In his piece published yesterday, Crikey‘s Bernard Keane makes the case that if Labor fails to deliver the stage three tax cuts, it will derail its strategy of offering “competent, predictable government that voters will reward over the long term”.
As he observes:
Under Albanese, Labor has ditched a risky, ambitious agenda for a cautious, centrist economic management model aimed at achieving multiple terms in government and making reforms a permanent part of the fabric of Australian life — more Medicare than carbon price. The selling point to voters is stable, competent government that provides certainty and delivers for working families
So far, so neoliberal. As a reconstructed former neoliberal, Bernard might have observed the extent to which the thinking of Prime Minister Anthony Albanese and Treasurer Jim Chalmers was formed by the 1990s and early 2000s. This is reflected in Chalmers’ comparisons to the Howard government and reference to Tony Blair as a personal hero.
But neoliberal or not, Labor’s strategy has already failed. It rested on doing a better job of implementing the previous government’s policies while raising living standards, implementing just enough progressive reforms to build the case for more active policy in the (putative) second and subsequent terms. The most notable examples were to be the Voice to Parliament, the Housing Australia Future Fund (HAFF), and the National Anti-Corruption Commission (NACC).
Labor has failed to deliver on both fronts. We are finally seeing some growth in real wages, but most working families will have lower real incomes by the next election than when Labor came to office. The Reserve Bank, freed of any remaining constraints by Chalmers, is determined to ensure this. The “cost of living” crisis is not that prices have risen but that wages have failed to keep pace.
The situation is even worse when taxes are taken into account. Although Scott Morrison is often derided as a fool, his tax reform strategy was a political masterstroke. The benefits to low- and middle-income earners in stages one and two locked Labor into supporting the entire package.
Having won office, Labor has had to implement effective tax increases for most workers — through bracket creep and the expiry of the low- and middle-income earners (LMITO) tax offset — to save up for handouts to high-income earners. The end of LMITO alone is more than enough to offset the $20 billion or so of “cost of living relief” trumpeted by the government and its media supporters.
The reform component of the strategy has also failed. The LNP sunk the Voice, the Greens took the housing issue and showed HAFF for the sham it was, and Labor’s persecution of whistleblowers highlights that legislating a NACC will make no real difference. The failure of these reforms was not a matter of bad luck: it reflected fundamental failings in Labor’s strategy and Albanese’s understanding of the political situation.
The prime minister assumed that Labor, having achieved a majority of seats in the House of Representatives, had a “mandate” to implement its program, despite receiving less than a third of first preference votes. But as the US saying (popular when prices were much lower than today) has it, “that and a nickel will buy you a cup of coffee”. A lower house majority gives Labor the capacity to form a government but not to pass legislation through the Senate, let alone carry a referendum.
The Voice referendum was always a long shot, but Albanese’s mishandling of it ensured a crushing defeat. Referendums can only pass with bipartisan support, but the treatment of the Voice as a specific Labor policy gave the LNP every reason to oppose it, and encouraged Albanese to resist even the appearance of negotiation over the infamous “details”.
Labor’s approach to housing policy showed the same hubris. But even more importantly, it was crippled by the commitment to the stage three tax cuts and debt reduction. These constraints meant that the program had to kept small and off the budget books. So instead of a program for public construction of social housing — seen as a high priority by most Australian economists — we got an off-budget fund.
HAFF was touted as a $10 billion fund that will “provide disbursements used to deliver 20,000 new social and 10,000 affordable homes over five years”. In reality, the fund was supposed to use borrowed money to invest in shares, then use the profits (average value $400 million a year) to support housing. At current costs, that would be enough for around 1,000 homes a year, but the plan wasn’t to build houses but to provide a modest subsidy. Even accepting the dodgy accounting, 30,000 homes over five years would have been nowhere near enough to impact Australia’s housing crisis.
The bogus HAFF scheme crumbled as soon as it was exposed to scrutiny. The Greens took ownership of the issue of rental housing and extracted commitments of billions of dollars in direct public spending before letting an amended version of HAFF through Parliament.
As the opinion polls are confirming, Labor’s multi-term strategy has been a comprehensive failure. Without a new tax policy, the question isn’t whether Labor will retain (let alone expand) its majority but whether it will get a second term at all.
Is Labor well and truly off the rails? If so, how can the party get back on track? Let us know your thoughts by writing to letters@crikey.com.au. Please include your full name to be considered for publication. We reserve the right to edit for length and clarity.
