Prior to Tony Blair becoming the UK Prime Minister, Paul Keating gave him some advice: “Don't ever put up income tax, mate. Take it off them anyhow you please but do that and they’d rip your f---ing guts out.”
It was a lesson Keating learned the harsh way. Prior to the 1993 election he promised a round of tax cuts – even legislating for them, and thus describing them as “L.A.W. law”. After the election, the tax cuts were dumped and put into a government contribution to superannuation.
He didn’t even raise taxes and yet he was slaughtered for his broken promise. It dogged him all the way to the 1996 election.
Julia Gillard didn’t raise income tax, but she too (to use Keating’s phrase) had her “guts ripped out” by the broken promise on carbon tax. It wasn’t the carbon part that anyone cared about – it was the tax. She had said that she wouldn’t impose a tax - and then she did. It didn’t matter that her “no carbon tax” promise referred to a completely different type of price on carbon than we have now – more akin to a GST on carbon emissions than a fixed trading scheme. Nope, the tax pledge had been smashed and really that was all she wrote.
Which brings us to this week.
Has there ever been a worse pre-budget sell by a government? Each year in April and early May we get strategic leaks (or “drops”) of all the things that the government wants us to know about what will happen on the second Tuesday of May. In between the drops are the speeches and generally selling of the vibe – a vibe which is punctuated by more selective leaks to newspapers to help with the selling of the story.
Don’t be fooled by the line that the Commission of Audit is not the government’s document. Tony Abbott and Joe Hockey appointed the members of the audit and set the terms of reference to ensure that the cruel recommendations contained within would be presented.
This time round there have actually been real leaks that have flooded out the drops. It started on Sunday with reports of a “deficit levy”. The details were scant but the narrative for the week was set – Tony Abbott was going to bring in a new tax. Then on Tuesday the story was that the levy was to be 1% on incomes over $80,000 and 2% for those over $180,000.
And it was to be on all the income – so we were talking $800 for people on $80,000, $900 for someone on $90,000. A massive hike.
All hell broke loose.
By Wednesday, the latest leaks were that it was to only be an increase of 1% and 2% on the tax rates above $80,000, so someone on say $90,000 would only pay $100 a year more.
Then it was leaked that maybe it wouldn’t work that way but it would scale up and not really kick in till the $100,000 mark - but some newspapers were still reporting by Thursday that the 1% for all income was still on the table.
A shermozzle. No wonder government MPs were backgrounding against the PM saying they had no idea what the hell was going on .
Overshadowing the entire issue was that it was a new tax, or at the very least an increased tax and that Tony Abbott was breaking his promise. It wasn’t like he gave himself wriggle room. He had set his foundations on the lower taxes promise. The ABC Fact Check unit went looking and found many quotes of Mr Abbott’s on lower taxes and promising never to introduce or raise taxes without first taking them to an election.
He’ll try to say taxes will be lower because getting rid of the carbon tax and mining tax and blah blah blah.
Nope, sorry. Ain’t going to fly.
Especially when in the midst of trying to deal with that broken promise it was leaked that he was dumping his “signature policy” of the paid parental leave, and it was no longer going to go up to those on $150,000 but now only to $100,000.
So two big promises broken in the space of a couple days.
There might be some who think it was all done so when the Budget comes and it is all sweet voters will forgive.
I don’t think so. On Tuesday when the deficit levy story broke Tony Abbot was in Melbourne announcing $1.5bn in funding for the East-West link. Did you hear about that? Nope, no one did. The announcement was buried under a tonne of talk of broken promises and new taxes.
Then the Commission of Audit report was released containing some of the most brutal cuts ever considered by a government. The recommendations, if carried out, would reduce Australia to a bitterly divided country where only those stupid enough to think that the USA economy is something we should envy would be content.
Don’t be fooled by the line that the Commission of Audit is not the government’s document. Tony Abbott and Joe Hockey appointed the members of the audit and set the terms of reference to ensure that the cruel recommendations contained within would be presented.
The recommendations are their wish list.
Sure, the budget in two weeks won’t look as bad as the Commission of Audit, but that won’t cut much with the voters if the broken tax promise is there.
Voters don’t care much for subtlety when it comes to broken promises on tax. It will hang over Tony Abbott’s head as it did Paul Keating’s and Julia Gillard’s, and it will require some fair degree of skill by Mr Abbott to ensure his guts stay intact.
Nothing he did this week looked all that skilful.
