Tax: the best form of defence

The Coalition has today adopted a shock-and-awe tactic to kick-start its election campaign: promised income tax cuts to cost $34 billion over three years, accompanied by aspirational talk of an Australia in which 98 per cent pay a marginal tax rate of 35 per cent or less. I won’t presume to discuss the promise’s target market at this point, but it should be noted that tax cuts at the past two budgets produced largely disappointing returns in the opinion polls (although the more recent round can be credited with a slight narrowing in Labor’s lead in August and September). Nonetheless, the announcement will fill the news bulletins with images of Peter Costello in his element, whereas Kevin Rudd will be forced to discuss those tax scales he couldn’t name a few weeks ago.

Centre-left economist John Quiggin makes the following observation on the troubled history of election tax cut promises:

I can recall (perhaps with error) at least two instances of such cuts being promised and then taken back. One was Paul Keating’s L-A-W tax cuts in 1993, which (as implied) were actually legislated in an attempt to increase their credibility. The other was the “Fistful of Dollars” tax cut of 1977 (so named for the ads which showed precisely that) promised by the Fraser-Lynch team going into the election and then (if my fading memory serves) taken back by Lynch’s newly-appointed replacement. Now what was his name again?

Author: William Bowe

William Bowe is a Perth-based election analyst and occasional teacher of political science. His blog, The Poll Bludger, has existed in one form or another since 2004, and is one of the most heavily trafficked websites on Australian politics.

409 comments on “Tax: the best form of defence”

Comments Page 8 of 9
1 7 8 9
  1. “Although if the announcement gives the Coalition poll momentum..”

    If it doesn’t give them anything then what are they going to do for 6 weeks? I would have thought the Tax Cut was the king of the policies. If it fails the rest is neither here nor there since Labor ‘own’ most of the other issues. If this Tax Cut fails then they will have to settle for narrowing the size of their defeat.

  2. Here’s a theory which Howard might be banking on:

    The Libs campaign theme for the ordinary punter is ‘the economy is everything’. The economy is experienced most commonly by paying tax, so thinking about the allure of a tax cut ought to stop those socialist health ideas Rudd is on about getting attention with the undecided.

    Howard may think that this will give him a bounce by grabbing attention with ‘his issue’. He may also think that if interest rates do go up, he can run the ‘it’s really risky to let ‘L’abor run the economy now and this outbreak of caution sends them back to him.

    Of course it could all be a spectacular failure, particularly if Rudd has his own heavy tax artillery to come.

  3. “There’s nothing wrong with the US that a good eight-year Democrat presidency can’t fix.”

    Adam, hat tip for getting Nov.24 right.
    A straight question. Was your use of the word “Democrat” inadvertent or intentional? For some years now, GOPper boosters have been deliberately using “Democrat” instead of the “owner-preferred” and gramatically correct “Democratic” as a perjorative, because of its sinister, rodentine suggestiveness.

  4. I don’t think that the tax announcement is anything but Howard spending money like a drunken sailor (hmm now, which treasurer said that about him?). Moreover, I don’t think it will actually be ever implemented. However, it is the only issue on the table announced during the campaign so far and for better or worse it has set the tone. It certainly wasn’t challenged.
    You are right, Evan @ 349, we’ll know soon enough what the electorate’s response is.

  5. I have to continue to disagree with chrispydog and ptobias.

    The only reason there would be reduced revenue is because there is still alot of pork as well as the tax cuts. Can you really say that Costello is not committed to lowering the top tax rate?

    Costello was criticising the pork, not tax cuts, but whatever.

  6. #322 – you must have been watching a different 7.30 Report. Howard was pretty much as he always is. Rudd is yet to look like a leader. He gets thrown softball questions by his political allies at the ABC and he still can’t come across as anything other than a policy wonk.

    #298 – Four Corners’ story on the space cadets at the Exclusive Brethren – which they probably thought was a good hit piece on the government – sank like a stone. People know that the Coalition is not controlled by any specific group such as the EB in the same was as Labor is controlled by the unions. Even corporate Australia is apolitical and has been since the Hawke/Keating days.

