Friday, September 18, 2015

Tax is Turnbull's boat problem

The pity of Tony Abbott's prime ministership is that when he did what he believed in, he achieved things and was successful.  It was when he did what he did not believe in that he came unstuck.

The shorthand label of "Stopping the boats" doesn't do justice to the extent of Abbott's achievement.  If the public lacked confidence in this country's migration program, there is absolutely no way the community would have accepted his announcement last week that the number of refugees to be settled in Australia would be almost doubled.  Abbott's success is all the more significant when considering that so many "experts" said what he ultimately accomplished could not be done.

The same applies to scrapping the carbon tax and mining tax.

Although few will now acknowledge it, there once was a time in Australia under Kevin Rudd and Julia Gillard, when it was the deliberate policy of the government to increase the cost of electricity to business and households.  Many politicians, corporate leaders, and media commentators believed it was both a good idea and electorally popular.  Many people, including the staff at the Department of Treasury also thought we should have higher taxes on one of the few industries in which Australia is internationally competitive.

Abbott led the Coalition to stand against the conventional wisdom.  Almost single-handedly he changed the debate on border protection and the carbon tax and the mining tax.  A significant part of Abbott's political legacy will be both these policies themselves, and his demonstration that having a good argument is the best way to overturn the prevailing wisdom.  Argument and evidence is what Abbott and his Trade Minister Andrew Robb were using to defeat the trade unions' xenophobic campaign against the China free trade agreement.

The energy, enthusiasm, and forcefulness Abbott had displayed in fighting against Labor's policies was unfortunately not always brought to bear in advocating for his own policies — especially on economic reform.  What the country needs now is a leader brave enough to argue against the prevailing wisdom that the solution to Australia's budget problem is simple — higher taxes.


LITTLE CHANCE OF SUCCESS

In a way Abbott never gave himself a chance to win the argument for reform given he'd basically ruled out making budget cuts and or changing industrial relations before he was even elected.

The man who became Prime Minister on the back of his opposition to Labor's higher taxes then proceeded to raise taxes himself, giving Australia one of the highest top marginal rates of personal income tax in the world.

In opposition, Abbott was a passionate defender of freedom of speech.  In government, at the first sight of resistance from the prevailing wisdom, he buckled on his promise to amend section 18C of the Racial Discrimination Act which makes it unlawful to offend or insult someone because of their race.  Abbott appreciates more than most the existential fight for the values of the democracy and liberalism in which the West is currently engaged — and will be engaged in for many years.  Freedom of speech and freedom of thought are core values of democracy and liberalism.  To many of his supporters, Abbott's abandonment of freedom of speech was an act from which he could never recover.

The challenge is now for Malcolm Turnbull to develop and present a program of economic reform.  On tax Turnbull will have to do what Abbott did on border protection and climate change.  He'll have to defy the conventional wisdom that he should just raise taxes.

Many of the building blocks for that program are already in place thanks to the enquiries already initiated by the Abbott government into tax and federalism.  The missing part of that trifecta is of course industrial relations which is probably the most pressing policy area of the three.

"What ifs" haunt life and politics.

It's futile, but interesting nonetheless, to ponder how Tony Abbott's term in office would have turned out if, instead of spending his time defending himself against claims that he'd broken his election promises, he'd used his many outstanding personal qualities to fight for economic freedom, freedom in the workplace, and freedom of speech.


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