GST change is a plain and simple tariff, Scott Morrison

With Sinclair Davidson

The Turnbull government’s proposal to eliminate the $1000 threshold before the GST is levied on imported goods is not a tax integrity measure. It is a tariff, and one that will have serious repercussions that the government does not seem to have considered seriously.

The end of the low-value threshold was first flagged by the government in December 2014. It formed part of last year’s budget. Now there is actual separate legislation before parliament, and a Senate committee inquiry that will give its verdict on the legislation the same day Scott Morrison releases his 2017 budget.

By July, if everything goes to the government’s plan, the commonwealth will be receiving a stream of GST revenue from every global internet retailer that supplies Australian customers with a total of more than $75,000 worth of goods.

That’s the plan, anyway. This proposal is no more convincing now than it was two years ago when it was first announced.

In 2011 the Productivity Commission concluded that inspecting low-value imports at the border to assess their GST liability would cost more money than it would raise. So rather than getting Customs to collect the GST, the government wants to convince foreign online retailers to do it for them.

Let’s imagine this ploy works. Some of the consequences are easily predictable. First, many Australians will substitute away from well-known online sellers — such as eBay and Amazon — that have built excellent reputations for facilitating and protecting trade, to those less well-known sellers that are likely not to charge the GST.

Doing so will expose more Australians to online fraud and lead to them purchasing less reliable products from unreliable suppliers that may not meet our high quality and safety standards. It also will expose more Australians to the more unsavoury sellers on the internet, possibly leading to an increase in unlawful imports into the country.

At the very least, a 10 per cent increase in the cost of digital goods will make intellectual property ­piracy just that little bit more ­attractive. This is a real cost of the policy that must be fully accounted for.

Second, the way the government proposes to implement this measure constitutes an exercise in extraterritorial power. The commonwealth Treasury does not have jurisdiction over eBay (headquartered in San Jose, California) or Amazon (headquartered in Seattle). Attempting to rope them into our tax system will place the Australian government in conflict with our major trading partners. At the very least this should generate trade disputes at the World Trade Organisation.

Doubly so if our trading partners read the Treasurer’s second reading speech introducing the legislation, which makes it clear that this is a protectionist measure to benefit the Australian small businesses that have been “unfairly disadvantaged” by the fact they pay taxes that firms in other countries do not.

This is the nub of the issue. Transactions that occur in foreign countries should not be liable to the Australian GST.

The GST is usually described as being a “consumption tax” but in fact, for practical reasons, it is a tax on sales.

When Australian consumers purchase goods online from, say, a company based in Britain, the sale does not occur in Australia — it occurs in Britain.

The money is exchanged in Britain, the order is produced in Britain, the sale is processed in the Britain and the dispatch order is made from Britain.

The fact the goods are subsequently imported into Australia does not mean those goods should be liable to an Australian sales tax. A tax levied on imports is a tariff. This legislation is an embarrassing reversal of Australia’s longstanding free trade agenda.

Morrison pointed out in his second reading speech that his legislation is a “significant world first”. That is not something of which he should be proud.

In the realm of tax administration, at least, Australia is showing itself to be a bad international player.

Rather than introducing a new tariff to protect Australian business from international competi­tion, the government should focus its efforts on those features of the Australian business environment that impose such high prices on local consumers.

Working to lower company tax, high wage structures and reducing red tape would benefit Australians far more than protectionist measures for their small-business constituency.

From Markets To Speech, Libertarians Straddle Political Divide

When David Leyonhjelm won a Senate seat for the Liberal Democratic Party at the 2013 federal election, many in the media did not know how to react.

Leyonhjelm described himself as a libertarian or a classical liberal. He subsequently was attacked for being too left-wing on drugs, gay marriage and national security, and too right-wing on guns and economics. Many in the press tried to pigeonhole the plain-speaking agribusiness owner as nothing but a kook: one of the crazies who had been raised above his station merely because of the preferential contortions of that election.

