Leadership needed on tax reform

For too long, politicians have been allowed to tiptoe around the issue of tax reform without achieving anything meaningful.

Tax reform in Australia has been placed in the ‘too-hard’ basket by successive federal governments for much of the past decade.

The days when the government announced a reform, explained why it was needed, and then just did it are long gone.

It’s a simple exercise to track the declining quality of public discourse, which goes back decades and is demonstrated through the increasing use of scare campaigns. While it’s tempting to think it all started with Paul Keating’s devastatingly effective scare campaign against John Hewson’s tax reform package in 1993, it was already happening before that. 

The Liberals’ scare campaign during the 1980 election over Labor’s planned introduction of a capital gains tax was integral to their win. Later, in opposition, the Liberal scare campaign over quarantining negative gearing losses in the mid-1980s contributed to the Hawke government’s reversal of the policy. 

Labor then carbon-copied the 1993 anti-tax reform scare campaign in 1998, which only just failed because of John Howard’s massive parliamentary majority.

In 2007, Labor’s campaign against WorkChoices was up there with the best (i.e. worst), and then Tony Abbott’s relentless criticism of the carbon tax set a new benchmark in overreach. 

Things have spiralled down to a state of gridlock. In days past, Labor and Liberal would only argue over the things they actually disagreed on, and then pinch the other side’s good ideas. But the combative strategy nowadays is a lazy, dumbed down, one-size-fits-all directive – devise a scare campaign. 

Some of our newer federal politicians know nothing of the negotiated outcomes of the past, and are only versed in the party politics of the negative; that is, just say ‘no’.

It doesn’t occur to them to assess the merits of a suggestion, in case it’s worth pinching; just find the scare campaign because that’s party politics. It’s all they know.

So, what do we do?  Well, I think a fine start would be to stop tiptoeing around the subject and start calling out those who just say ‘no’ without offering anything constructive.

Labor’s leadership team needs to pull their heads in over tax-mix reform. We’re better off shifting the tax burden from income to consumption, with appropriate shielding. 

Opposition leader Bill Shorten recently said Labor didn’t believe that a GST helped things. Such empty rhetoric should no longer be allowed to pass as a credible contribution to a contest of ideas. 

Rather, Labor’s apocryphal tirades on tax-mix reform must be shown up as the hollow bunk that they are.

The Liberals haven’t been any better. It bothers me no end when they cower behind a spent political agreement that required a unanimous federal/state/territory consensus to change the GST rate or base. There’s virtually zero chance of that, so it’s a convenient excuse to do nothing while assuming the appearance of mature policymakers.  Some would call it a tacit admission of being unable to, as Paul Keating wisely puts it, “turn good policy into good politics”.  I’ll just call it weak leadership.        

We need a circuit breaker to diffuse the standoff, something akin to hitting the reset button.  And maybe, just maybe, we’ve got it. 

There’s been a noticeable difference since Malcolm Turnbull became prime minister.  Discussing policy at a deeper level, both practical and intellectual, and in a calm and reasoned fashion, has suddenly become trendy again. The bar has been raised, and has exposed the true nature of the tactics to which we’ve become accustomed, puncturing our tranquilised state.     

Hopes for anything meaningful coming from the government’s impending White Paper on tax reform had been steadily waning. But now, the standards of policy discourse have been noticeably raised. It’s still early days, but good policy might just get turned into good politics such that we could actually get some decent reform out of the process. 

For now, we must seize the opportunity to enforce our newfound tolerance limits. It’s time to grasp the nettle.

David Montani

Nexia Perth

david.montani@nexiaperth.com.au