Proposed taxes may have defined election outcome

Bill Shorten and Scott Morrison in May. Photo: Alex Ellinghausen
Bill Shorten and Scott Morrison in May. Photo: Alex Ellinghausen

Last weekend was a watershed in Australian politics.

Think first about the Liberals. They had been in turmoil since Joe Hockey gave the leadership to Tony Abbott ... who was dethroned by serial saboteur Malcolm Turnbull.

It was the Turnbull government that reshaped the superannuation rules, restricting the amount that could be held in pension mode to $1.6 million a person.

On any reasonable view, that was not a particularly onerous regulation, but the Libs' retiree base took it very badly.

There was a barrage of protests to local members, with many retirees even resigning from the party. Donations dried up right around the country.

The nadir came when Turnbull was dumped as leader, splitting the conservative side of politics right down the middle.

Even the most conservative members of the party thought it was the wrong thing to do, despite their lack of affection for Turnbull.

Now think about Labor - their opponents were in chaos, and it was almost a walk into government.

Bill Shorten had held his team together well, but it gradually moved to the left as courting the urban Greens became a major objective.

Finally, things like moving the whole country to electric cars and stopping mines became their focus.

And then came the own goal. Chris Bowen figured he could raise $56 billion by abolishing the refund of franking credits to retirees.

This galvanised the conservative side of politics. They may have been unhappy about the Turnbull changes, but the attack by Bowen was a bridge way too far.

And the irony is that Bowen's data was faulty. It was based on modelling done by the parliamentary budget office (PBO) for 2015-16 and took no account of the massive changes to the system made by the Turnbull government.

I raised this repeatedly with Bowen's office, pointing out the faults in their reasoning, but the stock answer was always the same: "It's based on PBO modelling."

Furthermore, the tax was easy to avoid. As I wrote at the time, "This is another mining tax - it will raise nothing."

Of course, the chickens came home to roost on election day when the people overwhelmingly repudiated Labor's left-wing, high taxing agenda.

As shadow Agricultural Minister Joel Fitzgibbons put it on ABC radio, their move to the left and their alliance with the Greens was Labor's undoing.

The Greens have made no secret of their vision for Australia. As I walked to the polling booth, I passed a sea of Green placards all with the same message: anti-big institutions, anti-mining, and higher taxes on everything. Which translates as anti-jobs.

Fitzgibbons also said that if Labor is not prepared to focus once again on the ordinary working people who used to be their base, they are doomed.

Now the whole political scene has changed. Thanks to last Saturday's election, Turnbull, Abbott, Julie Bishop, Christopher Pyne, Julia Banks (Independent ex-Liberal) and Kerryn Phelps (Independent) have all departed the scene.

The party is now in the perfect position to regroup under Scott Morrison, who has proved himself to be a highly effective leader. Labor finds itself with the possibility of three or more years in the wilderness.

Of course not everybody was happy with the election result.

Left-wing novelist Jane Caro tweeted that the election result was a sign Australia had "decided to be a backward-looking country - I wish I was a New Zealander."

I couldn't resist the right of reply, tweeting, "Wouldn't we all - no capital gains tax, no payroll tax, no stamp duty, and a top personal tax rate of 33% on incomes over $70,000. The exact opposite of what Labor was proposing."

  • Noel Whittaker is the author of Making Money Made Simple and numerous other books on personal finance.