Yet what was so different about Leyonhjelm’s views from those of the other parliamentarians? His most controversial position, backing the right to own guns, would not be unusual in a National Party meeting, and it certainly was common enough before the Howard government moved to limit gun ownership. His views on drugs are not much different from those held by many progressives, and they are in step with an increasing acceptance by the political class that the war on drugs has failed. His support of gay marriage is shared by a sizeable majority of the population. And his views on economic policy are exactly those espoused by the free market wing of Liberal members of parliament – indeed, after the 2013 election, there was a widespread belief within Liberal circles that Leyonhjelm’s vote, at least on economic questions, could be taken for granted in the Senate.

It’s hard not to conclude that what makes libertarians unusual is nothing more than the constellation of views they hold, rather than the specific views themselves. There is a near-infinitesimal number of political positions that any individual may take, but the country’s political culture slots everything into a binary division: you are either with the Left, and therefore vote for Labor or The Greens, or you’re with the Right, and therefore vote for the Liberals or Nationals.

So more libertarian-minded people are buried in their parties, awkwardly lumped in with those who they might vehemently disagree with on social or economic issues.

In the Liberal Party, libertarians are found among the ‘‘hard right”, who strangely share that title with the conservatives who focus on social issues like gay marriage and abortion. Labor libertarians, such as they exist, are scattered on the left and right wings of the party, either hiding their admiration for economic liberalisation or turning a blind eye to the retrograde social views of the conservative unions.

It has been more than 30 years since the Hawke government began to deregulate and liberalise the economy. We’re still not over it.

In December 1983, Bob Hawke and his treasurer, Paul Keating, floated the dollar. Their decision was both inspired and visionary. Governments started to place their faith in markets. In 1985, the government opened the banking sector – one of the most tightly monopolised and anti-competitive industries in the Australian economy – to foreign competition. Throughout the next decade, publicly owned businesses were privatised. Tariffs and other trade barriers were lowered.

The labour market was substantially deregulated. The airline market was opened to competition. Ports were sold and restrictions on shipping liberalised. The final break with the past came with changes to the tax system – the introduction of the goods and services tax in 2000 replaced a sales tax regime that had been instituted by James Scullin’s Labor government in 1930.

‘‘Reform”, of whatever stripe, has become the gold standard of government. For the political class, a successful government is that which reforms; an unsuccessful government squibs on reform. But while one of the most common tropes in the press is the business-leaders-urge-reform genre, in which CEOs and corporate lobbyists complain that politicians are avoiding tough decisions about economic change, rarely do they offer any specific proposals.

The reform mantra has allowed each side of politics to dress up regulatory or legislative change as a great reform no matter what its purpose. For the Australian Labor Party, the minerals resource rent tax and the emissions trading scheme introduced by Julia Gillard’s government were considered great reforms. For the Coalition, abolishing those two schemes constituted great reform. Each harks back to the HawkeKeating era not just as precedents for economic change but as some sort of justification for that change. Reform has become the sine qua non of government.

What made the reforms of the 1980s significant was not their constituent parts but that they added up to an agenda. Governments of the time deliberately shifted the economy from one system of political economy to another. They began to instinctively favour market solutions to policy problems where their predecessors had looked to the state. It was a revolution in philosophy as much as it was a legislative program. Once the full significance of this revolution sank in, there was a host of books published by intellectuals of the old Left who believed that Hawke and Keating had hijacked the grand old Labor Party and its socialist-tinged traditions. The sociologist Michael Pusey argued that the commonwealth bureaucracy had been captured by economic rationalists, a sort of reverse-Fabian takeover of the institutions of government. These economic rationalists had a new idea of what Australia ought to look like and what values public policy should reflect.

But budding reformists have a problem. Since John Hewson’s economic policy package Fightback! died at the hands of voters in 1993, there has been no driving vision of what Australia might look like, no vision of what values ought to underpin political change.

There is scarcely any serious contest of ideas. We can attribute that to a generation of politicians too weak to build and defend a vision. It’s a neurosis that infects the entire political class.

My book, in all modesty, is an attempt to offer a new agenda. Libertarianism is a political philosophy that favours liberty in all its facets. The libertarian agenda is deceptively simple but powerful and ambitious. It wants people to be free to trade across national borders and to move their families across them, too.

It provides a philosophical structure for open markets, unencumbered by excessive regulation and red tape, exposed to and strengthened by engagement with a global marketplace. It views overregulation not simply as a cost to business but as a brake on human progress and innovation.

