Good policy is good politics, right? We’re about to find out. And we’ll hear about it all the way to the next election.
Moving the substance of the stage three tax cuts around so that less goes to top-end earners and more to middle-income earners is fairer. It will reduce the regressivity of the tax system that would have been in place on July 1. It’s good policy, albeit probably slightly more inflationary than the original package given high-income earners are more likely to save extra income than middle- and lower-income earners.
Yes it’s good policy. But it’s bad politics. Truly spectacularly bad politics. Opposition Leader Peter Dutton must be unable to believe his luck.
The core of Anthony Albanese’s approach to government is to offer competent, reliable, no-surprises management. His is a government that keeps its promises so that people learn to once again view governments with trust. Keeping the stage three tax cuts as they are, a promise Albanese made before the last election, was part and parcel of that approach.
Now that promise has been broken. No ifs, no buts, no John Howard-style casuistry about what was said and when. Defenders might say that the tax cuts will be delivered in full, just with a shift in their targeting. Well, try telling that to Paul Keating, who got crucified for altering his L-A-W tax cuts by putting half into super and bringing forward the other half. Albanese and Labor will insist that most workers will get more money than under the original package. The only “victims” are people earning over $150,000. Whether the government can actually sell that remains to be seen. Ross Gittins wrote this morning that if Albanese can’t sell such a revision, he should get out of politics.
Dutton will be only too happy to help with that.
Dutton’s central charge (other than yelling “broken promise” over and over) and primary response to the “most workers are better off” line will be why Albanese didn’t make the case for his planned changes before the last election. If this is such a good idea, so much fairer, so much better policy, why didn’t Albanese tell voters during the 2022 election campaign that he was going to rejig the tax cuts? Australians could have voted for the merits of the two plans. Instead, Dutton will argue, and he’ll have a good point, Albanese told voters one thing before the 2022 election and did another thing after.
So was the prime minister lying before the election when he said he’d deliver the tax cuts? Or did he intend to deliver them, only to decide that changing circumstances warranted a change in policy? If so, what’s changed? Inflation has surged since then, but is now subsiding, and more quickly than the RBA expected — partly thanks to specific inflation-targeting measures by the government that have worked to make life easier for households without risking further inflation.
Keating couldn’t sell his revised L-A-W tax package. It was one of the reasons for the 1996 Howard landslide. No-one in the government or in public life is a patch on Keating when it comes to selling policy, but the Albanese government has given itself a similar task.
If Scott Morrison as prime minister had similarly broken an election commitment of such magnitude, he’d have been savaged. Doubtless progressives, Greens (who’ll claim credit for any change) and Labor partisans will claim this is different. But in effect they’re saying it’s okay when their side breaks election promises. And yet they wonder why voters are so jaded and alienated from politics.
For Dutton and the opposition, the path to the next election is now clearly signposted. Labor has handed them a prize gift and they’ll keep using it until polling day. The only worry for Dutton is whether his Treasury spokesman, Angus “The Invisible Man” Taylor, will be able to prosecute the case well enough against Labor’s best performer, Jim Chalmers. But Dutton will take the lead, Abbott-style, in hounding Labor.
If Labor can succeed, it’ll have done so where Keating failed, where Julia Gillard failed on her carbon pricing scheme labelled a tax by Tony Abbott, where Abbott failed with his 2014 budget. Only John Howard, breaking his “never-ever” promise on the GST managed to avoid the same fate — and he did it by the narrowest of margins, as Kim Beazley nearly snatched victory in 1998. And ever afterward, Howard could say that he took his broken promise to an election and asked voters’ permission — something Albanese can now never say.
Has Anthony Albanese done the right thing? Let us know 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.
