Hands up anyone old enough to remember the GST wars?
In the early 1980s John Howard — Liberal treasurer at the time — expressed interest in a consumption tax but was warned off by prime minister Malcolm Fraser. Howard’s successor at Treasury, Labor’s Paul Keating, energetically spruiked one in 1985, inside the party and in public, but he too was eventually rolled by his leader. Then, early in the next decade, Keating betrayed not a skerrick of embarrassment as prime minister as he employed his substantial rhetorical skills to help bury John Hewson’s Fightback! package, which had a GST at its centre.
A couple of years later, in 1995, opposition leader Howard was forced to promise “never ever” after some loose-lipped equivocations to a business audience. Then, in his first term as PM, he announced he’d changed his mind and would seek an electoral mandate for a GST at the next election.
Did he earn popular kudos for promising to run the plan past voters first? A bit, but not much: his personal ratings and party voting intentions immediately dropped. Claiming it wasn’t a broken promise didn’t wash.
The 1998 election vote outcome was not very different from that earlier “GST election” in 1993 — Labor won both — but this time the Coalition retained a comfortable majority of seats. When the GST started operating in July 2000 it was not without teething problems, but also not the cataclysm most voters had expected. (Read this tasty excerpt from an exchange between Labor’s Mark Latham and his party’s former pollster Rod Cameron on Lateline at the time.) At the next election the Kim Beazley–led Labor opposition, rather than promising to unscramble that complex GST egg, offered something called “rollback” — a bit of tinkering around the edges. The Howard government was re-elected.
Since then the GST has sat securely in the policy infrastructure. Econocrats regularly urge a broadening and a lift in the rate (with compensation for people on low incomes) but that’s a no-go politically, something that each side of politics routinely forces the other to rule out.
How about the Gillard government’s “carbon tax”? Like the GST, it involved revenue gathered with one of the government’s hands and then returned through spending and direct tax cuts with the other — though, at around a fifth of the dollars, it was much smaller than the earlier tax. The “tax” was announced in March 2011, was immediately branded a broken promise (in reality it was a price rather than a tax, and not really a busted pledge), was legislated later that year and came into operation in July the next.
Folks with memories uncluttered by post-hoc projection will recall a stark difference between the sixteen months before its introduction — endless headlines, rallies, and fear and loathing of what this “big new tax” would do to people’s budgets and the economy — and the time after. With no new items on payslips, a few price rises and a bit of compensation, it largely subsided as a salient issue. In fact, polling for the unpopular Gillard government marginally improved. (Things turned south again the following year.)
Opposition leader Tony Abbott’s longstanding promise to repeal the carbon price got some mentions in the 2013 election campaign, but like all politicians he preferred to emphasise his opponents’ crimes rather than spell out his own plans. And when the Abbott government got rid of the price the next year, the enthusiasm in the electorate was underwhelming.
What is the point of these frolics down memory lane? Most importantly, to hammer home the big difference between the electorate’s fear of change before it happens, and the relative ease with which voters tend to adapt to the new reality.
Going even further back, most of the still-ballyhooed Hawke–Keating changes were sprung on voters midterm and — importantly, vitally — put in place well before the next appointment at the polling station. By then the bite had turned out to be infinitely less painful than the bark for the vast majority, and the opposition, having warned of Armageddon, had to decide whether to promise to repeal.
(In the 1980s and early 1990s the Coalition generally did put its money where its mouth was by promising to undo policies it had opposed. It remained in opposition until its successful 1996 campaign, at which “small target” entered our political lexicon.)
This week the Albanese government flagged a new twist on tax reform. Its superannuation changes are a small-ticket item, not remotely in the same league as the GST or the carbon price, and not even like opposition leader Bill Shorten’s franking credits; for one thing, the Coalition and News Corp will find it impossible to dig up lovable old codgers of meagre means who will affected by it.
But Anthony Albanese has broken a basic rule of the politics of reform: the changes, if legislated, won’t happen until after the next election. In that way, on a much smaller scale, it’s more like Howard’s GST, which nearly cost him the 1998 election.
A policy bedded down before voting day becomes part of the status quo, and if the opposition says they’ll undo it, it’s they who are proposing change. And that makes them susceptible to questions about how it will work, where the money will come from, whether the sums add up, and what the unforeseen consequences are.
Now it’s true that, all else being equal, if you’re taking a new policy to an election you’d rather be the government than the opposition. Governments are known quantities, and the risk factor doesn’t attach so easily to their plans. But as Howard found in 1998, the policy itself, or imaginings of its repercussions, can still generate a great fear of the unknown.
Albanese evidently believes his strategy will enable him to claim he’s not breaking a promise — that there was always a subliminal “in the first term” asterisk when he talked about tax during the 2022 campaign. (From memory, this caveat was uttered during the campaign, but only once or twice. It’s a rather dangerous thing to say, because individual voters can’t be sure that if the new government proposes something obnoxious, other voters will deny them a second term.) So he’s running it past the electorate first. Yes, he’ll get a few points for holding off until after the election, but that won’t negate the “broken promise” charge.
I’m not saying first-term governments shouldn’t break campaign undertakings. Most of the time it’s inevitable.
Abbott’s prime ministership is the oft-cited cautionary tale about breaching trust in this way. But Abbott’s unpopularity had many causes, and the biggest problem with most of his 2014 budget nasties was that, thanks to the Senate, they never even became law, let alone begin operating. They just floated around, discussed ad nauseam, creating a greater and greater stench. He got the worst of both worlds.
Albanese is generating a similar interplanetary configuration. If the super changes were coming into effect this July or next, they would quickly more or less cease to be a topic of interest. As it is, he’s being seen as an election promise breaker but will go to the 2025 contest with no pay-off, no added authority from making us eat our greens.
Unlike Kevin Rudd and his rhetorically woeful treasurer Wayne Swan, the current government has not slouched in the important task of burying the legacy of its predecessor. Treasurer Jim Chalmers in particular never misses an opportunity to repeat the “trillion dollars in Coalition debt” line. The government even leads the opposition in surveyed perceptions of economic competence, something I don’t believe was ever achieved under Rudd (or Gillard).
(For various reasons Scott Morrison’s government is an inherently juicier punching bag than Howard’s.)
But if a first-term government is going to renege on a promise (as all of them, including — or especially — the successful ones, do) it should be done sooner rather than later, accompanied by heartfelt regret that its abominable predecessors, still fresh in voters’ minds, left no other option. And the new measure needs to be operating well before the next election.
It’s natural that a newish prime minister still enjoying sky-high ratings and an easy life with the media will be reluctant to rock the boat. But the good times will be over one day. As Kevin Rudd learned, a determination to postpone the inevitable can be fatal: the honeymoon has to end eventually, and when his ended in 2010 he had few difficult decisions to show for it.
True, this isn’t the GST, or anything like it. But if Albanese thought this week’s announcement would stop the hubbub then he already knows he was wrong. Sweet-talking journalists into describing something as a political masterstroke won’t make it one. One of them is already speculating that the government, having “found a way not to breach voters’ faith,” might attempt “an overhaul of negative gearing and capital gains tax” by the same method: legislation that doesn’t kick in until the next term.
Now that would make the next election very interesting indeed. We would truly be closer to GST territory.
Labor supporters should hope this tactic is a one-off. It is not a habit Albanese should get into. •