  7. Gotta admit, I am very surprised Howard released his tax policy this early on. Doesn’t make sense. (Mind you, neither does a lot of what he has done lately.)

  8. I’ve always used Democrat as a noun and an adjective, but I do now recall being told that the US Democrats prefer to use “Democratic” as the adjective, as in “the Democratic candidate.” I can see why the Repubs don’t like this, since it implies that they are “the unDemocratic candidate.”

    The Repubs are heading for a massive smash next year, with up to six losses in the Senate as well as losing the White House. I’m looking forward to Three Amigos II, starring Hillary, Gordon and Kevin, solving the world’s problems.

  9. ShowsOn on RBA 253:

    ‘If the inflation figure next Wednesday shows an increase of say 0.8%, and they raise rates on November 7, then people will just see that as the RBA doing what it’s paid for’.

    Yeah, ShowsOn. Glenn Stevens will have heard Howard when doing his strong chin out, for the good of the nation ‘that’s what I get paid for’ bit.

    But hey, let’s remind him!

    Interview: John Howard February 11, 2007 Reporter : Laurie Oakes

    JOHN HOWARD: ‘Well exactly, of course. I mean, so in the end people will pay on results. Australians are very practical people. They say “What’s this bloke done, what’s happened on his watch”, they look at the lowest unemployment in 32 years, they see a strong economy, they see somebody who’s prepared to weather the storm of unpopularity in relation to something he believes is right, and they will make those judgments and I’m in their hands, and whatever judgment the Australian people make at the end of the year, I’ll accept with the greatest of good grace but I want them to know that I am very dedicated to the job, I’m very enthusiastic, and I have a lot of fight left in me’.

  10. [Rudd is yet to look like a leader. He gets thrown softball questions by his political allies at the ABC and he still can’t come across as anything other than a policy wonk.]

    Yeah, yeah, blame the ABC… blah, blah, blah…

    [#298 – Four Corners’ story on the space cadets at the Exclusive Brethren – which they probably thought was a good hit piece on the government – sank like a stone.]

    Um, no, it was a report demonstrating that the exclusive brethren most likely broke federal electoral law.

    [People know that the Coalition is not controlled by any specific group such as the EB in the same was as Labor is controlled by the unions.]

    Did you even watch the show? Where was it claimed that the coalition was controlled by the exclusive brethren?

    The report demonstrated that the exclusive brethren participate in an organised fashion in political campaigns in Australian, N.Z. and the U.S. When the E.B. claim that only individual members, on a private basis, campaign they are lying. This argument was completely dismantled by the 4 Corners report.

    [in the same was as Labor is controlled by the unions. ]

    The ALP is a LABOR party, it is the political wing of the trade union movement. It isn’t controlled by unions, it is influenced by unions.

  11. At least Howard was close with the rate figure, Rudd fluffed the tax scales completely, he had no clue at all, not even in the ballpark, and was clearly just making shit up when he answered.

  12. [I refuse to take american politics seriously until they get an independant electoral commission.]

    Good point, we are streets ahead of them there. The AEC does a brilliant job. They should also organise the debates.

  13. 358
    Just Me Says:
    October 16th, 2007 at 12:14 am
    Gotta admit, I am very surprised Howard released his tax policy this early on. Doesn’t make sense. (Mind you, neither does a lot of what he has done lately.)

    Just he has to get on the front foot somehow. Older voters like myself will remember the Fraser campaign based on handing back [what was it, $8.36c a week] to the electorate in a corny cartoon election advertising campaign. Guess what.

    It worked, straight to the hip pocket nerve of those with no interest in the nuances of policy debate. Give me money and u get my vote- it worked for Fraser and it will work for JWH- to a point.

    Moreover, he is trying to wedge Rudd into overspending or trumping him on tax reform {higher bid}- smart opening swing from JWH if you ask me. It puts Rudd into the ‘think music’ corner -umm, well, errr, lets see what happens, at least temporarily.

    He will toss money around like it is confetti in areas that the RBA will consider ‘neutral’ as the Cheif economist of Westpac said tonight on Lateline Business report.

