beyond reform. Sometimes, revolution is better,” said Terje Petersen, Liberal Democrats candidate for Bennelong.

The Liberal Democratic Party does not argue for incremental tax and welfare reform. Instead it offers a new template from which to consider tax and welfare issues: Reform 30/30.

Reform 30/30 includes a tax-free threshold of $30,000 and a flat tax of 30% above that. All taxes (company, capital gains,  fringe benefits) would be equal at 30%.

Welfare would be replaced by a sliding scale of payments (called a Negative Income Tax, or NIT) starting at 30% of $30,000 for those with no other income. As income was earned, NIT payments would be reduced until income reached $30,000.

For example, if you earned $0, you would receive 30% of $30,000. If you earned $10,000, you would receive 30% of $20,000. If you earned $25,000 you would receive 30% of $5,000. No tax would be paid at any of these levels.
One advantage of the NIT is that it removes the need for a minimum wage. Wages can be determined by demand and supply, with those on low incomes receiving the NIT as a supplement. This would result in a significant increase in the number of jobs available, especially benefiting the long term unemployed and those on disability support.

“Probably the biggest advantage of Reform 30/30 is that the effective marginal tax rate (EMTR) is always 30%. Under the current system the EMTR is variable and can be higher than 80%, creating a major disincentive to earn additional income.

“30/30 solves the poverty trap which locks low income families into welfare. Under our policy, low income earners can climb the ‘ladder of prosperity’ to higher incomes and a better standard of living,” said Mr Petersen.

Reform 30/30 is unambiguously beneficial to the economy. It offers 500,000 new jobs, less poverty, a $90 billion bigger economy, higher growth rates, lower tax levels and a simpler, fairer tax/welfare system and more money in the budget.

“Only the Liberal Democrats offer a solution to the poverty trap whilst encouraging saving and investment in our future. The era of buying votes with welfare payments to those who have paid tax must come to an end.

“Reform 30/30 would be a major step forward for Australia,” Mr Petersen said.

My Facebook campaign page is up and running here.

I am humbled by the endorsement from the Liberal Democratic Party to run as a senate candidate (Victoria) in the upcoming Federal Election.

The Liberal Democrats are a party that is most aligned with Libertarian philosophies and we are looking to promote our message of limited government, low taxes, greater personal freedom and personal responsibility. I will be posting my campaign progress further on this blog, but in the mean time you can view the Liberal Democrats policies here.

The first few days of the campaign has been dominated by the opposition leader attempts to distance the Liberal/National Coalition from the WorkChoices legislation implemented by the Coalition Government prior to the 2007 election. From all of the analysis since that election, it seems that WorkChoices went too far with the electorate and was a major factor in the Coalitions defeat.

Under the new Labor Government, we have seen the introduction of new work laws (administered by Fair Work Australia) that remove workplace flexibility, by enshrining minimum standards and a set of industry awards (a one size pay and benefits template for a companies operating in a particular industry). Under the previous WorkChoices system, employers and employees were allowed to negotiate an agreement between themselves (although changes were later made to ensure there was a “No Disadvantage Test” determined by an independent umpire when new contracts were being negotiated). In both cases, there are exemptions for unfair dismissal claims for small businesses.

So in a nutshell, there is now very little difference between Labor and the Coalition industrial relations policy. This is a shame because, when analysing any industrial relations law I generally look to see if there are any government roadblocks that impede the free exchange and negotiation between employer and employee – provided there is no coercion, blackmail, physical violence or fraud by either party. I firmly believe that is every person’s right negotiate directly with their employee and negotiation the wage, hours, sick leave etc. It is one of the reasons that decided to go into business for myself – I have much more flexibility to negotiate almost every facet of our relationship. So it looks like Australia will have greater inflexibility in the workplace which will lead to lower productivity and higher than necessary unemployment.

So my “Liberation Engineer” rating of Industrial Relations polciy (0 being completely government controlled, 10 being completely free for individuals and employers to negotiate as they see fit):

Labor: 5/10

Coalition: 5/10

Australia goes to the polls on August 21. Over the last few months I have been loosely involved with the Liberal Democratic Party, in particular, the Victorian chapter. Be sure to check out their policies here. In my opinion, they are the most reasonable, pro-liberty party in Australia.

