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Is Labor Stuck Between The Economic Reality And The Political Reality Or Has The Canberra Bubble Burst?

There’s something about the whole Stage 3 tax cut thing that reminds me of the days leading up to the invasion of Iraq.

For those of you who don’t remember it went something like this:

“Hand over your weapons of mass destruction or else!”

“We don’t have any. You made us get rid of them after the last Gulf War.”

“We don’t believe you. We’re going to send weapons inspectors in.”

“Ok, they won’t find anything.”

A little while later.

“The weapons inspectors haven’t found anything because you’ve hidden things and fooled them. Hand over your WMDs of we invade.”

“We told you. We don’t have any!”

After invasion, “Well, they certainly hid them well. Still it was good to get rid of that Hussein guy because he was an awful dictator who fooled us into thinking that Iraq had WMDs.”

The reason that Stage 3 tax cuts remind me of this is because Labor keep saying that they haven’t changed their policy while the media and the Opposition – which some days do seem like the same entity – keep asserting that Labor are considering a change of policy, so why aren’t they being honest and explaining exactly what their change of policy is.

Now, I’d just like to make the simple point that Labor would be foolish if they weren’t considering all options in the current economic circumstances, but with this particular change they have to weigh up making the correct economic call against the political fallout from a broken election commitment. And while they’re weighing that up, they HAVEN’T changed their policy and it’s pretty hard to come out and say we haven’t decided what we’ll do yet because we’re tossing up whether we should ignore the right thing in order to keep a promise we weren’t that keen on anyway.

Keeping promises isn’t always given the blessing of the media anyway. Here in Victoria, Dan Andrews went to the 2014 election promising that he wouldn’t be building the East-West link, so the Liberals quickly signed contracts in the period just before caretaker conventions kicked in. Was it the Liberals who were attacked by the media? No, it was Dan Andrews for wasting a billion dollars on something that didn’t get built. Nobody talked about sunk costs, opportunity cost and the fact that building the road would have committed Victorians for billions more and maybe those billions could have been better spent on something else.

Some people respected Andrews for keeping his promise, but one person I spoke to thought that he should have broken it. Not because of the billion dollars to break the contract, but because it was going to take twenty minutes off her commute to work.

And that’s the point with the Stage 3 tax cuts. The extent to which people care will largely be the extent to which they miss out. As Jack Laing is reported to have said: “In the race of life, always back self-interest, at least you know it’s trying.”

So, while we all agree that it’s important to keep promises, the extent to which we judge people depends on a whole range of things, but one of the most important things is how it affects us personally, For example, you’re unlikely to really care when I tell you that you can’t trust Sally because she promised to give me a foot massage in 1998 and I’m still waiting. It certainly won’t stop you giving her a job, if all her referees give her a glowing report.

So when politicians break election promises, they usually get away with it if it only affects a minority. For example, when they promise more resources for indigenous Australians to help close the gap, the majority might be a bit disappointed that it didn’t happen but when you balance that against the beaut, new sporting clubrooms the government built, well, it’s priorities, isn’t it? They can’t be expected to do everything…

Similarly, if Labor decide to keep the changes in the bracket where the tax drops from 32.5 cents to 30, then fiddle around with the bracket starting at $120,000 and lift it by a figure that covers enough people in that range, they can say screw you to those on $180,000 or more, the outrage of the few that are affected will just make them seem like they don’t appreciate how lucky they are to be on more money than the people who just got a tax cut. In fact, Labor could even raise the $180,000 to $200,000 just to show that they’re not really the Marxists that the Murdoch sabre rattlers would have you believe.

Whatever, I keep coming back to my fundamental point: Labor do not have a definite, confirmed position on the Stage 3 cuts yet, so the idea that they should make it very clear that they in the process of balancing good policy against political damage and they’ll let us know when they’ve decided which way they’re going is just naive.

After all, if you listen to Peter Dutton on “Insiders”…

You have my sympathy.

But as to the substance of what he was saying on the Liberal position when asked if the Liberals would go to the next election promising to reinstate them, if Labor changed the legislation, well, there wasn’t any. Substance, that is….

As he said when asked about what his policy would be at the next election for those earning more than $200k, “We will take a policy to the next election and when we’re successful at the next election, in government, we will honour it…”

So, he’s still committed to the cuts even if he’s not committed to stating exactly what the policy will be, if Labor change the legislation. Which is fair enough, if you’re the Liberal Party, because only the Labor Party should be forced to state what their plan is while they’re still working it out. And he’s committed to calling Labor liars at every opportunity, as well as suggesting that there’s a big rift between Albanese and Chalmers on the tax cuts. The Liberals are a “broad church”, but Labor have rifts.

Ah, just like the mainstream media I’ve spent all this time discussing something which hasn’t happened yet and I’ve completely ignored the story about how Mathias Cormann is stuffing up his job at the OECD and how 26 economists and academics have written an open letter expressing concern about how he has effectively shut down the New Approaches to Economic Challenges which they believe was working efficiently.

Yes, when Mathias left the Liberals to work at the OECD, he managed to reduce the competency of both groups. It’s really pretty amazing that a body like that could employ a man who didn’t even notice that he’d forgotten to pay “HelloWorld” for his holiday.