It takes seriously the choices people make about how they spend their money and sell their labour, without assuming that policymakers and the government know better what values those people are weighing up when they make risky decisions. It views entrepreneurs as the central driver of economic growth, and the key to future living standards. And it says that decisions are better when they are made by the people they affect. Libertarianism offers a new and important perspective on the biggest issues facing Australian society, from human rights to the environment and inequality, from trade to sexuality and gender.

It provides a new way through our moribund political debates. The libertarianism I argue for is a fundamentally practical one. It takes people as they are. It treats human society as an impossibly complex, endlessly diverse and infinitely exciting web of relationships and ideas. It asks what economic and political system suits a world in which people have different preferences and want to lead different lives, form different communities and enjoy different lifestyles, but all have equal rights. Government can only limit our liberties, not enhance them. Markets and civil society, by contrast, facilitate such difference, encourage toleration and co-operation, and take advantage of the natural pluralism of a free people.

Libertarianism exposes old problems to a new light, helping us understand how to tackle them and what’s at stake in doing so. As for the inequality debate, governments should first realise they’re already making the problems of poverty and inequality worse before they try to ‘‘fix” economic inequality. Environmental problems are regarded by libertarians as fundamentally property rights problems. Libertarianism also has a distinctive approach to freedom of speech and privacy, two of the thorniest issues of modern public policy. Some conservatives argue that libertarians can’t handle questions of national security and foreign policy – I make the case for a security policy that respects individual freedoms, and a non-interventionist foreign policy.

Returning to the domestic sphere, I tackle freedom of choice, consumerism, and what the human rights debate tells us about the state of libertarian ideas today. The economist Adam Smith wrote that all that was necessary to allow a nation to thrive was ‘‘peace, easy taxes, and a tolerable administration of justice”. What made sense in 1755 is even more compelling now, as technological change and innovation eliminates many of what our predecessors saw as the necessary limits on the market economy. We’re on the edge of a revolution in the way we work, the way the economy functions, and the way we relate to each other. Exploiting these possibilities to the fullest will mean rethinking what government is for – and recognising its limits.

Libertarianism is a philosophy of optimism. It is a philosophy that understands what institutions can and cannot do.

It embraces change. It embraces difference and diversity and pluralism. It wants government out of your wallet and out of your bedroom. Libertarianism, alone, wants individual freedom in all its dimensions.

Beware Google Tax Grabs

with Sinclair Davidson

Last month, Treasurer Joe Hockey ­announced the government had “embedded” auditors in 10 ­unnamed multinational corporations to ensure they pay tax on profits earned in Australia. And the government is “contemplating additional legislative action” to ensure multinationals pay their “fair share”.

The government should tread carefully. This obsession with multinationals and corporate tax looks like the Rudd government’s mining tax debacle. In 2010, Wayne Swan said foreign-owned mining companies were paying only 13 per cent tax in Australia. Tax office data told a different story but the government ploughed ahead. As we learned, populism made for poor policy.

Last month, the British government announced a “Google tax” to tax 25 per cent of the profits earned by multinational firms in Britain that are “profit-shifted” to other jurisdictions.

As the London-based Institute of Economic Affairs pointed out, the British proposal is a “retrospective and arbitrary tax change designed to attack a particular small set of well-identified businesses that are not popular with the public”.

This financial year, the Australian government is budgeting to collect $71.6 billion in company tax revenue. Hockey says just 10 targeted multinationals could contribute up to another $3bn in revenue. This doesn’t seem plausible. Indeed, the entire corporate tax debate is a cloud of confusions and misconceptions.

There is a big difference between tax minimisation, which is legal and tax evasion, which is not and properly so. Hockey has made no allegation of illegality. Perhaps they are not paying as much tax as the government would like but there is no evidence that multinationals are not paying their correct tax liabilities.

Australia has some of the strongest tax avoidance laws in the world. Every government ­announces a “tax crackdown”. The idea that the powers which successive governments have granted the tax office are insufficient to deal with any problem in the tax system is ludicrous.

Governments have defined their own domestic tax base and established rules to define the international tax base.

The British Google tax is a big change to the principles of taxation. Countries can either operate a residency-based tax system or a source-based tax system. Many high-income countries ­operate residency-based systems and then enter into double taxation agreements to avoid (or minimise) double taxation.

