Some home truths for Labor in WA

Clearly one should ask not the Australian Labor Party how the West was won; following Saturday’s half-Senate election, it is far more appropriate to ask WA Labor and Bill Shorten just how the West was lost so decisively and so humiliatingly. At the time of writing, Labor has managed to attract just 22% of the first preference vote in the Senate, suffering a swing against it of close to 5%, collapsing to its worst Senate election result since 1903. The Greens and Labor together look set to attract less than 38% of the combined first preference vote. On Tuesday, outgoing WA Labor Senator Mark Bishop described the result as disastrous, and it is difficult to disagree. Coming as it does in a period when Tony Abbott’s government is stuck on the back foot, behind in the polls nationally and under considerable political pressure on multiple fronts, Labor members and the general public have a right to wonder just what went wrong on Saturday and what is going wrong with the party more broadly in Australia’s largest and proportionately least populous state.

One thing is clear: this isn’t just about Joe Bullock: Labor has failed in recent years to grasp the nettle on some of the big policy issues impacting the lives of people living in Western Australia. There is a clear sense that both the Rudd and Gillard Governments tended to look first and foremost to suburban Sydney and Melbourne for approval when spruiking their policies, with people in regional Australia, the Queensland and the West left feeling like they are a few faceless men short of having meaningful representation in Labor’s party-room and Cabinet. There is a reason Clive Palmer strikes a nerve when he talks about the eastern states stripping the West of its rightful GST takings: it is yet another reminder of the palpable “us and them” sense that Labor has played a part in inculculating.

The Mineral Resource Rent Tax (MRRT) is arguably the most important policy pain area introduced by Labor that impacts Western Australian voters, whether in practical terms or philosophically. The ABS estimates that in 2010-11, the mining industry accounted for 29% of economic production in WA and by 2012, over 8% of jobs. Despite the fact that the MRRT has in any case failed dismally to generate the annual revenue estimated by former Treasurer Wayne Swan, Bill Shorten has been unwilling so far to permit the Abbott Government to repeal the legislation. Nor has Shorten deigned to offer any alternative policy or even a thought bubble that conceptually tackles the issue of rebalancing Australia’s lopsided economy: Labor (and to some extent, the Greens) currently remain chained mindlessly to an idea that – whilst intellectually well-intentioned – simply has not worked for the country either politically or in practice.

Indonesia is closer to home for most Western Australians than Sydney, and even as Minister for Immigration and Border Protection Scott Morrison continues to try his darnedest to “stay mum” on boat matters, Labor has yet to outline a convincing rebuttal to the Abbott Government’s hardline approach to asylum seekers. Polls continue to indicate that the average Australian – and particularly the average Western Australian – is not as far away from the talkback radio consensus as Labor and the Greens would like, and happy to even canvass increasing the “severity” of the treatment of asylum seekers. The Greens have a clear, principled, but unpopular position on the matter: Labor’s position by comparison is just confused. The party that implemented the flawed, draconian and failing PNG solution is also the same party that oversaw the highest numbers of asylum seeker boat arrivals in Australian territory in recent recorded history. There must be a workable middle path that discourages dangerous travel by boat, satisfies the requirements of international refugee laws, encourages regional co-operation rather than conflict and restores Australia’s international reputation as a moral society. If Bill Shorten and Shadow Minister for Immigration and Border Protection Richard Marles are even looking for let alone have found this middle path, they are keeping a very good lid on it indeed, to Australia’s detriment.

Finally, there is the “carbon tax”. Labor’s WA Opposition Leader Mark McGowan is on record as opposing the fixed carbon pricing regime currently in force but supporting the introduction of an emissions trading scheme (ETS). This is a position that Bill Shorten has also adopted at a federal level, offering to support the repeal of the current carbon pricing regime on the condition that the Abbott Government introduces an ETS. This is of course a nonsense offer that the government has the moral authority to reject, an offer that makes a mockery of the mandate won by the Coalition parties at the September 2013 election. In a policy sense, Shorten’s position does not advance the debate. In a political sense, it leaves the Coalition with a cricket bat in its hand to thump the Opposition with, as it continues to rail about Labor’s unwillingness to yield to the judgement of voters in last year’s poll. The commentariat might well sniff and scoff, but for the average punter, the current fixed-price carbon regime is as much of a “carbon tax” as the ETS is. If Labor is to continue to support the introduction of an ETS, it needs to work harder at making the case for the complex system to voters, perhaps in combination with a red-blooded industry policy focused on exploding the size and scale of green energy industries across Australia, as our manufacturing sector flounders.

Yes, things may be grim now, but the national political scenario is about to shift for Labor: the sitting of the new Senate in July will break the current legislative deadlock and force Bill Shorten and his team to reconsider their policy positions – even if they do not want to. We can only hope that this change of the composition in the Senate ushers in a new mindset in Federal Labor that considers a bit more carefully what voters in Western Australia and parts of Queensland are telling them. Winning government in 2016 will be hard; winning government without anything more than desultory support in two big states will be bloody hard indeed.

Be kind, rewind, rollback, dissemble….

In the years immediately after the 1998 Federal Election, at which John Howard’s Coalition successfully won a mandate for introducing the GST, Federal Labor got stuck in a real policy communication rut. Sure, there was quite a bit of popular opposition to the new tax, and there were some very good reasons for Labor to continue to fight against it. Unfortunately for Labor supporters and indeed Kim Beazley’s political aspirations, as the years ticked by and Australia headed towards the 2001 election, the catch-cry of “rollback” started sounding regressive, tired, and somewhat unappealing to the average punter. One started to get the sense that the core premise of Labor’s economic platform was to take the country back in time three years, chronologically if not literally. Not really a good look, unless you’re Marty McFly.