    An interest rate rise, according to Westpac’s cheif economist, will not be shaped or influenced by this kind of election promise which is rolled out in the future somewhere, at least not in November 2007. Smart, very smart Johnny> what else does he have but $$$$ to toss around ? Nothing !!

  14. Adam, I hoped Gore would run too, but now he’s an extreme longshot despite recently firming from $9 to $6 in the betting. His heart’s elsewhere.
    The 3 Amigos II chances look pretty good. HRC is at $2, she is beltway approved up the wazoo, has a monster war-chest, has been given the nod by Citizen Rupert and hubby has promised to stay on the porch. Not sure if HRC has Skull&Bones endorsement but she poached ace triangulator Peter Daou from a couple of years back and he’s helped her negotiate the minefields so far.

  15. The US doesn’t have an national electoral authority because it doesn’t have national elections. All US elections are run at state level, either by the department of the Secretary of State of the state – that is, by state public servants – or by independent election commissioners. The FEC is concerned only with policing the campaign financing laws. The quality of election administration varies greatly from state to state. In some it’s excellent, in others, as we saw in Florida in 2000, abysmal.

  16. Question for the Australian Citizenship test in say 2020:
    Who was the Australian Governor-General who prorogued the last Howard parliament?
    Get it right or you are not fit to be here.


  17. A question for the betting experts.
    Sportingbets has “published” some figures showing,
    for 29 crucial seats, the percentages of money
    backing the respective candidates.

    (you have to click on the news headline
    mentioning 29 seats)

    Naively, I would’ve thought that this would exactly
    determine the odds that the company is quoting.

    For example, since Stirling is quoted as odds of
    1.85 for ALP and 1.85 for Libs, you would think that
    roughly even money has been bet on the two
    candidates. But no.

    The table shows that only 30% of the monetary value
    of the bets on Stirling has been
    bet on the ALP. 70% for Libs.

    It does not seem sensible for sportingbet to
    keep the odds at 1.85 each in this situation.

    1) it suggests that punters are more confident in betting
    on a Lib win at those odds. So the quoted odds are out
    of line with punter sentiment.

    2) it suggests that sportingbet will lose money if the Libs win
    because they have not taken enough ALP bets to
    pay for the winnings.

    So why doesn’t sportingbet change the odds?

    And, how what conclusions can we make about
    odds representing expert knowledge on the
    chances of candidates if they are out of line?

    Any suggestions?

  18. Did you see the last moments, the sign off, for the 7.30 interview with the PM? I always wait for Lib/Nat ministers to finish their interviews on the ABC, to see how they let go, to see if they can resist getting in the last word, or at least the last tone. Dolly is always worth waiting for, but tonight was something else.

    KERRY O’BRIEN: Mr Howard, we’re out of time, I look forward to the next of these.

    JOHN HOWARD: I’m sure.

    Now, that “I’m sure” was spat out. Spat. And the head was turned, as if PM was getting half out of his seat before the tape stopped rolling. Noone in Australian national life has done more interviews to camera than John Howard, and he knows the stagecraft. Better than anyone. The ill discipline of this maneauvre was telling.

  19. If I was running a book on the election I would be wanting individual seat polling. Does anyone have a handle on what it costs to poll say 500 people according to generally agreed polling principles? Are they doing this?

  20. More party polling from QLD seems to back up the Galaxy findings:,25197,22592476-5014046,00.html

    “Labor strategists last night told The Australian that the party is leading in the ultra-marginal seat of Bonner, held by first-term Liberal MP Ross Vasta on a 0.5 per cent margin, and in Moreton, where the margin is 2.8 per cent and which has been held by former multicultural affairs minister Gary Hardgrave since 1996.

    Liberal insiders said internal polling in recent weeks confirmed that the party was behind in Bonner, but that there was “still hope” of Mr Hardgrave holding the line against Labor in Moreton.

    A senior Labor source in the Sydney-based campaign headquarters last night said Mr Hardgrave’s fellow “class of 96” MPs, Indigenous Affairs Minister Mal Brough and parliamentary secretary Teresa Gambaro, were also on track to retain their seats of Longman and Petrie.

