Comment: Talking tax needn't be so partisan

Tresurer Joe Hockey speaks at the ACOSS breakfast about his new Re:think discussion paper in Melbourne

If you want to appear as a mature party of government, you need to shelve the partisan politics.

The release of the tax discussion paper – even with the dopey “Re:think” branding – is the third valiant attempt by the government to appear forward thinking. While it is easy to be cynical of the whole exercise, there looks to be a good chance that Joe Hockey may be able to use the discussion to attain a position of credibility, and improve the government’s fortunes.

Last year the government’s attempts to sell the budget were a cluster-bomb of stupidity. They started with the “Commission of Audit” – a review so ideologically driven it was quickly put in a drawer and few are wishing it to come out again. That audit was supposed to be all about putting the budget on the path to sustainability, but spent all its time looking at expenditure and essentially found little government spending it thought worthwhile.

Joe Hockey also moaned for a couple months about a budget emergency and then produced a Budget that was essentially a litany of broken promises. It didn’t work. Voters were turned off, and the policies had little sense of cogent thinking behind them. Hockey found himself barely staying afloat as he tried to defend the indefensible.

This year the attempt to look forward and position the government as more than mere political partisans was first made with the Intergenerational Report. The document, which is produced under the auspices of the Charter of Budget honesty, however was so shamelessly designed to kick the ALP’s budget (or at least a version of the ALP’s budget  Joe Hockey would like us to believe existed) that it received scorn more than consideration.

The report which Hockey predicted would have us “falling off our chairs” mostly had people giving it as much care as they did when the Liberal Party opposition released its “Little book of Big Labor Waste”.

And despite the baffling use of Dr Karl Kruszelnicki in an advertising campaign, within a month of its release it has pretty much been forgotten.

This week the government tried again with the long promised tax discussion paper.

Did we really need another debate about tax? The 2010 Henry Tax Review covered the issue pretty well – other than a major investigation on GST – but even the issues around the GST are pretty clear.

Without even reading the discussion paper it would have been possible to make a good guess at what it would suggest – Australia relies too heavily on income and company tax, not enough on the GST, our GST is too low, our company tax is too high, something about bracket creep and then a bit about other taxes such as superannuation, stamp duty and the impact of negative gearing.

And so it was.

Yet despite the retread of issues, Hockey has started well in beginning the “conversation” on tax. While the Henry Review, pretty much covered it all, the ALP government criminally stuffed up its response.

It possibly has made that review so tainted that it was best to re-do it all – even if it meant indulging in a fair bit of cut and paste.

Crucially Hockey is not ruling out anything – which means the GST is on the table. Not including the GST in the Henry review was a weak-kneed action by the ALP which had such a fear of fear campaigns that it continually undercut itself.

One problem Hockey will have to overcome in his efforts to make sure the government does not follow the ALP line is Tony Abbott.

Prior to the election – when the propose tax discussion paper was proposed by the LNP – Tony Abbott promised “let me be as categoric as I can. The GST won’t change, full stop, end of story.”

After the election was one he suggested we needed a “mature” debate on the GST – presumably a mature debate involves saying one thing before an election and one thing afterwards ...

But even the sense that all things are on the table has already hit a Tony Abbott hurdle.

The one area of tax where a quite broad consensus of opinion has been reached is in relation to tax concessions on superannuation. Superannuation contributions are taxed at a flat rate of 15% - which means the more you earn the better the benefit there is to put your money into super – especially as you get closer to turning 60.

On Tuesday, the ALP despite (stupidly) immediately ruling out any changes to the GST did suggest there was room to move on superannuation. After all the ALP attempted to raise the tax rate to 30% for those earning over $180,000 and had also introduced  the low income superannuation contribution (which the Abbott government has cut from 2017-18 onwards).

But then Tony Abbott was asked to respond to reports about increasing the superannuation on the wealthy.  Rather than respond with the “all things are on the table” line, he went into his standard kick the ALP mode. He noted that “it’s so typical of the Labor Party that they immediately want to see more tax, not less.

He went on to argue that “as far as I am concerned, as far as this Government is concerned, we want lower, simpler, fairer taxes” and that “we have made a very good start to that by scrapping the carbon tax which means that every household is about $550 a year on average better off”.

At that point you could switch off. He was into his spiel that he always falls back onto whenever an actual policy issue arises.

Hockey has finally produced a document not loaded with partisan language, or indeed partisan purpose. It may well be the document which proves him to be a worthy Treasurer in the eyes of voters. But he is saddled with a lame Prime Minister, who is out of his depth.

The tax discussion paper could be used by the government to set itself up as a mature party of government, but it will have to overcome its leader if it wants to ever appear driven by more than the desire to spout partisan slogans. 

Greg Jericho is an economics and politics blogger and writes for The Guardian and The Drum.

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