One of the recurring problems with Labor’s attempts to communicate its economic message has been a tendency to say different, often contradictory, things at the same time. In particular, the government’s outstanding economic management record — low unemployment, low inflation, low interest rates, moderate wage growth, high household savings, triple-A credit rating — has been wilfully obscured by a reflexive need to tell voters it understands they’re still “doing it tough” and that it understands families face cost of living pressures.
Except, unless you’re in the bottom quintile of household incomes, probably because you’re on Newstart, which has been held at such punitively low levels that even the hairshirts of the Right have started blanching at it, there are no “cost of living” pressures, merely pressures created by consumption choices of households with more purchasing power than ever before.
Thus Labor finds itself in bizarre situation of having to explain, despite its continual insistence that families are indeed facing “cost of living pressures” how inflation is now so low it has seriously undermined tax revenue.
For a government that is flat out communicating even the simple message that it has masterfully managed an economy in unusual and challenging global circumstances, such nuance was certainly beyond Prime Minister Julia Gillard yesterday. The result was the worst speech she has given for a long time, possibly since that lurid Luna Park effort a couple of years ago in which the jaundiced eye was turned on the socialite.
From the struggle to explain the complex issue of nominal GDP growth to the experience of “John”, her exemplary citizen whose financial affairs did little to illuminate the government’s plight, to options that were off the table, then back on again, then a “guessing game” as to what the contents of the table actually were, it would have provided an unbiased observer (though given the strong media presence, there probably weren’t many) with little insight into what the government is actually trying to do. Revenue has fallen, and urgent and grave decisions are being contemplated, but the government won’t cut to the bone, and it will keep preparing for its costly National Disability Insurance Scheme and education programs.
Confused?
“If Labor wants a tip on how to fund big programs with a modest levy, it should look to Abbott …”
Compare that with the Prime Minister’s nuanced and mature speech with which she kicked the year off, the one entirely ignored by the press gallery and most of the commentariat because she mentioned the election date and wore glasses. In that speech she explicitly knocked the “cost of living” claim on the head but acknowledged other types of pressures on households in areas like low super returns, flat property prices and commuting times. And she cleverly used the high dollar as a spur to more reform, more or less saying that instead of whingeing about the dollar or talking about intervention to bring it down, we’d have to suck it up and get smarter. That speech was a high point of Labor’s communications since media advisor John McTernan arrived, evidence that the Prime Minister’s Office had not merely sharpened its messaging but settled on a coherent, sensible economic narrative.
Yesterday’s effort had little of that.
And most bizarrely, Gillard now finds herself owning, and inevitably being berated for, a proposal to use a levy to fund the NDIS that just nine months ago was put forward by the conservative premiers that she had rejected out of fear Opposition Leader Tony Abbott would use it in a scare campaign. Indeed, Queensland Premier Campbell Newman declared he was proud to put forward the idea of a levy and accused the Prime Minister of cowardice in not embracing it last July.
If the government does go down the route of an income tax rise for NDIS, it will have completely botched the politics of it, given it had the chance to embrace it backed by the conservative premiers last year.
If Labor wants a tip on how to fund big programs with a modest levy, it should look to Abbott, who’s going to hit middle-sized and larger companies with a tax rise to pay for his paid parental leave scheme, a direct wealth transfer from company shareholders to high-income earners, who’ll be able to obtain up to $75,000 under his scheme. As yesterday’s Essential Report results showed, voters are quite happy with the idea of companies paying more tax, probably partly because they’re offended at the sheer size of profits being earned by the big banks, and partly because more corporate taxation appears to most people to be a victimless crime, given they never see the lower investment and employment that might (or might not) result from higher taxes.
Thanks Bernard. Great stuff.
What I still don’t understand is the government’s strange distinction between savings and revenue. Even today, Penny Wong was trotting out the “..every structural spend needs a structural save” line when discussing a possible increase in the Medicare Levy to fund the NDIS. Surely that would be a revenue measure, not a saving? Restricting access to government benefits and subsidies, scuttling underperforming programs, shedding staff and even another “effectiveness dividend” would be savings. Increasing levies or tax rates, fixing broken taxes and removing tax write-offs would be revenue measures. Surely there is a responsible mix of both that can be talked about without treating us like dimwits? No wonder it gets more and more difficult to understand what governments are talking about.
One of the few messages Labor has successfully conveyed to the nation was the unfortunate promise of a surplus in 2013.
It was hard not to wince whenever Swan and Gillard guaranteed a surplus, particularly as late as September 2012. We, the electorate, heard it – we didn’t necessarily believe it but the oft-repeated message registered loud and clear.
If the government could match that level of communication with some of its better-advised policies and achievements September would not appear so bleak.
Maybe the social media such as Facebook might get Labor some traction for its positive economic performance. There might be enough time for PolitiFact.com, Crikey’s Get Fact and the ABC’s coming fact checker program to counter the propaganda spewing out of MSM. I still reckon Abbott will wind up in a similar position that Gillard finds herself in. I don’t suppose there are any red, or even pink candidates standing I could vote for? Hmmmm?
I reckon Gillard’s gone through her Thatcher phase and is in “Dame Edna Everage” now.
I saw an interview on TV with Jane Doe on some buying/selling of something and she said the words “doing it tough” and I thought yes all those Australian’s doing it tough and are going to Bali for there holiday next week. Everyone knows someone is doing it tough it just isn’t them.