You have to be quick in public debate around here. Last week was “tax reform” week — one of the periodic eruptions of the issue into public consciousness. Fixing Australia’s disastrous tax system was the most important matter in public life. Tens of thousands of words were spewed out, mostly in the Financial Review, about how politicians needed to find their policy courage. Right at the end of the week, even The Australian lumbered into action, yelling at clouds about the need for reform.
Well, all that’s so last week — not much around about tax reform today. There’s only so much you can say about it, especially given the self-interest of many of the parties involved. The business lobby will demand an increase in the GST and lower company tax — which is what the Business Council of Australia has called for in every “tax reform” boomlet for the past 15 years.
The AFR will urge Labor to adopt courageous tax reforms, with the goal of campaigning against those same reforms at the next election. Various specialist business sectors will explain how particular changes that benefit them have remarkable economy-wide benefits too. The Melchizedek of tax reform, former Treasury secretary Ken Henry, will be summoned to bless the calls for a debate with references to his abandoned review for Kevin Rudd. And so, as they say in the classics, it goes.
The only worthwhile contribution last week came from the redoubtable unionist and Gen X music advocate Dave Noonan, who inquired of the BCA in response to its call for a “national discussion” on tax, “Why not invite a plague of locusts to discuss agriculture while we’re at it?” Having devoted much time over the years explaining, with extensive evidence, why cutting company tax rates has never produced any of its claimed benefits — such as greater investment, more jobs, higher wages or higher productivity — I could only seethe with jealousy at such succinctness.
The real victim of this outbreak of reformitis was Peter Dutton. All anyone — including, eventually, his mates at The Australian — was talking about last week was bracket creep, effective marginal tax rates and the participation effects of lower tax rates income, rather than what Dutton wanted them to be talking about: Anthony Albanese’s lack of integrity in breaking his promise. By the end of last week, The Australian was urging Dutton to develop an ambitious tax reform package including “lifting the rate of the GST and broadening its base”. Or, as Malcolm Turnbull once put it during a previous eruption of tax reformitis, the political equivalent of taking a pistol and retiring into the study.
Dutton and the rest of the opposition ought to be hoping that the impact on the prime minister’s credibility will be, to use Tony Abbott’s phrase, a python squeeze, not a cobra strike. That phrase was pulled out by Abbott as opposition leader when his spectacular warnings that Whyalla would fall into the sea and buying lamb would require a mortgage as a result of the carbon price didn’t eventuate. But Abbott was adept at continuing to hammer a line regardless of how little actual reality conformed to his inevitably nightmarish claims about what Labor was doing to Australia.
So far, Peter Dutton ain’t no Abbott. Gifted a colossal broken promise by Labor, he was slow out of the blocks responding, and his response was — and remains — confusing (will the Coalition support the amended package or not?). His party don’t appear to have war-gamed how it should respond to a Labor change either. The speed with which the debate moved on to who would benefit, would the Coalition reverse the cuts, and what about broader reform, should be a warning that the early rounds in this battle have gone to Labor.
This has required some serious reverse-ferret stuff at the Oz, which was confident Albanese had inflicted serious, possibly terminal damage on himself with the stage three tax cut changes (“When given the chance, voters have rejected the politics of envy” it drooled the day after the announcement), only for the first Newspoll of the year to reveal precisely no change of note in Australians’ feelings — if anything, there was a small drift away from Dutton. Ah ha, enthused the unfortunate Simon Benson, that showed Labor’s tax changes had generated no benefit for the government. Neither python squeeze nor cobra strike anymore, it seems.
Dutton has been gifted a rare political opportunity; so far he’s blown it. Shadow cabinet will settle on a position today on the changes. It needs to be the start of a rebooted effort to sink his fangs into Labor.
Does Peter Dutton have any justified arguments against the tax cut changes? Let us know your thoughts by writing to letters@crikey.com.au. Please include your full name to be considered for publication. We reserve the right to edit for length and clarity.