As the election campaign rolls on I will give my insights on the policies of the major parties by examining their impact on individual liberty.

In Australia, we operate with three tiers of government: local, state and federal (you could argue that there is a fourth: the UN and our obligation to its treaties). Government expenditure is most effective when the geographical spend is concentrated in the area where taxes are raised. For example, I can see directly that my local council rates go towards local roads and my garbage collection. By having many small, local and regional government councils, innovative service delivery and taxation regimes can flourish to encourage residents and business to be established. If I do not like a particular council, I have greater access to the elected officials to air my grievances. If I feel strongly enough I can move to another council region (which is much easier than moving state or to another country). This can breed a healthy competition among councils to give the best “bang” for its rate payers buck.

So it is refreshing to note that, in a recent survey by Griffith University, more people are favouring localised and regional governments as opposed to state governments:

The Griffith University report found rising support for abolishing state governments, from 30 per cent to 39 per cent between its May 2008 and March 2010 Newspoll surveys. But it also found increasing support for abolishing federal and local governments. The federal government’s rating as the most effective tier of government has dropped from 50 per cent to 44 per cent, even after Rudd helped save Australia from the global recession and neo-liberalism. Most of this decline was captured in an increase, from 20 per cent to 27 per cent, in support for local councils as our most effective level of government.

But most striking is that 42 per cent of Australians now favour creating regional governments, up from 32 per cent less than two years ago. Adding the 9.3 per cent who favour “more states” suggests that one in two Australians favours shifting power below the state government tier.

…more than one in four Australians now judges its local council to be the most effective tier of government, compared to the less than one-in-six who prefers state governments.

Joe Hockey, shadow treasurer of Australia and Member of Parliament, delivered an excellent speech at the Grattan Institute, on liberty, personal responsibility and a call for limited government. Below are snippets of his speech:

On Individual Worth and Liberty:

I believe that we are equal in our worth, if not necessarily in our talents. I have a role, you have a role, each of us has a role to play in the process of our own governance. This is what liberty means. This is what it means to be free.

On Liberty:

[John Stuart Mill'] famous statement of liberal principles is that:

“the only purpose for which power can be rightfully exercised over any member of a civilised community, against his will, is to prevent harm to others. His own good, either physical or moral, is not a sufficient warrant.”

And just in case we have a tendency to gloss over words like “freedom” and “liberty”, Mill defines it in the most compelling way:

“The only freedom which deserves the name is that of pursuing our own good in our own way, so long as we do not attempt to deprive others of theirs, or impede their efforts to obtain it.”

I believe that individual liberty must be the foundation of our society, even when it clashes head on with the perceived communal good. That belief rests on John Locke’s positive view about human nature – that there is an essential good, rationality and an innate desire to co-operate in all men and women. I share his conviction that happiness is achieved when individuals are permitted to flourish in ways of their own choosing, according to their own conscience and beliefs.

On the other side of the coin, though, individual liberty is based on an acceptance that we are all fallible – that there is no certainty that any one person or any one society knows “the truth”. It is only through diversity, debate and discourse that we can come closer to understanding what is right.

Free vs Open Societies:

On the one hand you have societies that are free and open. The press is free and the judiciary is independent. Elections are free and regular. An open mind and spirit of enquiry are fostered. The arts and sciences flourish and innovation is encouraged. Multiculturalism, diversity and tolerance are hallmarks of a liberal society. The existence of dissent and debate are regarded as positive signs. Authority is respected only when that respect is earned. It is from this that economic and entrepreneurial activity arises in a way which, over time, raises the living standards and dignity of all citizens.

And on the other hand, you have societies that are not based on individual liberty. In those societies conformity and control are the guiding principles. The alleged good of society (usually only code words for the benefit of the ruling elites) are extolled above the rights of individuals. There may be art and science, but there is little creativity. Dissent leads not to debate, but to detention. Economic activity is centrally controlled and usually stagnating. Wealth is created, but only for the few.

On Eroding Liberties:

Liberalism not only confers the rights of individual liberty on a nation’s citizens, but it also demands that citizens accept their civic responsibilities.

I am however concerned that some of the liberties we take for granted in Australia are being eroded by the actions of government.