I can foresee a lot of arguments turning up in the Comments on the pros and cons of Labor. I commented negatively on Keane’s piece yesterday, and someone rightly pointed out that Labor no longer represent the lower paid and Left-leaning, so cancelling the Stage Three cuts would be self-destructive in the next election. But… what exactly does Labor stand for? I watched a grim ABC doco on homeless women a few days ago, and none of them believed the government had their interests in heart. They’re spending billions on submarines and allowing renters to be extorted at will by property owners. They’re still committing to fossil fuels and allowing land clearing while preaching about global warming and species decline. Now there’s effective tax cuts for the upper end, and next-to-useless ones for the
peasantslower earners. That’s just for starters.I understand that there are no major votes in derros, renters, greenies and human rights, but Labor once used to support this stuff, used to be a advocate for equality, environment, and social justice instead of some Bizarro World copy of themselves, not quite evil enough to be the current Liberal Party, but not wanting to be good enough, decent enough, to risk votes or bad press. There’s only so long you can straddle a backyard corrugated iron fence before you slip and lose that which people once respected.
Agree with everything you say. Labor has lost its way. I voted to get rid of Morrison but we seem to have got worse.
On what planet is the ALP worse than Morrison et al?
“Derros”! Really? How about some respect for the there-but-for-the-grace-of etc citizens who don’t have a voice.
Labor had learned that you only need to keep the greed ridden middle class satisfactorily happy and empowered to hate the poor and they will remain in power.
Mainstream Australia has no interest in poverty, environment, women’s issues, male violence and such. Labor has learned that to remain in power, you need appeal to bigotry, greed and paranoia.
Agree just a little bit, but reflects more nostalgia for the good old days of unskilled work, union membership, awards and ALP voting, yet conservative while anything positive about ALP and the centre is denigrated in RW MSM, or simply disappeared?
Howard’s team was smart or committed in understanding, including a long game, in getting at oldies/boomer ALP social conservatives aka old NSW ALP right, including traction with RW MSM in dog whistling immigrants and population growth (underpins the ‘great replacement’ & proxy white Oz), to hold up &/or deflect from eg. fossil fuels and carbon, unions and better awards etc..
Fact is employment markets have changed much (& declined in relative terms) with sectors such as health care expanding due to ageing and requiring more educated personnel, many positions generally require a university degree etc. vs. manual or unskilled employment.
The middle class or centrist elephant in the room is that many ALP supporters middle aged & older have wealth in property, and now super, so more a blue and white collar mash than anything purist, if it ever was.
Perhaps ALP needs to consider becoming more like their EU counterparts e.g. social democrat parties that accommodate both traditional workers and white collar elites vs. RW MSM dog whistling and disruption to co-opt retired ‘working class’ aka Brexit & Trump.
Agree with most of that. Labor’s commitment to the Stage Three tax cuts is even more central to its strategy than Quiggin suggests. After voting for the cuts, Albanese and Chalmers have taken every opportunity to shackle Labor to implementing the cuts in full. They have ensured the political cost to Labor of resiling will be as high as possible. Therefore there could be no greater gift to the opposition than changing course on this, because Labor has deliberately made sure of it. Albanese and Chalmers are absolutely convinced they will gain a huge advantage at the next election when they can point to the Stage Three tax cuts and say,’We did that. We promised to do it, and we did it, despite what everyone said, despite all the moaning, despite all the complaints, despite all the contrary advice, despite the cost. We stayed on course all the way. So: you can trust us.’
Albanese and Chalmers welcome all the anger and dismay and the arguments saying it is terrible policy, because that all shows how steadfast they are. If it was a popular or sensible policy it would prove nothing. It is because it is dreadful policy that it makes their point.
It is strange to say ‘Labor’s persecution of whistleblowers highlights that legislating a NACC will make no real difference.’ That’s two different issues. The NACC was rendered useless, or possibly worse than that, by Albanese and Dutton getting cosy together to ensure it will work behind closed doors, so that it is simply handy mechanism for hiding scandalous allegations until such time as they become irrelevant.
… and that’s going to help them win an election?
Hmm, are there any other terrible policies they could adopt to prove how steadfast they are in being dumb?
