The paradoxes of politics

In an everyday political sense I suppose we can’t really blame Little Bill Shorten for cynically and dishonestly demonising the Abbott government’s mooted tax increases and spending cuts. After all, Abbott cynically, dishonestly and very successfully demonised Labor’s carbon and mining taxes. What’s sauce for the goose is sauce for the gander, as they say.

On the other hand, perhaps we really can’t blame Tony Abbott for doing this either, because Labor and the trade union movement (prominently including Little Bill Shorten at the time) cynically and dishonestly demonised the Howard government’s Work Choices system, despite the fact that it was an entirely reasonable and fair one at least once the “no disadvantage” test was restored. Then, of course, there is Kim Beazley’s (and before that Paul Keating’s) even more cynical and dishonest demonising of Coalition GST proposals despite the fact that Keating himself had championed precisely such a tax back in the 1980s.

I guess the bottom line is that dishonestly demonising opponents’ policies is the everyday business of politicians. It’s the business of the government politicians of the day to sell their policies effectively and persuade the electorate that the Opposition’s arguments are indeed dishonest scaremongering.

That would seem clearly to be the case with the current budgetary situation. Economists largely agree that weak leaders from both political parties over the last decade (Howard, Rudd and Gillard) largely squandered the windfall of the China-driven resource boom by creating permanent spending programs (largely of a middle-class welfare nature under Howard) and equally permanent tax cuts despite knowing that they were being funded by the inherently temporary proceeds of the resource boom. Presumably they all knew what they were doing but hoped that the chickens would come home to roost on some later government’s watch. It looks like the chickens have arrived, because it is now unavoidably apparent that there is a long-term structural deficit which will not be repaired without tough measures both on the revenue and spending sides of the ledger.

No doubt Abbott and Treasurer Joe Hockey could, if they wished, have avoided taking the tough decisions by claiming (truthfully in a narrow sense) that there isn’t a “budget emergency” and that Australia’s net debt will only peak at around 17.5% of GDP in a few years time, which is much less than nearly all of our major western trading partners. But that would be ignoring the fact that it will indeed become a larger and larger problem over the years, with a high probability that deficits will continue indefinitely into the future and the interest burden continue progressively to increase until it really does become a significant impediment to government policy. Far better to grasp the nettle now and take the hard decisions while faced with a weak and discredited Opposition with a radically unimpressive and tainted leader in Little Bill Shorten.

Of course, it could all end in tears for the Abbott government, with the apparent decision to impose a temporary income tax levy on high income earners (and perhaps increases in fuel excise) being seen by history as Abbott’s “no carbon tax” moment and a courageous decision in a Sir Humphrey Appleby sense. Nevertheless, as someone who prefers sound policy to political theatre I certainly hope not. As far as one can tell from the budget leaks, it would appear that what Abbott and Hockey have in mind is very much sound economic policy. Fortunately, I think that Abbott is a much better political salesman than either Rudd or Gillard. Moreover, with any sort of luck the Coalition should be able to keep a figurative foot on Labor’s throat through an unending stream of embarrassing news stories emerging from former High Court Justice Dyson Heydon’s royal commission into trade unions. Mind you, the current ICAC hearings in New South Wales provide an amusing illustration of the propensity of independent inquisitions to end up biting the instigator that fed them as well as the intended target.

Moreover, in a somewhat perverse and paradoxical sense, a royal commission which exposes and dramatises the skulduggery of a significant minority of the trade union movement may actually be to the ALP’s benefit in the long term. Labor renewal in my opinion depends on reducing the almost complete dominance of a tiny cabal of union and faction leaders over both Party administration and preselection. They are unlikely to surrender power willingly, but may well be much easier to displace if preoccupied by defending themselves before a royal commission and avoiding imprisonment for corrupt activities.

About Ken Parish

Ken Parish is a legal academic, with research areas in public law (constitutional and administrative law), civil procedure and teaching & learning theory and practice. He has been a legal academic for almost 20 years. Before that he ran a legal practice in Darwin for 15 years and was a Member of the NT Legislative Assembly for almost 4 years in the early 1990s.
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21 Responses to The paradoxes of politics

  1. Tony Tea says:

    Politics is the art of exaggeration.

  2. paul frijters says:

    yes, I agree political leaders really are entrepreneurial storytellers, inhibited not by the truth but by what the swinging voters will believe. Neither the beliefs of the vast majority of the population (who are not swinging voters) nor those of the experts get much purchase in the political arena (within some bounds).

