Governments should increase company taxes if top executives continue to draw huge salaries, in order to give workers a fairer share of the economic pie, according to the former Labor treasurer Wayne Swan.



Swan will use a speech on Saturday marking the 45th anniversary of the election of the Whitlam government to argue that political parties on the centre left must be unequivocal in articulating an economic framework that delivers rising living standards for workers.

He notes that last year, the head of Commonwealth Bank received $12.3m, “or the combined salary of 250 Commonwealth Bank tellers”.

“One way for governments to combat this is by enforcing higher company tax rates the higher that this pay ratio goes. If executives can seize the rewards of a higher share price, why shouldn’t workers benefit too?”

Swan, who has been active and vocal in Labor’s internal debate in opposition about the party’s economic direction, says Australia in contemporary political times “has returned to the same fractures as in 1975, with one vast difference: the vested interests in our society are richer, more politically active and are more willing to align themselves with one side of politics than at any time post war”.

He says vested interests “will stop at nothing to entrench unfairness at every level: income and wealth inequality, social immobility, and a political process entirely captive to the top end of town”.

“The radicalisation of the right and the polarisation of politics demands that centre left parties articulate an economic framework which delivers rising living standards for workers,” Swan says.

“If we fail, then neoliberal ideologues – cloaked in Trumpian populism – may lead us down the road to ruin once more”.

Swan says if contemporary Labor is to build on Gough Whitlam’s legacy and see off the challenge of right-wing populism, it needs to construct economic policy around four progressive pillars:

Sustained full employment, defined as a level of unemployment of 3% or less;



An activist fiscal policy, including Keynesian demand management “as a means of eliminating spare capacity and achieving full employment”;



A stronger voice for workers;



Taming corporate excess from executive remuneration to oligopoly power in the economy, and advancing Australia’s “world-leading progressive tax system”.



While the Turnbull government appears to be pressing ahead with its promise to reduce company tax for big business, and is also flagging personal income tax cuts, Swan says Labor must not take a backward step in holding corporations to their tax responsibilities.

“Every time we hear the argument that Australian companies pay too much tax, we should take a moment to remind ourselves that in recent years, one-third of our largest corporations paid no tax at all,” he says.

“If the Reserve Bank governor considers it reasonable for workers to simply demand higher pay, it should also be fair game for governments to demand that corporations pay their fair share of tax.

“We can do no greater justice to Gough’s legacy than by reaffirming boldly our commitment to being the party of initiative, the party of inclusive prosperity, and the party of not just the ‘men and women of Australia’, but of their children and their grandchildren, too.”