Some time, around 2005 or 2006, Bill Shorten was seeking to knock off the sitting member for Maribynong Bob Sercomb. They were both members of Labor’s right. But for various reasons the left, or parts of it, wanted to block Shorten’s pre-selection.
Shorten gained a front page headline in ‘The Australian’ calling for Australia’s top marginal income tax rate to be lowered to 30%. At the time I was the policy convenor on the Socialist Left Executive. I moved a motion at the ALP state conference on the issue criticising the call for the 30% rate. A debate ensued. Shorten argued that a policy in favour of a top marginal rate of 30% would help Labor gain power and that lowering the top rate to 30% was affordable if the tax system was overhauled- removal of negative gearing, capital gains tax reform, reform of allowable deductions, removal of other taxation rorts.
I took Shorten’s arguments with a large grain of salt. Removal of negative gearing? Yeah sure- as if Labor is ever going to support that I thought. The left had argued for its removal for years. I remember trying to galvanise ACTU support for its removal, with secretary John Halfpenny’s support, when working at the Victorian Trades Hall in the mid 90’s- all to no avail.
After the state conference debate Labor’s shadow treasurer Wayne Swan gave me a call and invited me for a coffee. He assured me Shorten’s call for a top marginal rate of 30% was entirely unrealistic and that if Labor won power it would be doing no such thing. I remember Swan specifically cautioning on the politics of touching deductions that were typically claimed by tradies.
The left of the labor party has never been an adherent of small target policies. We have always tended to think that if a policy has merit and the case is properly argued and put to the people, reason, and the greater public interest, will surely prevail. Many fair minded people outside of politics share this view. Well, it’s wrong.
I do not know at what point in his political journey Bill Shorten put funding of social programs and deficit reduction ahead of reducing the top marginal rate to 30% as the beneficiary of tax reform. But give Shorten his due. He took a set of policies, based on progressive taxation reform principles he has long supported to the electorate. Yes, he may be a mediocre communicator and not liked for other reasons. But I doubt anybody, even Keating or Hawke, could have shielded Labor from the scare campaign that Morrison launched in response to Labor’s proposed tax changes. Then again, even at this election, there was only a couple of two party preferred percentage points separating loss and victory. So it is a least arguable that a leader like Hawke or Keating, or different messaging, might have made a critical difference. Remember though that Hawke and Keating’s advocacy of economic reform was mainly directed towards Labor’s own base. It had to be convinced to accept wage restraint and privatisation in exchange for improvements in the social wage. Much of this agenda was supported by capital and the opposition. Superior communicators they may have been. But their’s was arguably an easier sell.
There is a fundamental problem in politics. There are many issues where people will express support for change in an opinion poll. But this does not mean they will change their vote on the issue. Horse jumping races are a good example. If surveyed 90% of people will say jumps racing should be banned. But very few will care enough to change their vote on this issue. Who will change their vote? Everybody who is directly involved in the industry- trainers, jockeys, owners and any of their friends that they can convince.
Ask most people if they think action should be taken on climate change and of course they will say “yes”. Renewables are nice too. But it does not necessarily mean they will change their vote on the issue. But a coal miner or someone who wants to work in the coal mining industry or sell stuff to them will. This is why any action the world takes on climate change seems likely to be too little too late and we will be increasingly likely to have to resort to dubious technological fixes like solar radiation management.
Do people really want lower house prices? They might say they do so that their kids have a better chance of buying a house. But what about deeper down? Do some parents kind of like the control helping the kids buy a house gives them? And who wants to run the risk that the mortgage on a house might end up greater than the value of the house if the value of the house dips following purchase due to abolition of negative gearing reducing investor demand in the market? My niece and nephew in Townsville (Herbert) already both have houses that are now worth less than what they paid for them thanks to Townsville’s depressed economy.
Labor’s policies would have created broad categories of people who would benefit a little bit from the new policies- for example, families who would benefit from more affordable access to childcare, lower income workers who would have penalty rates restored. But the tax policies created more heavily concentrated categories of people who perceived, following the scare campaign, that Labor tax policies would have a deeply detrimental effect on them- mainly retirees (whether beneficiaries of franking credits or not) and housing investors. This does not make Labor’s policies ‘wrong’ in principle. But principles are worth little without power.
Then there is another problem- Australia is a class based society- just like every other society in the world- even the so-called socialist ones. How else is it that in our country a wholly inadequate allowance paid to an unemployed person is labelled a “hand out”, yet a tax credit given to a relatively privileged retiree who pays no tax is an “entitlement”? But point this out and you will soon be guilty of ‘class hatred’, ‘envy’ etc
So where to for Labor now? Will it move from leadership by a member of the Labor right who took a big target package of very progressive policies to the electorate, to leadership by a member of the Labor left who may ditch much of this package and look to form a smaller target with no guarantee that this will succeed either?
A mismatch is possible- it might be that the internal Liberal leadership implosions in this term of government meant this was the election suited to a small target strategy from opposition. Easy to say with hindsight. And too late now. Such implosions on the Coalition side are unlikely in this term of government. So a small target strategy might not work next time around.
Time will tell- sad ironies- and three long years.