Albanese and Chalmers certainly think so, and that’s why we are stuck with it. It will be put to the test at the next election. It’s not hard to find scathing criticisms of Labor’s lack of economic rigor, it’s tendency to tax and spend, it’s readiness to find excuses for breaking promises; the facts seldom matter. (The facts show Labor runs the economy better than the Coalition, but never gets credit for it.) The allegations of being unreliable, slippery and evasive have been maintained for about as long as Labor has existed, and it’s clearly often hurt Labor badly. This time Albanese and Chalmers reckon they will have a clear and irrefutable proof they mean what they say. You can trust Labor. What could possibly go wrong?
Well Chalmers has apparently named Tony Blair as one of his heroes. I can’t think of more duplicitous policitian.
Mr Broadband
Blair is universally eviscerated for his support of Bush’s invasion of Iraq. But duplicitous?
John Quiggin provides a good perspective on both Bernard Keane’s article from yesterday’s edition of Crikey and on the performance of the (so called) ‘Labor’ government.
It seems from reading the comments here, that more and more people are waking up to the sham the ALP (Alternative Liberal Party) is and has been since the days of Bob Hawke and Paul Keating.
I had to laugh when I read the questions posed by Crikey at the end of John’s article; specifically,
“Is Labor well and truly off the rails? If so, how can the party get back on track?”
The first question is clearly based on a patently false premise, that is, that Labor was “on the rails” at some stage. Perhaps it was in the time of Whitlam but since then it has been well and truly “off the rails” as far as I am concerned. Any first step that the party could take to get itself “back on the rails” would be to adopt a genuine socialist platform (and in more than name only as was the case previously) and an independent foreign policy (one that does not require the government to genuflect in the most subservient way to America.
Shorten went to the people with reformist policies. How did that go
Shorten had a higher primary vote than Albanese (33.34% vs 32.58% primary), with a swing of -0.76 away from the ALP (and -4.09 away from Liberal).
The swing was picked up by minors on both sides – but notably +3.80% towards the Greens & Teals combined, both of whom showed substantially more interest in reform than the ALP did in the campaign.
The assumption is that Shorten lost the election because of the policies but I don’t think that was true. The people I spoke to at the time who wouldn’t vote for Shorten was because they didn’t trust him. It was personal and based on emotional perception, not concrete evidence. Not one of them could say what it was about him that they didn’t like/trust.
Labor and specifically Albanese, has made a strategic error in dropping most of those policies. They’d have done better to hold on to them and sell them better. I like Shorten, but he wasn’t the right person to sell them. That’s all.
As for winning the last election. A drovers dog could have won that. Morrison was so on the nose that people just wanted him gone.
When the Labor leadership was up for grabs Shorten had just been on Q&A as his real self and came across very well. So he was picked as leader. But then he went to all sorts of training sessions to become a better communicator etc, etc, which turned him into some sort of ventriloquist’s dummy and he looked a fool from then on, trying to be what he wasn’t. He even started to make Albo look cool, which is why we’re now stuck with Albo. If Shorten, instead, had gone in for reconstructive surgery to give him a broken nose and a cauliflower ear, plus had a course of iron pills, then we’d never have had Scomo – or Dutton.
By the way Bill, it’s not too late.
wiv a bidda luk..
Totally agree, Shorten was seen as totally untrustworthy. He had demonstrated himself to be so over a long period. His obsequiousness in regard to the USA, dog whistling to US business interests in regard to his views on unions as revealed by Wikileaks. Let’s be honest he is one of a long line of people without a union cell in their bodies that used the labour movement to advance their careers without any genuine interest in workers. The inability of the ALP to bridge the divide between the inner city environmentalists and the mining industry workers in North & Central Queensland and NW WA was also an enormous factor. Not Shorten’s fault, but his inability to meet the argument convincingly was exposed. No point telling workers in Queensland their job future is in renewables when there is not a project or job in sight. The issues still remain in the same areas of the country. Shorten is not the answer, action that people can see and feel is the answer. I see nothing and no one on the horizon.
So true Robert.
I can’t help wondering where we would be today if the Whitlam Labor Government was able to get its Petroleum and Minerals Authority up and running, having control of the mining and extraction and processing of our finite minerals, oil and LNG?
I suggest we would be in the enviable position that Norway finds itself in :-
The Master in control of the extraction of its precious petroleum resource, the proceeds of which are invested in their sovereign wealth fund, the envy of the world. Not to mention leading the way in a viable transition to electric vehicles and green energy.