The Google tax looks like a shift to a source-based tax system – or worse, an arbitrary hybrid of the two, designed on the run to meet temporary political goals. The British general election will be held within six months.

Politics aside, the question is how big is the problem of profit-shifting? The evidence isn’t as clear as governments and tax ­bureaucracies would like it to be.

In the past, academic studies suggested the amount of forgone tax revenue from profit-shifting was substantial. Shocked by those estimates, the OECD launched a broad campaign against profitshifting and tax competition.

Yet in recent years, economists have gained access to far more ­detailed data sets that offer a better picture of what happens within multinational firms. Now the story looks very different.

In a recent survey paper, Dhammika Dharmapala of the University of Chicago concludes “the estimated magnitude of (profit-shifting) is typically much smaller than that found in earlier studies”. Estimates of the amount of shifted profits are now between 2 per cent and 4 per cent.

This is not enough to justify undermining Australia’s relatively effective and coherent corporate tax system. Or risk damage to our investment reputation.

There’s another reason for Hockey to be careful. When all the dust had settled from Swan’s tax crusade, the mining tax raised almost no money anyway.

Don’t Strangle Communications Networks

The marriage of politics and commerce is a destructive one. This is a lesson the Labor Party should be learning as it tries to work with the telecommunications industry.

Despite Communications Minister Stephen Conroy’s promise that his broadband plan would cut through the barriers holding back a national fibre-optic network, the grand soap opera that is telecommunications policy doesn’t look as if will be ending any time soon. Bidders for the Government’s tender are required to lodge a bond by Friday and provide their full proposals by late July. But Telstra’s rivals have been claiming the carrier is not providing enough information about existing infrastructure. And the G9 consortium is pushing hard for a five-month delay in the tender process so it can get its proposal together.

There has been aggressive and highly public criticism of the tender process, the cost of the bond required to tender and the regulations that will govern this still hypothetical network.

Telstra, AAPT and Optus have even been holding talks to negotiate a broadband settlement, as if they were great world powers preparing a ceasefire agreement. After a decade of government subsidies, regulatory gamesmanship and legislative inaction, the Australian telecommunications industry has never been so highly politicised. But while the fibre-optic network debate has dominated headlines for more than a year, the real action in broadband is elsewhere.

Compared with the lumbering environment of rent seeking created by the regulations that apply to our fixed-line network, Australia’s mobile networks are a paradise of laissez-faire entrepreneurship. In the mobile sphere, there is the rapid innovation and the large-scale investment federal governments have long desired.

Optus modestly announced earlier this month that it was expanding its 3G mobile network to challenge Telstra’s Next G mobile broadband network.

Both Telstra and Optus plan to upgrade the speed of these mobile networks to 42 megabits per second – significantly faster than the fastest wired broadband available at the moment – in the next two years. Both these networks will dramatically exceed the Labor Party’s broadband promise, which it says will provide a 12Mbps internet connection. And it plans to use $4.7 billion of taxpayers’ money to do so.

This pattern of innovation and investment in mobile networks while highly regulated fixed-line networks are bogged down in politics and regulation is repeated throughout the world. In many developing nations, entrepreneurs are bypassing state-owned and corrupt monopoly carriers to build mobile networks instead.

The consequence, widespread mobile ownership, is fundamentally changing these emergent economies for the better. Small producers can easily communicate with their suppliers and customers thanks to the ubiquitous communications networks that the state-run carriers were too incompetent to provide.

The situation in developing nations and Australia is disconcertingly similar. Recall that part of the reason Telstra originally decided to build its Next G network was out of frustration with poor regulations affecting fixed-line services. But just because Australia’s mobile networks are relatively unregulated at the moment, this doesn’t mean the regulatory wolf isn’t howling at the door. The political games played earlier this year over the shutdown of Telstra’s CDMA mobile network illustrates how comfortably the Government can threaten this energetic commercial environment.

Back in the late 1990s, Telstra received $400 million from Canberra to help extend its CDMA network into otherwise uneconomical rural and regional areas. For everyone involved at the time, this seemed like a win-win deal. The government was able to claim it was providing something akin to the universal service that Telstra is compelled to provide for the home phone network. And Telstra received hundreds of millions of dollars to expand its market share. But, at the time, Telstra owned the GSM mobile service as well as CDMA.