    Instead of seeing this as a bad thing though, you should really see it as a largely good thing: smart ambitious leaders now have to bend over backwards to second-guess what the voters want to hear, and quite clearly spend a lot of their time on reading the whims and wishes of the populace. Just think of what the same type of ambitious smart men and women would have done in a more brutal age, or what they are doing right now in Syria and Russia, and you should realise just how lucky we are that our institutions work so well as to force our ambitious politicians into this position.
    As to the content, I agree that we should have taxed the mining boom a lot more and put it into a kind of national super fund. It is not too late though so I hope the Libs have some plan to smuggle in an increased mining tax.

    • Ken Parish says:

      They could abolish the diesel fuel rebate for miners but keep it for farmers… Of course the miners would squeal like stuck pigs as is their wont, but wouldn’t be likely to urge voters to revert to Labor. However the Coalition has already ruled out mucking around with the diesel fuel rebate.

      • zoot says:

        So it’s still the age of entitlement for some.

      • peter says:

        Yes Ken, I can never understand why the ‘problem’ of separating farmers from miners wrt the diesel rebate exists. Real farmers, as distinct from hobby farmers or those with off-farm income have a ‘primary producer’ tax status, therefore qualify.

    • Patrick says:

      I do have a secret hope that Abbott will let himself be ‘forced’ into scrapping the MRRT spending but keeping the actual tax! Hopefully tweaking it a bit too, raise the de minimis threshold and align a bit more with PRRT.

      And then go to an election against a largely imprisoned labor on the issue of broadening and raising GST in exchange for an increased carers and unemployed benefit, win the election by default because the unions are bankrupt and half of labor is in prison and reduce company tax to 15%, index the personal income tax brackets and scrap all levies.

  3. derrida derider says:

    Economists largely agree that weak leaders from both political parties over the last decade (Howard, Rudd and Gillard) largely squandered the windfall of the China-driven resource boom by creating permanent spending programs (largely of a middle-class welfare nature under Howard) and equally permanent tax cuts despite knowing that they were being funded by the inherently temporary proceeds of the resource boom.

    You know, it is very hard in Australia to shift a narrative once it becomes conventional wisdom among the elite. Here is Ken – a moderate, thoughtful and informed person – repeating one such narrative in blissful ignorance that quite a lot of it is actually false.

    The Australian government spends a smaller share of the national income than the US one – and in fact the lowest in the OECD outside the new semi-developed members such as Chile and Korea. We have FAR less “middle class welfare” than any other OECD country – as I’ve argued elsewhere, in fact too little (it’s a long argument, but basically there are very good reasons for many forms of middle class welfare). The revenue boom was pre-2008 and was NOT the proceeds of the mining boom; governments accordingly had no reason to suppose it temporary. In fact it may not prove to be – the factors that have driven revenue down since 2011 (a high houseold saving rates – that is, low spending, non-existent wages growth – hence no bracket creep – and a very high dollar that encourages/enables transfer of company profits overseas) are quite likely to be temporary and are in any case not directly a product of the end of the mining boom (which hasn’t, BTW, actually ended – hence the high dollar).

    Beware of self-interested political narratives – as you note, pollies are a distinctly dishonest lot.

  4. desipis says:

    I’m still trying to work out how a temporary levy is supposed to solve a structural problem in the budget. I suppose it’s intended to make it seem like the more well-off are sharing the burden in the same way the less well-off are from the permanent cut-backs.

  5. Crocodile Chuck says:

    You’ve taken the lure, hook, line & sinker.

    The gov’t doesn’t have a ‘spending problem’, or a ‘debt problem’.

    The gov’t has a revenue collection problem. Give us a mining super profits tax, obliterate the tax loopholes of Australian corporations, and make US technology corporations (Google, aapl, IBM, Microsoft) and others (GE) pay their rightful share (its 35% of profits).

    Then let’s see how things stand.

  6. Paul Bamford says:

    According to ABC Fact Check, Shadow Chris Bowen is on the money here:

    …we aren’t seeing any short and determined effort to bring down the deficit. What we are seeing is an effort to double the deficit. That’s what Joe Hockey has done since becoming Treasurer. Doubling the deficit by adding over $68 billion in new government spending and changes to government assumptions, not even the Treasury’s or Department of Finance’s assumptions; his personal forecasts as the Treasurer of Australia, so he’s not trying to reduce the deficit, he’s doubled the deficit.