    Labor has virtually “written-off” winning Longman, on Brisbane’s northern outskirts, as well as the neighbouring seat of Dickson, held by Assistant Treasurer Peter Dutton, who sits on an 8.8 per cent margin, after taking the seat from Cheryl Kernot in the 2001 election. “

  21. #357
    Jack Lacton Says:

    ” Even corporate Australia is apolitical and has been since the Hawke/Keating days.”

    Is it coincidence that EStJ goes to bed and then this gem appears???

    So, if Corporate Australia is so apolitical, whats the story with the SerfChoices support adds they were running?? Showing closed up shop-fronts with “Unions put out me out of business” painted on them, in the lead up to an election is a political i suppose??


  22. [“17 seats” again. They said it twice. How can they expect to be taken seriously when they repeat this nonsense?]

    They know political pendulums, biggest they OWN political pendulums!

  23. Good god that GG editorial is madness. I’m just gobsmacked – there’s countless numbers of extraordinarily foolish statements in it.

    For instance “ALP will struggle to pick up more than 2 seats in Qld”. Even if you assume that the Galaxy poll was correct (I don’t trust it) it showed that the ALP won’t win 2 _of_ _the_ _4_ polled. The other 25 or so seats were not polled. Including Blair, which is more marginal than some of the seats actually polled.

    And 17 seats. Idiots.

    And people that throw around facile 1993 comparisons might want to be careful about calling other people “glib”.

    Shanananan et. al must be getting cranky again.

  24. MG in the age reports that:
    The five-year plan is in two parts. The $34 billion cuts are a solid promise, to be delivered over three years. Further “goals” for the following two years include reducing the top marginal tax rate to 40 per cent.

    … no word on whether they’re a core or non-core solid promise.

  25. I notice Mr Dennis Shanahan has written a provocatively titled article regarding political momentum deriving from economic competence, but in it he fails to mention Mr John Howard’s inability (also demonstrated yesterday) to recall the current interest rate (something surely more relevant to the average Australian than the top marginal tax point) in that context…

  26. If Labor is writing off Petrie, Longman and Dickson, then that gives lie to the promise of spectacular gains in Kevin Rudd’s home state.

    Perhaps the importance of Queensland has been massively overstated.

    On the other hand, maybe we should maintain our usual suspiscion about insider whispers and leaked party polling.

  27. monday – tax

    The coalition have to run to catch up and a big headline policy might help. It probably can’t hurt: they have little to lose by trying to take the initiative and put the focus on “how the government can help”. This is an obvious attempt to create a government-friendly issue, one that can be linked to the economy and public finance more generally.

    On the other hand, Labor has plenty of time to put out a tax policy and you’d have to say they now have the opportunity to aim their policy where it can do them the most good, to out-flank the coalition. Rudd has also signalled that – regardless of who might benefit from Labor’s tax policies – they will be “conservative”, “cautious” and developed with patience. This is Rudd-cool: don’t overplay your hand, make a virtue of prudence, don’t make spectacular claims, attend to the detail.

    The coalition policy will register most with its heartland: the biggest cuts seem to be reserved for the highest and upper-middle ranges. This cannot be accidental. While the lowest paid get a rate cut, it will be relatively easy for Labor to offer an even better deal.

    This is a fascinating iteration of one of the themes of this political cycle: the interplay between the contenders. There is Howard the quintessential operator; the perrenial, insistent advocate; haggling and jabbing and provoking; a serial provocateur. And Rudd the cool; the smiling autocrat; patient, firm, visually subtle, controlled; the simplifier….Such contrasting styles….There is over-statement and under-statement; impatience and reserve…

  28. I sense that the Australian people are getting tired of being ambushed by the Coalition.

    Ambushed by water policy,
    Ambushed by the Budget,
    Ambushed by the NT intervention,
    Ambushed by the history policy,
    Ambushed by Howard’s aboriginal mea culpa,
    Ambushed by the latest tax fantasy.