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14 comments

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  1. Dave Scott

    As a pensioner I and every pensioner and any low paid worker won’t benefit from tax cuts… there is a undercurrent of opinion that with the economy tanking because of inflation, the cuts could/should be delayed untill we get a bit of stability…
    “Potato Head” Dutton and his weaponised media mates in the “Murderoch Media” will scream blue murder, and will ignore WE lowly unconsidered minions completely…

  2. TwainandHume

    Yep, with you on all points. It seems that we see the LNP on the ABC a whole lot more now that they are out of office than when they were in. And each time the hypocrisy seems to increase to a higher level.

  3. L.S.Roberts

    HelloWorld, I seem to remember prime minister Howard reneged on an election promises about taxes and still managed to get elected twice more on the promise of tax cuts. I also seem to remember prime minister Hawke said that the airline pilots dispute would not effect Labor voters because they did not fly ~ in those days. This is a media beat-up. I am sure our comrades in the cabinet have it under control. Delayed or put on another back burner. It’s almost three years to the next election and I’ve forgotten already.

  4. Phil Pryor

    There are many who recall the high and accepted rates in the Menzies years, top rates being c. 67cents in the dollar. Of course, the cashed up had lurks, perks, deductions, bounties, tariffs, incentives, bonuses, writedowns, etc. I recall a year when I paid c. $4,000 on an income of c. $27,000, while P M Malcolm Fraser paid less than $1,500 on a huge gross income (Iinfo due to a friend of a friend in treasury) Our tax system (hah) needs upping, revising, enforcing and getting well spent as government receipts for all that is clearly necessary, especially in education, infrastructure, health, climate change and energy issues, social services justice.

  5. David Stakes

    As for Cormann getting a Job as head of the OECD, who do you think employed him. Like minded Conservatives like himself. Not hard to work that out.

  6. RomeoCharlie29

    Labor should have nothing to do with potatohead and the Opposition, not on the corruption commission or any other thing, send them to Coventry they are liars, hypocrites and the scum of the earth. I would not watch Dutton because I know he has nothing positive to offer. If Labor waters down it’s corruption commission to appease the LNP he can just about kiss majority government goodbye, not because the LNP will win, not in a decade, but because people like me will vote for Greens or independents in protest. I am already pissed off, as I have said on numerous occasions, by the timidity of this government. It knows the stage 3 cuts are shit, it knows it should increase jobseeker, it should know it should introduce a windfall tax on the mining companies, it should know it should get back some of the Covid overpayments but seems reluctant. Chalmers talks about the tough times ahead but with so many options for getting some more money in doesn’t seem to want to follow them up. Meanwhile as Dave says, pensioners just hang in there hoping.

  7. pierre wilkinson

    why announce it now? they can tweak the tax cuts or eradicate them next year, why go through all the angst and political fall out now just to satisfy the media?
    Dutton is praying that there will be an announcement soon so he can escalate his “you can’t trust Labor” campaign and the MSM seem to applaud that action

  8. Terence Mills

    If I recall correctly it was Hans Blix who was the chief weapons inspector in Iraq.

    They sent Hans in to find the arms !

  9. Lambchop Simnel

    ARRRRGH!!
    It Is not relevant when it attacks the paramountacy of reason and decency?

    Assanges, anyone? (as an example of the thinking)

    Look, in the end it is the thieves from the Oligarchy with their narrow minds and interests and pitiful ideology versus a humane and developing civilisation.

    If you yell at thugs smashing a neighbours car, say, is that “politics” because folk up the street wonder at the noise?
    Gimme a break, surely even the most dimwitted Tores can see it for the scam it is by now?

  10. New England Cocky

    Albanese and the LABOR inner city cellar dwellers advising him just have to do the benefit sums, either
    .
    1. about 250 BILLION spent on hospitals, roads & transport infrastructure, alternative energy transition etc to benefit the WHOLE COMMUNITY; or
    .
    2. $250 BILLION poured into the pockets of the wealthy borne to rules in a blatant example of trickle down economic who will then vote for the LIARBRAL NAZIONAL$ COALition at the next election.

  11. Sean

    NEC, that’s it in a nutshell. How much does the average MP get paid?
    That is why they will not backtrack. Anyone know of a good pigs anecdote?

  12. wam

    If you add up all the wages and divide by the number of people you get an average of just under a $100000. If you make a line of all the wages and pick the middle one that will be about $58000. So perhaps 60/70% earn below the average. A small percentage of these people will get $3 or 4 hundred and many will get nothing. Those over the average will get thousands right up to those at $200000 or more getting $9000. Funny that politicians all get a minimum of $200000? What are the chances of those voting down the cuts? There is a precedent that could work. Last century I could claim deductions for school related equipment and expenses. The government gave us a tax cut and removed the deductions. The same removal of deductions could be applied to the stage three cuts. What about it, albo? Wouldn’t your pollie colleagues squeal???
    ps time to talk to frankers????

  13. B Sullivan

    Pierre Wilkinson:
    why announce it now?

    So that the money allocated to future tax cuts can be used now, where and when it is needed without increasing the deficit.

    Prosperity for the rich, austerity for the poor.

  14. leefe

    wam:

    The wealthier people are, the more they generally spend on tax avoidance. The whole system needs to be overhauled to eliminate as many dodges as possible, rather than tinkering around the edges.
    A progressive tax system is fairer, rather than this flattening that the neo-libs insist upon.

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