Tony Abbott is a strange person to run an anti-tax, anti-spending election campaign. Sure, Abbott got the leadership on the back of a simple phrase – ”great big new tax” – liberally applied to the government’s emissions trading scheme. He’s picked up Malcolm Turnbull’s theme of careless waste in education and insulation, and run with it hard.
His budget reply speech in May sung loudly with ”this reckless spending must stop”.
But it was quickly revealed that the night before his reply Abbott had asked his shadow cabinet to approve a pretty reckless piece of spending of his own: a quick cash payment of $10,000 for stay-at-home mothers. This idea was quickly shut down by his colleagues.
That was to be on top of the opposition’s proposed paid parental leave scheme, which had been announced in March, supported by a $2.7 billion tax imposed on businesses. It would give Australia parental leave to rival Sweden’s.
(As an aside, for decades we’ve been told Australia should be like Scandinavia. So why Abbott’s policy has been so enthusiastically laughed at by those who believe we should be playing policy one-upmanship with Pippi Longstocking is beyond me.)
Anyway, now the opposition is back condemning great big new taxes. Abbott claims increasing the tax paid by the mining industry would be like digging out the heart of the economy and sending it, still beating, to Guangdong Province to work the rest of its life making iPad knock-offs.
Putting aside the merits (and demerits) of the mining tax, there’s a reason for this barrage of mixed messages.
It’s that Abbott’s small government identity doesn’t quite fit him properly.
One of the most common claims made about the Opposition Leader is that his ideas are little more than nostalgia for John Howard – to elect Abbott is to give Lazarus another triple bypass. It’s an understandable view. When in 2003 he was asked if he could think of anything he disagreed with Howard on, Abbott responded: ”No. No. I can’t.”
But Abbott isn’t exactly Howard. Abbott represents strongly just one side of the Howard legacy, a side that became more and more dominant as the Howard government got longer in the tooth – big government conservatism.
That’s the best description of the Howard government’s mix of modest social conservatism and giving the middle-class as much welfare as they can stomach.
Howard was much more like a progressive leftie than anybody gives him credit for.
Under Howard, the rich got taxed more, and the poor got taxed less. In 1996, the top 25 per cent of income earners paid 60 per cent of the Commonwealth’s total tax revenue. By 2007, they were paying 67 per cent. That’s a big increase.
On the other side of the city, the bottom 25 per cent of earners were paying 3.4 per cent of the total revenue in 1996. Eleven years later, that number had dropped to 2.5 per cent.
Yet Howard had made his way in the 1980s as an economic dry. He was supported by the rump of free marketeers in the Liberal Party who believed Australia needed to privatise the big, lumbering bureaucrat-run businesses, deregulate and destroy the cosy government cartels (the government’s official Egg Marketing Board, for instance), lower taxes, cut spending and generally get off the economy’s back.
Let’s just call them neo-liberals. Everybody else does.
In government, Howard spent heavily and regulated heavily, but he did come good on some of the neo-liberal agenda. Telstra was fully sold, the GST implemented, media markets deregulated, and so on. Small steps, but enough of them to keep the free marketeers on side. Howard still got to call himself a neo-liberal, and everybody else got to damn him as one.
Howard was a neo-liberal on Mondays, Wednesdays and Fridays, and a big government conservative on Tuesdays, Thursdays and Saturdays.
Neo-liberalism in Australia is primarily an economic agenda. And Abbott’s lack of interest in economics is famous: ”I have never been as excited about economics as some of my colleagues; you know, I find economics is not for nothing known as the dismal science.”
Much more than Howard, Abbott sees the economy as simply an engine to produce money for governments to spend. A good economy is important. But mainly so governments can fund social programs: ”You can’t run a decent society without a strong economic base.” The word ”run” is crucial. That’s hardly a vision of a neo-liberal, dry-as-dust, no-such-thing-as-society Brutopia.
All signals suggest an Abbott government would continue to bump up taxes in order to fund lavish subsidies to the middle class. Like Howard.
But unlike Howard, Abbott’s interest in neo-liberal reform seems limited to WorkChoices.
So there was considerable disquiet within the Liberal Party when the parental leave scheme was announced. Not just with the way it was announced, but the very idea of levying a big new tax on business.
Former treasurer Peter Costello wrote in The Age: ”I have been to a lot of Liberal Party meetings in my life and I can honestly say I have never heard a speech in favour of higher tax.”
After all, many in the party still harbour an intuitive resistance to tax increases, let alone whole new taxes. Howard and Costello knew what they were doing. Their later budgets invariably had some sort of tax cut, no matter how piddly or token.
Any leader will do if you’re winning. (That’s politics. If you’re losing, no leader is good enough.) The Opposition Leader has made big gains. But iron-man Abbott will have to work out harder if he’s going to fit into the clothes of an anti-tax, anti-waste warrior.