Embattled PM ignores carbon, backs Hockey’s tax cut pledge
Frustration with the lack of leadership coming from Canberra prompted two of the nation’s more influential newspapers to stage what was billed as a reform summit this week. But instead of a far-reaching agenda, on display was the sort of self-interested myopia the organisers bemoaned.
Few could disagree with the scene-setting statement: “For too long our politicians have been engaged in bitter personal conflicts, across different parties and within them.” They chided elected leaders for forgetting that Australians want and expect to see our country being well run. Voters certainly tired of the Rudd-Gillard soap opera that ran on repeat for six years of Labor government. But the replacement hasn’t impressed much either. Running the country well seems to be an elusive project. What makes it so much harder is the loss of trust or credibility. For Tony Abbott, regaining it is a losing struggle.
Maybe it’s because the editors of The Australian and its rival The Australian Financial Review share Abbott’s scepticism about the need to take climate change very seriously, but it was not on the draft agenda. That stunned The Climate Institute’s John Connor. He says it was an embarrassing omission, completely out of touch with developments overseas. It ignored the biggest economic reform to be taken in our lifetime – the curbing of carbon emissions.
It was left to Opposition Leader Bill Shorten to remind the gathered businesspeople, union bosses, welfare agents and think tankers that climate change was a challenge and an opportunity for the nation. He said cutting pollution and driving investment in renewable energy lifts productivity in energy generation, distribution and consumption. He invited the brains trust in the room to help design an appropriate emissions trading scheme for Australia, a market mechanism that is already embraced by 40 per cent of the world’s economy. He didn’t get the sane debate the promoters claimed they were seeking. Environment Minister Greg Hunt rejected the call as Shorten only wanting higher electricity prices.
Abbott sent a video message to the forum. He explained he was visiting Indigenous communities in the Torres Strait and on Cape York, the first prime minister in 18 years to do so. There he made a historic break with his side of politics and its antipathy to native title. At the grave of Eddie Mabo, who won High Court recognition of this denied right, he said: “The struggle for justice, justice sought, justice granted and people moving forward together as Australians – that is what we all must seek. And thanks to Eddie Koiki Mabo, that is something to which we are closer to today than we have ever been in our history.”
These sentiments are better late than never. Few doubt Abbott’s commitment to seeing the first Australians recognised in the constitution. But the UN’s Intergovernmental Panel on Climate Change warns the planet hasn’t got 20 years to start getting serious about emissions.
The prime minister was more on the wavelength of the summit with his slogan for lower, simpler, fairer taxes. Amid the Thursday Island palms, he endorsed Joe Hockey’s plans to cut taxes ahead of the next election. This aspiration, or is it a promise, has caused more confusion than excitement. Like the treasurer, Abbott says it means cutting spending further. They already tried this in their 2014 budget, with disastrous political consequences. The Coalition still hasn’t recovered the ground it lost then. But sounding crazy brave, Hockey told Monday’s business audience that voters would be told where the axe would fall before the next election.
The tax cuts Hockey is talking about is simply handing back bracket creep, the situation in which people are pushed into higher tax brackets as a result of inflation. The bill would be $5 billion a year. To help pay for it, he has also signalled tax changes elsewhere. That can only mean tax rises. He seemed to be suggesting that extending the GST to health could be an option, only to run away from that position two days later.
The performance far from impressed the chief executive of the Certified Practising Accountants organisation, Alex Malley, who ridiculed the treasurer for calling busy people into a hotel room to tell them something they already knew. “If it wasn’t so tragic, it would be funny,” he said, continuing: “Hockey appears to be caught in a cycle of restating the problems rather than rethinking the solutions, while key issues are deferred and deferred and deferred.”
The deferral is the strongest clue to just how hard this is for a government that keeps painting itself into corners. The midweek summit highlighted this; it did not quarantine the entire retirement income system from scrutiny and reform. For Abbott and Hockey, tax concessions for high-income retirees costing billions – $40 billion next year – are off limits. So, too, are concessions for capital gains and negative gearing. They are an ideological no-go zone. Something has to give and it looks as if the holy grail of a budget surplus is it.
Hockey was asked on ABC Radio what was the higher priority: personal tax cuts or returning the budget to surplus? He replied both. He insists he has already shown how with the $5 billion of tax cuts for small business. That was offset by savings elsewhere in the budget. Never mind that it is not a structural change. The largesse has a two-year time limit on it. Is that the plan for the income tax cuts as well? The evangelical fervour that the Coalition used to attack Labor’s debt and deficit has dissipated along with its talk of a budget emergency. That’s sure to return after the next election if the Coalition is back in opposition.
The Canning byelection is shaping as an ominous portent of electoral doom. A ReachTEL poll in the seat, paid for by the United Voice union, has given Labor a winning edge, 50.1 per cent to the Liberal’s 49.9 per cent. This same polling method picked the loss of the seat of Ashgrove by Queensland premier Campbell Newman and the collapse of support for his Liberal National Party. It represents a swing of 12 per cent. If that happens – and it would be a bombshell – it’s hard to see Abbott’s leadership surviving.
Already, the Liberals appear not to see him as a plus. He doesn’t feature in their campaign material for the seat. Julie Bishop is the big attraction there. Abbott, we are told, will be too busy to do much campaigning in the electorate apart from one appearance yet to be announced. The Liberal candidate, retired SAS captain Andrew Hastie, struggled to keep to the party script when asked on Seven News if he would welcome the prime minister on the campaign. The idea is to airbrush the PM out as much as possible, to make it a contest between candidates and not their party leaders. While Bill Shorten is not exactly Mr Popularity either – he rates a minus 18 satisfaction rating in the latest Newspoll, compared with Abbott’s minus 33 – he plans to make several forays on the trail.
The Liberals are confident Hastie has come out of the “question of conduct” controversy in front, although the defence force has not completed its investigation into a soldier under his command committing the war crime of cutting off dead enemy combatants’ hands. Hastie has been exonerated but complains the military has left one of his former charges in limbo. Labor is convinced the candidate is no shrinking violet when it comes to playing partisan politics with national security.
Hastie told the state Liberal conference one of the things that propelled him into politics was the Labor government “not having our backs” when he was fighting in the Middle East. This infuriated former treasurer Wayne Swan. He says everything the military asked for in that area, they got. Cuts elsewhere in the defence budget did not apply to Afghanistan. Shorten’s office says operations were ring-fenced, including personnel and front-line equipment. “To claim otherwise is a lie.”
Fairfax Media reports that Abbott pushed for Washington to request Australia to join air strikes in Syria fuelled suspicions that the escalation was timed to coincide with the byelection. Abbott denies the story, saying it was United States President Barack Obama who first raised the mission extension with him. Pointedly, US ambassador John Berry would not confirm this.
The agenda for our Middle East commitment is being run out of the prime minister’s office. Counter-insurgency expert David Kilcullen lends weight to the perception that there’s more politics than strategic necessity in the mooted new deployment. He told ABC Radio that our contribution of six fighter aircraft, while welcome, is “not a game changer, put it that way”.
Whatever the case, Abbott clearly needs something to boost his stocks.
This article was first published in the print edition of The Saturday Paper on Aug 29, 2015 as "Getting down to sparse tax". Subscribe here.