When Telstra announced in 2007 it was going to replace both with the snazzy new Next G service, the embattled Coalition government altered the CDMA licence to require Telstra to keep it open until the new network provided equivalent coverage. The result is that the Next G network, and likely any future mobile network that Telstra would choose to replace it, is subject to an unspoken but very real universal service mandate.

Regrettably, having been vested with the power to set the terms and conditions of the spectrum licences that all mobile networks require to operate, politicians cannot resist manipulating Australia’s telecommunications for their own political purposes.

But hopefully the federal Government can draw the right lessons from the success of Australia’s mobile networks. Where politics is absent, there is innovation and investment.

If the federal Government wants Australia to have world-class broadband and mobile networks, it needs to get the politics out of the telecommunications industry.

Set Traps For Rats In The Ranks

When Wollongong City Council was sacked late yesterday, it gained the dubious honour of being the eighth council to be dismissed in NSW within the past five years. This is an embarrassing record for the tier of government that is supposed to be the closest to its constituents. The federal government in far-away Canberra has been sacked only once.

The Wollongong council scandal has everything: sex, bribery and an impersonation of a corruption watchdog officer. But, most of all, Wollongong council has inadvertently highlighted the deep problems with local government administration across the country. Compared with other levels of government, there is little accountability and scrutiny of local government. It is no wonder it often makes expensive mistakes and is susceptible to corruption.

Part of the fault lies in the sorts of people who are drawn to council office. Local government politics tends to attract those excited by the machinations and manipulations of political life but disinterested in public policy.

There is one good thing to be said for politicians motivated by ideological fervour: at least they want the best for their constituents.

Too many people stand for local government with little interest in responsible governing.

As Wollongong has been virtually a one-party city for the better part of a century, it is little more than a sandpit for Labor’s factional warfare.

A main cause of the corruption in local government is the often cited problem of lack of transparency and accountability. Few media organisations are interested in the day to day goings-on of individual councils, at least until a corruption watchdog puts a councillor in front of a judge.

Free from the close scrutiny that federal and state governments are subject to, councils are free to follow their whims. It is perhaps indicative that some of the earliest casualties of the sub-prime crisis have been local government investment portfolios.

If the market had not so spectacularly imploded during the past few months, NSW’s Wingecarribee Shire Council would never have been asked why it was investing in mortgages in Houston and Orlando.

One possible remedy for this sense that corruption is endemic in councils has been raised by the Queensland Local Government Association: politicians would be less likely to accept bribes and gifts from property developers if there were more extensive scrutiny of political donations.

This echoes Kevin Rudd’s declaration yesterday that the federal Government plans to drastically limit campaign donations in the name of good government.

Limiting political donations creates its own problems, not least that doing so tends to favour incumbent politicians who are able to harness the full resources of their government.

But, more crucially, limiting political donations to local councillors does not tackle the real problem. Local governments have too much power over questions of property development.

After all, this is virtually the only reason that bribery occurs between councillors and property developers. Most of the time, local governments are doing little more than imposing petty, nanny state, regulations: putting up noise restrictions for street parties; forcing us to use smaller rubbish bins; ensuring that nobody paints their front door red; and other similar important things. But when they deal with the issue of property development, these councillors suddenly hold vast levels of discretionary power, able to approve or reject multimillion-dollar investments with a stroke of a pen.

Furthermore, the approach that many councils take towards property development is also a leading cause of Australia’s housing crisis. Local government tends to resist urban infill, putting extra pressure on our already critical land shortage. It doesn’t take long for councillors to realise that being caught between NIMBY activists and property developers is potentially a lucrative position.

When councillors and their staff have the power to determine town planning restrictions according to their subjective judgment, and the discretionary power to impose heritage restrictions on properties barely a decade old, it is no wonder that developers feel the need to flatter those councillors with friendship, gifts, and brown envelopes full of money.

Corruption exists where there are opportunities for the manipulation of political power for personal gain. So local governments provide the corrupt-minded with ample opportunities. If we are to solve the corruption problem, we should remove the discretionary power and regulations that make that corruption so profitable.

Is Aunty’s Strength A Net Gain?

The ABC has turned 75 and still occupies a central place in Australia’s political status quo. But getting to its 100th birthday may be tougher.