I fear that step-by-step and in a way that barely registers in the consciousness of most people, we are losing some of the protections against the arbitrary and interfering actions of the State.

Some of these changes are driven by the community itself. It is hard to empirically quantify, but I am concerned that our society is becoming less self-reliant and placing more store in government to solve our problems.

On Globalisation:

Globalisation also represents the great potential of economic liberty. The breakdown of tariff walls, which restricted individuals and companies from trading, the internationalisation of the labour force, and the reform of failed centrally controlled economies has delivered wealth to large portions of the world’s population.

We rightly paused during the recent financial crisis to reign in the excesses and address some of the flaws in the global financial system, but the shock of recent events has not diminished my faith in either market forces or the positive power of a globalised economy.

Wealth should never be the sole indicator of progress. However globalisation, and the economic growth it is delivering to developing nations, is the most effective poverty reduction program in operation today. For example, between 1990 and 2015 the World Bank estimates that the number of people living on less than $1.25 a day will halve – from 1.8 billion people to 950 million people.

On Anti-Terror Laws:

As a liberal, a legislator and a lawyer, it is the Anti-Terrorism laws, enacted by a government of which I was a member, that has given me great cause to reflect on our individual rights.

Are there occasions I ask, in which the welfare of the majority warrants the restriction of the rights of the few? It is one of the challenges that we face in seeking to apply Mill’s principles.

In this case, the Australian government – like its counterparts elsewhere – was responding to terrorism threats that potentially put the lives of thousands of people at risk.

But did the solution also have the potential to limit the freedoms we hold so precious?

Under normal circumstances, much of the powers conferred on enforcement agencies by the Act are ones that I would be horrified to see any democratic government advance.

In particular, I make mention of “preventative detention” without charge that severely limits access to legal assistance or even outside communication; “control orders” that limit movement and may be in force for up to ten years; and expanded police stop, search and interrogation powers.

However, I reached the conclusion that the threat to liberty of so many justified the actions we took against so few. When effectively the whole polity is under threat from attack by people determined to bring it down, then the government’s primary responsibility is to secure the safety of its citizens.

These are war-time measures. If the nation was under immediate threat of invasion, I suspect that debate and concern would have been more muted. However, the war against terrorism is far less tangible. It’s like a guerrilla war where the enemy is not as easily discernible.

What is important to me is that the restrictions on individual liberty contained in our Anti-Terrorism legislation do not become permanent. The Act includes a sunset clause for some of its more draconian elements, which is essential. There is a compelling case for those sunset clauses to be something less than their current ten years.

But what if the war against terrorism is to last a life time? As the government’s White Paper released last month concluded, there is no end point in sight. Do these laws effectively stay on the statute books forever because the threat of terrorism will persist for generations to come?

It is my own view that the loss of individual liberty that these laws represent cannot stand for all time. What we must do is objectively, dispassionately and regularly review their efficacy, preferably in a bipartisan way. If we find the laws have not been used, or have not been needed, then they should be repealed. I would not find it acceptable to declare a situation an “emergency” one day and then declare it “permanent” the next.

On Internet Censorship:

we see the current Federal government seeking to introduce laws that will effectively censor the Internet. Of course we all want to stop unlawful material being viewed on the Internet. There are appropriate protections that are in place for that. But I have personal responsibility as a parent. If I want to stop my children from viewing other material that I feel is inappropriate then that is my responsibility to do something about it – not that of the government.

What we have in the government’s Internet filtering proposals is a scheme that is likely to be unworkable in practice. But more perniciously it is a scheme that will create the infrastructure for government censorship on a broader scale. Protecting liberty is about protecting freedoms against both known and future threats. Some may argue that we can surely trust a democratically-elected government in Australia to never try to introduce more wide-spread censorship. I am not so sure!

In Summary:

Our desire for a fair go. Our healthy scepticism. Our belief in self reliance, diversity and our multicultural society are the values that have guided Australia’s development. They cannot be taken for granted. It is the duty of us all to ensure that every new generation of Australians – whether native born or recently arrived – share those ideals.

It is the fundamental duty of governments, parliaments, places of learning, and our civic and cultural institutions and for us as fellow citizens to fight to maintain the fire of liberty for which our Diggers fought.

And that is why it is right for our veterans to remind us that the price of liberty is eternal vigilance.