    It’s no way to run a country. This tax cut business will be a three day wonder… if that.

    Aussies want a bit of stability, not continual surprise attacks by their own government.

  29. Mmm, the leftist bloggers and Fairfax writers are disgustingly biased when they faithfully interpret the results of this year’s opinion polls. Whereas Chris Mitchell is throughly objective when he glibly dismisses Labor’s chances in Bennelong and lies about the number of seats the ALP needs to pick up.

  30. Bennelong I think would have to be at least 50/50.

    I wouldn’t listen to them. They have been criticising Rudd for most of the year and praising the Govt.

    The GG has trashed its own reputation this year for the most part making itself a GG. Most bloggers here are no more impartial than they.

    I do hope however that now the election campaign is on that the will treat each party absolutey the same. IF they dont? I guess a delegation of 500 bloggers knocking on Chris Mitchell’s office door with the Channel 9 camera crew would be most interesting.

    By the way – as far as I am aware [and I meet some of the community weekly] – Much of the Chinese population in Darwin refuse to buy it because of its hard right-wing bias. I can tell you Chinese hate the press trying to manipulate them or presenting a govt bias [not hard to guess why – just think of mainland China’s control of everything].

  31. 317 & 318,

    There are many reasons why the Democrats lost to Bush twice but they are different each election. In 2000, it came down to challenges in the Supreme Court over recounts in parts of the US (Florida and Ohio). The Supreme Court that voted in Bush’s favor was dominated by conservative judges appointed by Bush Sr and Reagan. Clinton hadn’t enough opportunities to appoint centrist or left leaning judges. In 2004, it was merely the power of the incumbency and the rose coloured glasses of the Republican voters, be they rusted on or swingers. If the folks who had voted for Bush in 2004 had it to do over again today (between Bush and Kerry based on what they know NOW), I dare say that he would be tossed out.

    The people who voted Republican in 2004 and who will NOT vote Republican this time are experiencing much of the same “omg how could I have voted for him?” self recriminations that many of our Howard voters in 96/98/01/04 are feeling now. Doesn’t matter who the Republicans nominate this year, they could put up the ghost of Ronald Reagan, he wouldn’t win because Bush has so alienated his core base of support. [Sound familiar? ;-)]

  32. Bluebottle 367

    Thanks for that. The danger for Howard is that he can be painted as economically irresponsible, especially if a lot of senior business economists come out and say that is not the best way to go.

    And as to The Australian’s latest foolish outburst, they have clearly forfeited any claim to be politically neutral, and the long-term damage they are doing to their reputation is increasingly serious. On the bright side, this latest outburst proves that they are taking notice of what the blogworld is saying, and it is cutting them deep. If only they could be a little less reactionary in their response.

  33. Julie says:

    “The people who voted Republican in 2004 and who will NOT vote Republican this time are experiencing much of the same “omg how could I have voted for him?” self recriminations that many of our Howard voters in 96/98/01/04 are feeling now.”

    I just don’t believe this. Nothing has changed since ’04 that would warrant such a huge electoral change. I haven’t heard anyone say ‘how could I have voted for him’, but having said that I don’t know anyone that has voted for him since the ’96 election. They must exist somewhere…

  34. I think Howard’s grumpy demeanour on ACA and 7.30 Report is hugely instructive. As others have noted, he is the past master on TV interviews so for him to act this way on what ought to be a red letter day for the Coalition in unveiling a major policy surprise (as in the timing) tells us a lot.

    I see it this way: Howard delayed and delayed in calling the election in the hope the dynamic would change. It didn’t. He was forced to call the election. In desperation, the Coalition pulled the tax cut stunt and then, on mass audience commercial TV he fluffed the benchmark interest rate – and his political instincts would have screamed in his brain instantaneously that this is political poison for the tens of thousands in marginal electorates having trouble paying the mortgage. After all, the entire 2004 campaign was interest rates, interest rates, interest rates. And he knows there is a good chance they are about to go up again.

