After nearly a year in government, it seems the Liberal Party has finally learned how to negotiate.
It involved doing a deal with the Palmer United Party to get the repeal of the mining tax passed through the senate and it involved the government doing pretty much everything it wanted to do.
This week the government gave up on trying to get the “Minerals Resource Rent Tax Repeal and Other Measures Bill 2013 [No.2]” passed through the Senate. It had been defeated in the Senate in July. Instead it introduced a bill called the “Minerals Resource Rent Tax Repeal and Other Measures Bill 2014”.
“Surely here the government was over a barrel – it needed to get the mining tax bill passed as it was a key election commitment. Any missteps at this stage would be a massive failure. But while you might think Clive Palmer would use this to get his pound of flesh, in reality all that happened was the government got what it wanted.”
It was almost the same, except for one minor but crucial difference.
In the original version, the bill involved putting off the increase of the superannuation guarantee from 9.25% to 9.5% to 2016 rather than July 2014 as the ALP had legislated. This had been the LNP’s election commitment. Because the bill was not passed before July 1 this year, the amount rose to 9.5% automatically.
The new bill changed the wording so that no longer did it outline specific dates for increases to occur but instead stated that the timing of any increases would be up to the Treasurer to decide.
It was a significant change, especially as the Liberal Party has long been against the superannuation guarantee, for it meant effectively they could put it off forever.
They have form in this area. In 1996, despite having gone to the election effectively promising to keep the ALP’s commitment to raise the rate to 15%, John Howard and Peter Costello dumped that promise almost immediately.
The move by the Abbott government this week was also not unexpected. As Crikey’s Bernard Keane noted in 2011 when Tony Abbott initially promised to abide by the ALP’s policy of increasing it to 12% by 2019-20, “it can just ditch the promise once it gets into government, insisting that fiscal circumstances require it.”
And so it has.
But once the bill was rushed through the House of Representatives (time taken from introduction to final vote: 1 hour 23 minutes) it hit a bit of a snag in the Senate.
There the Palmer United Party, which controls the balance of power along with other minor party senators including the now independent senator John Madigan, wanted to negotiate.
Surely here the government was over a barrel – it needed to get the mining tax bill passed as it was a key election commitment. Any missteps at this stage would be a massive failure. But while you might think Clive Palmer would use this to get his pound of flesh, in reality all that happened was the government got what it wanted.
It conceded to not abolishing the schoolkids bonus, but merely excluding individuals earning over $100,000 from receiving it. This was hardly a concession. Yes, it means the savings are not as grandiose but given the Budget imposed $100,000 as the threshold for the Family Tax Benefit, it fits in nicely with the government’s overall economic view.
It also makes it hard for the ALP to attack.
It also agreed to conduct an inquiry on an idea of Palmer’s that an “Australian fund” be set up to provide loans and bail out failing businesses in the rural and manufacturing sector.
Such a policy goes against everything the Liberal Party stands for – and would be utterly hypocritical given its decision last year to stop supporting the car industry. But that fight is for another day. Governments don’t need to obey the findings of inquires.
The other bit of negotiation done fit right within the Liberal Party’s wheelhouse. Rather than leaving the decision of increasing the superannuation guarantee up to the Treasurer, the amended legislation set out a specific timetable, much like the original bill did.
But instead of the move to 10% occurring in 2017, it will now occur in 2021 – or given how long away that is, in effect, never.
The new time-frame is essentially what the Liberal Party would have liked to have been able to take to the last election, but which now they can say was forced on them by Palmer.
Given this and the move to axe the low-income super contribution after 2017 will both hurt lower income earners’ retirement savings more than higher earners it also fits in with the government’s economic narrative.
It was the type of negotiating of which Julia Gillard would have been proud, but it now comes from a Liberal Party perspective and policy.
This week the government looks to have discovered, just like the ALP did, that it can use the negotiations as cover to actually go further than they were willing to promise at the election.
The question is whether voters will applaud their efforts or see it is a broken promise. Finding the balance within is the key to continuing to govern, and also a major step toward getting re-elected.
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