And so it seems to be with Tony Abbott and the NBN. His mumblings are starting to sound like his policy on our telecommunications future is “rollback”; to regress, to move backwards. His latest hysterical suggestion to drop the NBN like a hot potato because of the floods seems patronising and misguided; a cry and a gasp for a headline. What right-minded government, having secured a mandate for an infrastructure project at two separate federal elections, and having already signed numerous contracts binding the nation to agreements to the tune of billions of dollars, would dump the project at the first sign of unexpected external financial issues, or at the suggestion of their political opponents?

One wonders what Shadow Communications Minister Malcolm Turnbull really thinks about the National Broadband Network, and his leader’s cock-eyed approach to opposing it. What one doesn’t wonder is what Julia Gillard thinks about the Coalition’s “duh….rollBACK!?!!” broadband policy for the years heading toward 2013. Two thumbs up?

Crossposted at Larvatus Prodeo.

Injecting some nutrition into the GST

Like many of us, I suspect, I have a strong disposition towards eating significant quantities of chocolate on a regular basis, so I do have some vested interest in the so-called “fatty food tax” that is being bandied about as an option in the war on obesity. The Obesity Policy Coalition, which consists of Cancer Council Victoria, the Victorian branch of Diabetes Australia, VicHealth, and the World Health Organization Collaborating Centre for Obesity Prevention at Deakin University, proposes that an annual nutritional survey be introduced, and that the data gathered from this survey be used to drive the particular foods that the tax would target.

While conservatives are sure to baulk in quick time at the prospect of another tax being introduced and the government sticking its grubby nose into our shopping trolleys, I really do think that a tax-neutral scheme could work, work well, and better yet for the poll junkies in the Rudd Government, be sold effectively to a sceptical public. Tax-neutral, you ask? As Jane Martin suggests in the article linked above, what I believe would work best is for healthy foods (e.g. particularly fruit and vegetables, wholegrain-based foods, lean meats, etc.) to be subsidised by the government through a reduction in the rate of GST for those items, with tax reductions funded through corresponding increases in the rate of taxation on unhealthy foods (e.g. alcohol, sweets, high-fat snacks, soft drinks, energy drinks, etc.). Such a scheme would inject two powerful incentives into the market for people to think more carefully about the choices they make at the supermarket, and the sorts of food that they should be eating a lot of.

Making the scheme tax neutral cuts through a lot of the “tax rubbishing” that is sure to be done by the sorts of one-eyed ideologues who would be happy to drive their expensive cars through the undergrowth before they will contribute to a public roads system, or are happy to see the less well-off attend substandard schools and be treated as substandard hospitals because they don’t believe in public education or health systems. In short, such people are selfish mugs, and normally shouldn’t be given the time of day. However, they also shouldn’t be allowed to let their prejudices taint the perspective of everyday folk who just want the best for their families. Presumably there will also be costs to the economy involved in instantiating such a scheme, but I’m fairly certain that modelling of the scheme would produce long-term health benefits for the nation that dwarf the initial costs of its introduction.

This issue could be a quick win for public health; all that is needed is some analysis as suggested, what is likely to be some fairly gentle tuning of an existing tax measure, and the job is practically done. Mr. Rudd? Ms. Roxon?

Should Federal Labor consider cutting GST?

In the current global economic environment, governments across the world are looking for ways to stimulate spending in their domestic economies. Consequently, the beleaguered British Government is set to temporarily cut the rate of their VAT (value-added tax) for a one to two year period, in the hope that it will stimulate spending in the immediate term. Toby Helm and Heather Stewart have the details that are at hand for the moment in The Guardian:

Alistair Darling will make a high-risk bid to lead Britain out of recession tomorrow, when he is expected to cut VAT and entice the British people to go on a pre-Christmas spending spree.

Last night, as Darling put the finishing touches to the most important financial statement of Labour’s 11 years in government, there was speculation that he might slash the rate to 15 per cent [from 17.5 per cent], a move that would cost the government about £12.5bn a year.

This is an interesting development because it raises a few questions about the Australian Labor Party’s stance on the local GST. Historically, of course, Labor opposed the introduction of the GST at the 1998 election and fought a second unsuccessful election campaign in 2001 on a policy of GST “rollback”. Now that the GST has been in place for practically a decade and is firmly part of the architecture of federal-state funding, it would appear unlikely that the Rudd Government would seek to manipulate it at this juncture. Cutting the rate of GST in Australia would have considerable implications for state funding, given that all revenue generated by the tax flows through to the state governments. In short, for the rate of GST to be reduced, one would have to think that the existing federal-state funding framework would need to in the least be padded by some non-GST contingency funding from the Federal Government – or perhaps reframed altogether.

The other part of the puzzle worth considering is whether lowering the rate of GST would realistically have any effect on consumer spending at all. Let’s say that the rate of GST was cut by the Federal Government tomorrow from 10% to 5% – an astronomical 50% cut. Consumers presumably would have more money in their pockets every week as a result of their reduced weekly spending – money that may or may not then be reinvested in more goods and services, stimulating the economy. Given present consumer confidence and the vast uncertainty that still exists with respect to the global economic situation, it is questionable as to whether cutting GST would actually result in a positive outcome, a fact that Peter Mandelson points out in the Guardian article with respect to the proposed British VAT cut.

In any case, it would appear that the Rudd Labor Government could not realistically afford a rate cut of anything like that magnitude without going into deficit. The revenue generated for the states from the GST in 2008-09 was projected at $45.5 billion, meaning effectively that funding such a 50% GST rate cut would cost in the ballpark of $22.75 billion; a figure already exceeding the now optimistic total budget surplus of $21.7 billion projected back in the May Budget. Without some credible evidence suggesting that cutting the rate of GST even by a small amount is definitely going to deliver results, it would be a highly risky endeavour for the government to pursue it.