    Apparently Abbott wants to be remembered as an ‘infrastructure Prime Minister’ – something he plans to achieve mostly by building roads. His real political legacy, given the number of measures targetted at the feckless yoof of of today is more likely to be a large cohort of young, disaffected voters who’ll vote any which way but liberal for years to come. Whether the ALP can pickthem up as members remains to be seen. Personally I consider it unlikely. More likely is you’ll see more independents and Greens joining Cathy McGowan and Adam Bandt on the cross benches.

    That’s the optimist in me talking. The whole LNP/ALP crazy-right/centre-right duopoly is such a bore. Totally last century.

  7. Alphonse says:

    More than a whiff of false equivalence masquerading as even handedness here. At a time of peak inequality, this government’s every move has been to exacerbate it. This shows up in tax (super, FBT, private health rebate, MRRT, carbon), spending (all road no public transport, PPL, anti-Gonski); wherever you look – even at the mooted fig leaves (puny temporary “deficit levy”, partial undoing of user-pays fuel excise unindexed by JWH, pollies’ and public servants’wage freeze ).

    And I hope your assessment of Abbott’s political skills is as skew whiff as it appears so far from the state of the polls. No amount of Murdoch/Singleton media support has succeeded in arresting the decline from an already low non-honeymoon base. One boggles at what the Abbott-friendly media would be making of his idiosyncratically shambolic tone-deaf performance so far if he were a Labor leader.

    • Patrick says:

      “Peak inequality” ?? Of what and compared to when?

      As for the political skills bit, have you spent much of the past 5 years in Australia?

      • Alphonse says:

        Sorry, my reply is down the list. I blame unfamiliarity with mobile device. And Abbott’s hope for a good news pre- election budget will founder on what he has done to consumer demand. He has hit those with the highest marginal propensity to spend, so exacerbating revenue shortfall. When election time looms, will he address that self-made problem with budget blowout, revenue increases, or by compounding his strangulation of demand?

  8. Yes, I am rather surprised at your sanguine approach to the apparent Abbott budgetary approach, Ken.

    He may not be the most independent source to quote, but Koukoulas’s take on what the Coalition is doing seems pretty right to me – they’re only increasing the tax rate to cover their pet projects (a PPL which only a handful of people think justified, increased defence spending, and paying for carbon reduction instead of collecting money for it) while simultaneously giving up revenue that good policy suggests you shouldn’t – the carbon “tax” and mining tax. To my mind, the fact that there are some unobjectionable elements in their package – at least reinstating indexing of the fuel excise, for example – shouldn’t mean that you take your eye off the big picture that they are coming from an ideologically driven position rather than one guided by evidence and wisdom. (The clearest example of all being the scythe they intend putting through that government effort directed towards climate change.)

    The only positive I can suggest from their strategy is that by introducing a “deficit levy” it may be tactically easier (because you have something to give up as a trade off) to introduce a permanent change to the GST, which it seems most economists think is a bit part of the permanent solution.

    That will be the real challenge for Labor, I think: whether they will be politically opportunistic come the next election if by then the Coalition actually does by then have the policies which are warranted for the long term. But there is nothing to suggest that have such policies at the moment.

    And besides – I think the political future is especially cloudy (worse than when Gillard formed her government, really) because of the role of Clive Palmer. Honestly, has anyone ever seen a one person driven party more obviously destined to implode than this one? Pauline Hanson’s party held more promise for stability than this effort. It’s about time we had a good constitutional crisis anyway, and now that the poisonous Rudd influence has left, Labor might stand a chance of coming out of such reasonably well.

  9. john Walker says:

    Joe Hockey does not strike me as all that ideological ,and there are plenty in the party that are already screaming. Time will tell but I find it a bit hard to believe that they would be doing this ‘very courageous’ stuff, if they thought there was a politically easier path to take.

  10. Tyler says:

    If he’s not ideological then he’s doing a damn good impression of someone who is. Cuts to healthcare, disability support, slugging young people more for education etc whilst imposing a pitiful ‘temporary’ levy on high income earners. Meanwhile of course ignoring the real budgetary doozies like superannuation tax concessions, negative gearing, various vehicles for tax avoidance (ie discretionary trusts).

    That’s not even getting into some of the outright lunacy like finding wind farms ‘offensive’

  11. Alphonse says:

    Abbott’s oppositional political skills were never going to translate, and have not translated into governmental political skill.

    Inequality?
    http://www.treasury.gov.au/PublicationsAndMedia/Publications/2013/Economic-Roundup-Issue-2/Economic-Roundup/Income-inequality-in-Australia

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