It turns out there are limits to policy bravery, especially when the targets of your bravery are a clearly defined group.
Unlike negative gearing and capital gains tax reform, where the losers from Labor’s proposed reforms are diffuse and widespread, middle and high-income seniors are a well-defined and potent group. Many of them, by careful management of their wealth, are part-pensioners who receive some of the taxpayer-funded benefits of the aged pension while enjoying a lifestyle far beyond that of many full-time workers. Labor has now caved in and exempted part and full pensioners from its dividend imputation refundability policy, amusingly dressing the backdown up as the introduction of a “new pensioner guarantee”.
So, well done to the Turnbull government. It finally managed to put together a scare campaign worthy of the name, conjuring the image of Bill Shorten personally entering the home of each pensioner in the country and rifling through their wallets and purses. All it took was a couple of meetings with retired business people portrayed as hard-up pensioners.
That pensioners were never really the target of Labor’s refundability policy is demonstrated by the fact that — at least according to Labor’s numbers — the backflip will only knock $3.3 billion off the $59 billion savings from the policy over a decade. But the fact that Labor blinked will give a deeply troubled government some heart that not everything it touches turns to manure.
It also serves to demonstrate just how hard it is to take something off powerful, narrowly defined interests: wealthy seniors who manipulate their wealth to qualify for a part-pension are exploiting Australian workers and younger people, not the deserving poor who have earned the gratitude of a nation for their efforts. But they’ll be looked after just fine, thanks.
It will also harden Labor’s determination to exploit the government’s vulnerability on Catholic schools by promising a special deal to the Catholic Church to maintain already over-generous levels of funding. There, the roles are completely and perfectly reversed: the government is trying to put in place fair and fiscally sensible policy while Labor has cynically exploited it by pandering to a wealthy, influential group.
Labor probably has the better of the deal because the targets of its policy don’t tend to vote Labor — as those hilarious media stories of seniors gazing sadly at their waterfront views and swaying yacht masts and saying “I’ve voted Labor all my life and I’m outraged” indicate — while the Catholic schools vote may be crucial in marginal seats.
“The lesson from Labor’s backdown on pensioner dividend imputation refunds is to keep the targets of reform as diffuse and ill-defined as possible”
Yes, because the bulk of the media will go straight for the losers, the fear of change, the downside of every single policy, thus resulting in the small target strategies which have been run by governments and oppositions alike for the past 10 years, with Shorten’s ALP not getting enough credit for bucking the trend.
A small number of brave souls including here at Crikey attempted to actually explain the policy, but the bulk of Australians get their news through the foghorns who either don’t understand or wilfully misrepresent the policy. It is expected that a party’s policy is rubbished by the other party, but it should be the role of the media to get in between the warring narratives and present the real story. Unfortunately, on this as on most other policies, the media is more interested in their own narratives.
I’m wondering if this was the plan all along. Announcing the policy as it was, with an obvious attack line for the government, News Corp, Sky, Today Tonight and the rest of the propagandists, and then undercut it with a simple change that only takes a small percentage off the revenue saved. Now what we have is a policy that nets a Labor budget billions even after answering the only criticisms thrown at it.
As Arky suggests this might be genius. Instead of entire grand-parenting protection (neutralising much of the budget benefit for a decade) Labor had got away with a fraction of the preservation for just a tad of the bark and a “victory” for the left (further shoring up Bill). Maybe barracking for the Turnbull forces too early.
This was my thought, too: it was an ambit claim.
Turnbull was always going to come after Labor with a pensioner scare campaign. The target of which was never the wealthy superannuated boat owner, but the real deal housing commission dweller. You can easily smash out an ad campaign with the generic word “pensioner” and frighten the bejesus out of a former laborer, hospital worker or truck driver.
Shorten had to neutralist that missile, but they should have seen it heading their way. Plenty of observers did.
Much of the angst of the last 2 weeks could have been avoided if the ALP had made at least some attempt at explaining the difference between pensioners “actual” incomes versus their “taxable” incomes right from the get go. I don’t recall Bowen or Shorten doing that until it was far too late. Were they that stupid that they didn’t see this definition as being critical to the public acceptance on this very worthwhile idea?
Bernard…how many times does it have to be said? The ‘special’ deal for Catholic schools is the difference between the original Gonski and Gonski 2.0…the reinstatement of which was a promise made my Labor when the latter was announced last year.
Even worse, you and others ALWAYS neglect to mention that over the same two year period covered by said special deal, the Catholic education system will receive $250 million, while the PUBLIC education system gets $1.78 BILLION!
This is the amount that Labor estimates school funding…for these two sectors…has been reduced by the current government, following their new ‘improved’ Gonski 2.0, making inequality in education worse.
Presumably, since this ‘deal’ only covers the next two years, Labor intends to reintroduce the original Gonski, or at least something very similar.
Incidentally, I don’t approve of public funding for private schools of any description, but the horse has well and truly bolted on this issue…for which you can blame the Menzie’s coalition government of the 1960s. Any attempt to change this policy now, by either side, would be political suicide. Needs based funding, introduced by the Gillard labor government, at least proposed a fairer alternative in the original Gonski…there is nothing fair about Gonski 2.0!!
Well that was depressing, BK.
Funny you should mention use of the generic term “pensioner”, Nudie. My elderly pensioner mother and I were chuckling about it today, listening to John Laws rant about Shorten’s attack on pensioners.
“Much of the angst of the last 2 weeks could have been avoided if the ALP had made at least some attempt at explaining the difference between pensioners “actual” incomes versus their “taxable” incomes right from the get go”. It wouldn’t have made much difference, EG. You’d still have heard ” Pensioners worked hard all their lives and went without to save for their retirement !” shouted from the rooftops. Pensioners are sacred cows. The word “pensioner” is like abracadabra- conjures up visions of little old ladies in threadbare dressing gowns, huddled over the teapot to keep warm, eating cat food sandwiches.