The ABC has to come to terms with the dramatic technological changes sweeping across the media landscape, changes that are slowly eroding the rationale for public broadcasting.

Unfortunately, many of Aunty’s recent attempts to shoehorn itself into the internet age have been embarrassingly awkward. The ABC has eagerly jumped at fads rather than focused on its strengths.

It has been convinced by a stream of hyperbolic and ridiculous media reports that the virtual world Second Life is the inevitable future of the internet. Second Life is essentially a glorified chat room with a focus on sex and gambling, but the public broadcaster has gullibly embraced it.

Unsurprisingly, in May the ABC’s Second Life headquarters, ABC Island, was reduced to a bombed, cratered mess by the pranksters who roam the online world.

A recent attempt to duplicate the success of the video-sharing site YouTube was also unsuccessful. The website that accompanied the screening of The Great Global Warming Swindle asked viewers to upload their own videos critiquing or commenting on the documentary. But by the time the forum was shut down, only two people had done so.

Building virtual islands and user-generated video sites are hardly central planks in the ABC’s charter. They are also a pretty questionable use of taxpayers’ money; the world doesn’t lack for YouTube clones or chat rooms. However, the ABC’s website is a relative success and understanding why can provide a template for future online activity.

The discussion forums that accompany many of its radio and television programs are popular and cost effective. The network produces a huge volume of content every day and provides much of it online as podcasts and streaming video, instantly multiplying its value for taxpayers.

Indeed, shifting material online is a far more vital task for the ABC than producing yet another mini-series based on a significant moment for the labour movement. Considering the central role the ABC has played in Australia’s history, digitising as much of its archive as possible would be a more valuable education resource.

A debate rages within the ABC as to whether to charge for access to online content. Being asked to pay for ABC programming twice, the first time through the tax system, is hard to stomach. But, more important, the worst thing for a media company is not for consumers to enjoy its content without paying but to not enjoy it at all. The media landscape is characterised by an abundance of material. In a crowded, highly competitive market, few companies can afford to deliberately exclude their consumers.

This abundance also presents a problem for the ABC. Public broadcasting is premised on scarcity. The limited space on the broadcasting spectrum, so the argument goes, means that commercial broadcasters will not be able to provide high-quality or important programming. Public broadcasting steps in to fill that gap.

But with the widespread availability of the internet, quality journalism has never been more plentiful. Quality opinion and editorial is produced by millions of amateurs and professionals, on and offline. Quality drama is available at the click of a mouse from anywhere in the world.

If anything, media consumers suffer from an overload of information and entertainment. In such an environment, it is hard to justify spending vast sums on public broadcasting. The ABC may need to look towards another programming and funding model if it is survive to meet its next big milestone, in 2032.

A useful model to consider is provided by C-SPAN, the US cable TV network dedicated to 24-hour coverage of congressional debate, campaign trail footage, speeches and book forums. C-SPAN is self-consciously focused on objectivity, even going so far as avoiding political commentary.

One of the most important roles the ABC has is broadcasting parliamentary proceedings, and the C-SPAN model would allow it to continue and expand on this valuable programming.

C-SPAN, however, is a good example of how the free market can provide quality public affairs broadcasting in the absence of government subsidy. The network is a privately run, not-for-profit company. An ABC strictly adhering to the C-SPAN model may not have to rely on tax dollars for financial support. Alternative models, such as accepting advertising or even full privatisation, have been well discussed by critics of the ABC. But probably sooner than it expects, Aunty is going to have to provide an answer to a simple question: what role should public broadcasting have in an age of media abundance?

Aunty Will Be Proud Of Maxine’s Candidacy

The Labor Party has decided that its secret weapon in John Howard’s increasingly contestable seat of Bennelong is Maxine McKew. It couldn’t have chosen a better candidate to attack the Prime Minster. After all, McKew has had years of experience doing exactly that at “our” ABC.

Indeed, the national broadcaster has certainly been a more reliable critic than the Labor Party, a fact Kevin Rudd now seems to appreciate. Even after having apparently stacked the ABC board with conservatives, the public broadcaster remains more effective at landing body blows on a conservative government than the ALP has been for most of Howard’s tenure. But it wouldn’t pay to get too excited about McKew.

