Hit companies with new tax, says ACTU

Unions will also press Labor to cancel stage three tax cuts.

ACTU Secretary Sally McManus says the summit is an opportunity to tackle the big problems that have remained unaddressed for a decade. Picture: Brendan Beckett

The ACTU has called for a tax on companies that earn windfall profits from high inflation and the cancellation of the stage three tax cuts, in proposals to be put to next month’s jobs summit.

The peak union body will also press the Albanese government to instruct the Reserve Bank to pursue full employment alongside its inflation target.

In the first of a series of policy papers to be released ahead of the summit, the Australian Council of Trade Unions says “full and secure employment” should be the government’s top macroeconomic goal.

It says the government should consider an “excess profits levy on companies enjoying windfall profits as a result of current inflation”

Unions also back cancelling the planned stage three tax cuts which they said only benefit higher-income households and will exacerbate inflationary pressures.

Centre for Future Work economist Jim Stanford, who helped prepare the paper, accused the Reserve Bank of being willing to “cause a recession and throw hundreds of thousands of people out of work” to get inflation back in line with its targets.

The Reserve Bank charter says the bank’s power should be exercised in such a way as will best contribute to the stability of the currency; the maintenance of full employment; and the economic prosperity and welfare of the people of Australia.

He said there was a difference between the goals in the charter and the operational instructions that guided the bank’s daily behaviour.

“That charter doesn’t even mention inflation which has always been a historic irony. Yet since the early 90s, for almost 30 years now, we’ve had an inflation targeting regime whereby hitting a certain rate of inflation is really their only explicit goal,” he said.

“I think that what we are proposing is a shift in the operational directions to the bank to be more authentic, more true, to that charter, to recognise it has to pursue multiple goals, not just a certain magic rate of inflation.

“Moreover, that it isn’t the sole guardian of inflation management; that the government has a role to play with its fiscal policies; with its regulatory policies and other interventions.”

The paper says the commitment to full employment needs to be reflected in the mandate given to the Reserve Bank.

“Its efforts to control inflation must be undertaken in a multidimensional framework, in which other policy levers — not just interest rates — are used to regulate inflation, and in which the goal of reaching target inflation is balanced with other macroeconomic goals (particularly preserving full employment),” it says.

“In this context, managing inflation can no longer be seen as just the RBA’s job. The government needs to play an active role, as well, through fiscal policy, public investment, industry policy, regulation, and labour market policy.

“The RBA’s operational structure needs to reflect this multidimensional and more balanced vision: it should be required to consult and act in concert with other government agencies in achieving an overall macroeconomic package that is consistent and effective in targeting both inflation and full employment.”

ACTU Secretary Sally McManus said the summit was an opportunity to tackle the big problems that have remained unaddressed for a decade to kick-start wage growth, deliver secure jobs and see living standards rise again.

“Working people have suffered through nearly a decade of insecure work and stagnant wages, only now to be met with historically high inflation delivering massive real pay cuts,” she said.

“Our top economic goal as a nation should be to give everyone the chance to get a secure and fairly paid job. This benefits everyone. That’s what we mean by full and secure employment.

“Achieving this will require more than fiddling around the edges, it requires new ways of thinking about how our system is managed, who benefits from it and how to change it for the better.”