We decided to become Servants to the multi- national and home grown corporations to exploit our resources at our expense and not even a sovereign wealth fund in place for the benefit of us all.
Now we find Labor and the LNP beholden to them through massive subsidies, a PRRT not fit for purpose and generous donations to their political coffers.
Is it any wonder we are in in the precarious position we find ourselves in?
I dare say Gough would be turning in his grave to see what our country and the Labor Party has become?
the main spin-off has been the absolute corruption of our polity..
Thanks for your supporting comments Ian. They are appreciated. There is so much that could be said.
Unfortunately, it seems that these days the only sort of ‘reform’ that is acceptable (even around here at Crikey), amounts to little, or nothing more than a bit is meaningless tinkering around the edges of our society. I think that circumstances will one day in the future demand a more serious approach.
The circumstances have demanded a more serious approach for quite some time; I think perhaps you meant that one day in the future we’ll reach a tipping point where enough people realise it.
Of course, by then it’ll be far too late, because it’s already far too late.
Unfortunately Kimmo, I suspect that you are right. It is already too late. When the music stops it will be helter-skelter.
About time someone whacked Keane for his previous iteration as a cheerleader of neoliberalism, which I am sure he would prefer that we all just forget. John Quiggin on the money as always, lambasting this laughable government for its bizarre claim that it will *one day* get around to doing something progressive. But right now they have to govern as Howard did and not offer any concrete proposals that may tarnish the reputation as sensible centrists. John Howard must view Chalmers as one of his great political accomplishment’s.
We all make mistakes Jack. I have made enough in my life so I am prepared to cut Bernard some slack on the neo-liberalism thing.
I must admit though, that I was thoroughly gobsmacked a year or so ago when he admitted in one of his articles that he once favored this economic model. But Bernard has done some absolutely incredible work in so many areas that I would not dare to be too critical of his efforts. He is a great asset to our community. However, I just cannot understand how anyone, especially someone with Bernard’s sense of justice, fairness, decency, and experience, could not have foreseen how this economic rationalist thing would turn out. You didn’t need a Bachelor of Economics to know what would happen. You only needed an understanding of human nature (and perhaps read one or two of Charles Dickens’s novels) to realize right from the ‘get-go’ that it would all end in tears.
I know, right? I was too young to realise how badly Hawke and Keating were screwing us over, but when Howard got in, I was well aware that anything and everything that Howard would endorse, except that one post Port Arthur move, was absolute poison.
And Blind Freddy could see the whole time, that there hasn’t been nearly enough daylight between the majors for a proper democracy since Whitlam.
I support your comment entirely, Kimmo.
Jim Chalmers to John Howard as Tony Blair was to Margaret Thatcher?
The metaphor that comes to mind is a corporation that runs a giant quarry: Capital Quarry P/L.
Management discovers that its preferred HR and marketing team is underperforming, dysfunctional and frankly a bit cuckoo. A bit sad, because they’re good mates of the owners and all went to school together, but it’s just business. A bit of a refresh and some window dressing is required, so new blood and all that.
New HR and marketing teams are given a go, Young Turks with a couple of risqué notions. Not entirely trustworthy, speak a bit funny and some of them are a bit ‘Woggy’, but easily managed. They go on to produce some slick corporate sustainability and governance brochures, painting a more favourable image of Capital Quarry P/L. They tinker with the payroll to ameliorate the worst excesses of the previous administration in playing favourites and abusing certain vulnerable employees. They don’t eat raw onions or spend too much time cosplaying off-site. The foreign investors seem to like them.
But the Board and owners of Capital Quarry, all rentiers and oligarchs together with their former and current Colonial masters issue strict instructions that the new HR and marketing team must stay within narrow budgetary guidelines, which they dutifully do. Don’t rock the boat, but keep turning them back,etc. “You work for us and don’t forget it”, the Board regularly remind them. “Use the modern corporate language of ESG to modernise our image a bit, but don’t go getting carried away with ‘the feels’ and let the peasants get the notion that they have a say and get all Bolshie .”
The new bosses of HR and Marketing are careerist company types so they stay in their lanes, hanging on for their pensions and who knows, a cushy Board or consulting position once their time is up.
Meanwhile, the Board bides its time waiting for its old classmates to get their act together so they can usher these trendy marketing types out the door and get the headkickers back in.
Nailed AF. Bravo