Bennelong, which the Prime Minister has held since 1974, is demanding more attention. Howard has won the seat in 13 straight elections but his margin has been steadily declining. Since the Coalition’s victory in 1996, it has dropped from 10.1 percentage points to 4.3. The redistribution that moved Bennelong further into Sydney’s western suburbs has merely sped up the decay in support.

Bennelong is also supposedly peppered with “doctors’ wives”, a group of voters whose concerns align perfectly with the concerns aired nightly on Lateline. If they dominate the electorate as much as the ALP thinks they do, then merely writing “ABC journalist” on her resume should give McKew a landslide victory.

But presumably some of the people who have returned Howard for more than a dozen elections still live in Bennelong. And the recent migrants to move into Howard’s electorate may be more sympathetic to Labor than the Liberals, but they may also be more concerned with maintaining strong economic growth and employment than levels of arts funding.

So where is the evidence that McKew is a political genius who can topple one of the toughest political figures in Australian history?

The art of journalism does not necessarily translate well into the art of politics. Success on the television screen does not imply success pressing palms and hugging babies. But even as a media commentator her political judgment leaves a lot to be desired. This is, after all, the person who said in the days leading up to the 2004 election: “Yesterday [the day after then Labor leader Mark Latham’s launch of Medicare Gold] for the first time I got a real sense of the inevitability of the Latham ascension … Yesterday, I saw someone who, if he does not make it on October 9 [the date of the federal election] — and I think he may — he will make it. And he might make it within six months: it may not be a three-year full term that he has to wait … I think Latham’s time could be coming quite soon.”

The financial recklessness of Medicare Gold stood in opposition to everything Latham had stood for as an independent-thinking backbencher. The ALP was punished with one of its greatest electoral defeats.

Right now, McKew’s appeal to the voters of Bennelong is largely theoretical. She may warm the hearts of the latte Left, but since Paul Keating hired author Don Watson as his speechwriter, this has not necessarily been sound political strategy.

And rule No.1 of Australian politics is that one should never write off Howard. Giving him the kiss of death always amounts to mouth-to-mouth resuscitation. In 2004, despite McKew’s confidence, Latham only strengthened the PM’s lead. In 2001, despite Kim Beazley’s seemingly strong position, Howard easily held government. In retrospect, it looks easy. Howard has won more “certain losses” than any other Australian politician. McKew needs more than her Lateline and The 7.30 Report credentials to unseat him.

This cannot help but reflect poorly on the ABC. One moment McKew is an impartial, objective journalist with no political interest except the truth, and the next moment she is a hungry political campaigner, determined to unseat the head of the government.

ABC host Virginia Trioli refuses to vote at elections. McKew has only just joined the ALP. Although ABC journalists may make these symbolic gestures to assure the tax-paying public that they maintain a balanced objectivity, history suggests otherwise. Barrie Cassidy, Kerry O’Brien, Mark Bannerman, Greg Turnbull, Alan Carpenter, Claire Martin, Mary Delahunty and Bob Carr, among others, have moved from the ABC to the Labor Party, probably to the benefit of both. Indeed, on ABC radio Sydney yesterday morning, former Greens candidate for Bennelong Andrew Wilkie may have jumped the gun when he said that “it’s great that Virginia [Trioli] is taking on Howard”. A slip of the tongue or a future Labor masterstroke?

The list of ABC journalists migrating into the Liberal Party is not nearly as illustrious. Peter Collins, a former NSW Liberal leader, and Pru Goward, candidate at next month’s NSW election, cut lonely figures against their former colleagues across the chamber.

The ALP is learning from its mistakes. What use is a celebrity candidate if they don’t contest the election? After parachuting Peter Garrett into the safe seat of Kingsford Smith with a whirlwind of publicity, he largely disappeared during the campaign. But putting McKew up against the seemingly impenetrable Howard, the ALP is signalling its confidence in McKew, and the Labor branches will respect her for it.

Perhaps this will translate into a stronger local campaign by the ALP; it needs any strength it can get.

Howard said yesterday that the McKew challenge will only provoke him to work harder in Bennelong. “When I get news like this it only steels my resolve to work even harder for the people I have had the privilege of representing for the last 30 years.”

Only a fool would think otherwise.