Tuesday, 3 July 2012

Delusional carbon tax comparisons with GST

It's a fair bet, although less certain than putting money on Black Caviar, that last weekend will be a turning point in Australia's political history, but not as Labor hopes.

The introduction of the carbon tax will be Labor's self-imposed coup de grace. Voters can look forward to a year of election campaigning while the carbon tax erodes our economy and Labor remains paralysed on other key issues like the asylum seeker non-policy. And then there will be an election and Labor will be thrashed.

No wonder the public are sick of politics; we are in our political winter of discontent.

Labor takes solace by comparing the GST with the carbon tax. They only ever quote the comparisons that suit their argument, and that is fair enough as a debating technique, but they are deluding themselves.

For example, Labor now claims it will stick to the carbon tax regardless of the outcome of the next election, but the comparison with the GST is that the Coalition abandoned the GST after it lost the 1993 election.

In the three years from 1990 to 1993, I was the chief GST salesman for the Coalition in my role as shadow treasurer. It was a hard slog, but as a general rule if you had 20 minutes to explain the proposal, then a majority of your audience would accept the GST as a good idea. Our internal polling showed that many thought the GST would be bad for them personally but good for the country.

The trouble was there was never enough time to sell the GST, even with the entire Coalition working to sell it. The GST was widely used in Europe and elsewhere, and it had very strong support from academics and economists. Business liked the GST because it reduced their costs even though they had to collect the tax on behalf of the government.

Despite all the plusses of the GST, in the lead up to the 1993 election (which we lost), we were forced to significantly change the proposal because Paul Keating had effectively eroded our support.

Five years later, despite giving the public a vote on the introduction of the tax in the 1998 election campaign, the Howard government still lost seats. To put it another way, on the two occasions the GST was put to the people at an election, it cost us votes.

Labor can't afford to lose one seat. The carbon tax adds cost to business and reduces Australia's competitiveness; it's an own goal for our economy. The tax in Australia is unlike any equivalent; Australia has become the leading zealous international advocate, while most world leaders will not agree on international action and now can't even be bothered to go to the latest international talkfest on climate change.

The tax is so controversial government ministers either can't explain (as demonstrated by Anthony Albanese on the Bolt Report last Sunday) or avoid trying to explain the rationale for the tax because it is a lost cause. And of course Gillard solemnly promised she would not introduce a carbon tax and then welshed on her commitment.

Labor could have responded to rising public angst by slashing the price of $23 per tonne, but they did not have the political savvy to realise that some acknowledgment of public concern might have smoothed the way for its introduction. Instead they have turned their back on public opinion, and the latest polling shows that opposition to the tax has risen to two to one against. A better comparison for the carbon tax, rather than the GST, might be the poll tax in the UK that finished Margaret Thatcher's political career.

The Gillard Government is terminal, as it has been all through her time as PM; the only conclusion one can come to is that Labor needs to change the leader and, at the same time, change the policy.

Sadly for Labor, the senior cabinet ministers around Gillard seem not to have the authority, the wit or the requisite political savvy to understand that their responsibility is to confront the political reality of Labor's obvious demise.

As an example of the senior people around Gillard, Anthony Albanese does not have the gravitas of a John Button or John Dawkins or Richo; his Australia Day speech, heralded as a vision for Australia, turned out to be taken from a US TV show and confirmed his status as a B-class operator. One of Gillard's many problems is her team, and that is not going to change either.

Unfortunately Australia will have to soldier on regardless. Worse still is that poor decisions are the continuing trade mark of the Gillard Government. The latest example followed the High Court's decision on the funding of the federal chaplaincy program. This decision ruled that the government had no authority for the program introduced by the Howard government (I had retired by then so please don't blame me for that one).

It is a serious matter when a government acts outside its authority. It is even worse if the Parliament, in response, gives up its power to control expenditure by giving the executive virtually unlimited powers to get around High Court decisions. The Coalition suggested a sunset clause but Labor and the Greens voted with the Government.

The Independents in the House are so bereft of understanding of the most basic principles of our democracy that one of them actually said the Government's rushed legislation was somehow good for the Parliament.

Whether you are a Labor voter or a Green or anything else, please don't take my word for this but read what Professor Anne Twomey has said on this issue. Anne is well respected, impartial, and she knows more about how governments work than most people.

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