    Howard is a political animal. Now that the last hope of delaying the election campaign until something shifted is gone, with the polls still telling the same brutal story, Howard knows in his political brain beyond any shadow of a doubt – barring the dramatically unforeseen – that he is completely, utterly, irretrievably gone.

    That is what Howard’s demeanour on those two shows was about. It is over.

  35. Lose the election please, you’re one of us, but remain pessimistic. I assume that’s based on the huge disappointments of 01 and 04. My best friend is in the same category, refusing to get hopeful until he can see the actual result.

    It’s a lot different this time. Labor’s primary throughout its period in opposition, even the 98 election where it ran close on seats and 2pp, has never reached and sustained the heights it has this year. 47-49 will require a catastrophe to lose from here.

    Workchoices, as you and some other Labor supporters have pointed out, may not be the critical deciding factor. But it (and Rudd’s elevation) was the critical turning point. Howard and the Government lost credibility through it. and nothing, even renunciation of it can win it back. The problem from there is that everything he says and has said in the past is viewed with enormous scepticism. Malcolm McKerras got it right.

    Almost concurrently Labor has suddenly become more disciplined and focused. The hereditary peers and factional warlords that Edward’s always on about are still around, but they’re definitely on the wane and there’s more talent from more diverse backgrounds coming in.

    I reckon it’s bankable.

  36. As a woman, Darn, my take on the performances were:

    PM – obviously ill at ease (the shoulder flicked a few times), and his attempts to appear relaxed and casual looked very forced. At the end, after the interest rates gaffe, he looked very angry.
    Rudd – polite, relaxed, controlled and gave a nice smile at the end

    7.30 Report:
    PM – looked really fired up, like he was spoiling for a fight and was clearly pissed off at the end of the interview, giving a petulant and rude response to O’Brien’s sign-off.
    Rudd – polite, relaxed, controlled and gave a nice smile at the end

    Rudd is doing very nicely. He is staying on message and is looking like someone we would be proud to have represent us in the eyes of the world. By contrast, Howard is looking more and more like an angry (and out of touch) old man who needs to be put out to pasture.

  37. The rates markets were talking about the tax cuts – but more becuase they mostly sit in the those top tax brackets….

    The RBA annoncement on Nov 7 is still up in the air…. But there’s a really strong case it will be a no brainer after the CPI on October 24.

    Rudd should wait until after the 24 October for his Tax policy. He’ll have much better information about the RBA then. If CPI is in the “bracket of indecision”, somthing about 0.7 or 0.8 then he might need to wait until Nov 7.

    Re whether or not the details are released early to politicians – officially the answer is no. But I have (through observation) seen that they tend to be a little clued up on the morning of the release. But there’s no chance the Government would know the CPI yes. The ABS probably doesn’t even know the CPI yet – they’ll still be figuring it out!

  38. Labor has two options I think.

    Option A is if Labor wanted to stake its chances on the intelligence and foresight of the electorate (a risky move) they could ask them to forego the tax cuts in exchange for 34 billion worth of improved health and education services and public infrastructure.

    Alternative they could take the cautious Option B in the knowledge that an extra 40-odd bucks a week instead of improved services and infrastructure (not to mention IR laws) will impress enough people to swing the election.

    Under Option B they could match the bracket changes in the lower 3 brackets and keep the rates as they are – just as the government is proposing. Keep the limit between the two brackets above that at 150,000 (or at least not raise it by so much), and keep the rates in the upper 2 brackets as they are now instead of reducing them (I would go one step further and introduce another bracket around 220,000 and slap it with a higher rate, but I’m sure they wouldn’t want to do that).

    For most people the tax cut would be the same – for those earning between 80,000 and 150,000 it would be a slighly smaller cut. The big difference would be for those earning more than 150,000 but they probably wouldn’t vote Labor anyway.

    There will be less money available for public projects still more than under Howard’s plan and at least the money won’t be going into new Volvos for Madison’s eighteenth birthday.

  39. *96
    And the most unfortunate part of it all is that the libs have complete control of the disgraceful media and that beatiful wedge will not see the light of day and gain momentum unless people read blogs like these.

Comments are closed.

Comments Page 8 of 9
1 7 8 9