Wednesday, August 7, 2013

Election 2013: Day 3 (or, I’d love to have a beer with Albo)

And so we reached the first real day of stupidity in the campaign.

The news.corp sites ran with a big scoop of Anthony Albanese having a beer with Craig Thomson in a pub in Sydney on Tuesday night. The photo which looks like it was shot with someone’s iphone on full zoom, has that nice fuzzy look that makes you think something dodgy is happening.

The story attempted to suggest something nefarious may have been going on perhaps the two were umm you know something something… or you know they might have perhaps ummm….  OK, look, when you get down to it they couldn't quite put their finger on anything that was actually wrong.

The “best” anyone could come up with was the old “it’s a bad look”.

Devastating. All smiles as five-year-old photobomber upstages PM Kevin Rudd

At least it wasn’t a story about how Kevin Rudd brushes his fringe away.

There was policy announced today but probably the highlight of the day was a young kid photo-bombing Kevin Rudd at a school. The shot taken by Fairfax's Andrew Meares is one of those light moments that is nothing to take too seriously, but is still good. The SMH did go on just a bit too much about it, but heck it’s a smile and smiles are good.

The advocacy group GetUp! tweeted the photo initially without attribution which was quickly deleted and replaced with one acknowledging Meares. The Daily Telegraph then took the photo, put it on its on website, and suggested it came from GetUp! and the source was “supplied”.

After complaints by Fairfax, it was removed.

Flogging a competitor’s photo and claiming you got it from someone’s Twitter account?

Now that’s a bad look.


I know it’s early days, but something has struck me about this campaign. It is very dull. I don’t mean dull in that everyone is saying their talking points and no one has made any slip ups. Jaymes Diaz and David Bradbury’s respective interviews are wonderful moments of excruciation. And as we’ve seen, we have had some fun images.

But there really doesn’t seem to be any reason to this election.

What is it about other than not voting for Abbott or not voting for Rudd?

Without worrying about who has won each day, I think both leaders have been tired, and out of step. Abbott has been stilted and dull. And that is being kind. It’s almost like he has taken Rudd’s advice to take a Mogadon and have a lie down.

But Rudd as well has not been good. He has often sounded like he hasn’t quite got his lines set. He at times seems to struggle to find his words. Almost like he’s out of practice – which of course he is.

I think the ALP is in big trouble at this point.

“A New Way” is a dumb slogan that makes no logical sense, and Rudd this week has seemed a bit old.

I also think they’re in trouble because I don’t think people give a sh*t. My gut feeling is that (as I said on Day 1) people are pretty much tuned out, and caring more about the footy and real life. I’m a political junkie and I can hardly be bothered to watch any of it all.

Three years ago, and in 2007 as well, everyday seemed crucial, every interview a must watch, every debate a turning point. This week has really felt a bit “going through the motions”.

It is early days – in 2010 the Libs had a very slow first week.

But the ALP should be very worried if they’re finding that the electorate isn’t caring about the election because it is coming from behind.

So stop right now and think what the ALP campaign is about. I don't mean after-school care or keeping the carbon price or the NBN. I mean what is the soul of the campaign? If you are someone who doesn’t care about politics why are you voting for Kevin Rudd?

“A New way”? But they’ve been there for 6 years, so where’s the new?

A new way? But one of the first things they did was announce funding for the car industry. 

Couldn’t they be stronger, or smarter, or heck even just more vibrant?

Kevin Rudd was just on the ABC 7:30 and he kept trying to talk about “Seven pillars”. Now look I am a numbers nerd but even I was thinking, “Geez, seven pillars? Can’t you just talk to us in human language?”

At his point Abbott doesn’t really need to care about much – it’s the ALP that has to overcomes the “Meh, you’ve had your turn, let’s give the other lot a go.”

Back in 1993 that looked to be what would happen, but the GST happened and the ALP (and Keating) found a reason to convince people not to give the other mob a go. Hockey says a GST rise will be on the table

And thus today we had the ALP getting pretty excited about this from the AFR:

Joe Hockey was quoted as saying that GST “was part of the equation”.

This isn’t really a shock – he has already been on the record as saying if you have a review of the tax system (as the Libs want to do – apparently the Henry Tax Review is old hat now) then you need to consider the GST.

So OK, fair enough the ALP want to try and make some hay out of it, but the GST can only be increased if all the states agree.

Now the only thing the ALP have going for them is the states probably will agree because they all know the federal government will get the political blame. So yes it is possible.

But my view is that Tony Abbott, were he to want to raise the GST, would take it to the next election. And I think had he gone up against Julia Gillard this election, such a tactic was writ in stone.

Exactly like John Howard in 1996 and 1998, the strategy was to win big in the first election and have enough of a margin so that at the following election you can throw in a few uglies . So had Abbott slaughtered the ALP under Gillard (which was likely), then I believe the next election would have seen the GST, and harsh IR all on the table, and few other things – the ABC maybe? And sure they would lose a few seats, but if they had a 100-50 seat margin – which was on the cards – then they’d be almost unable to lose.

Just wait for the next QLD election to watch what Campbell Newman will put forward. He has such a huge margin that he knows the next election is almost a walkover, so what better time to push through everything you know isn’t really popular, but where you will get over the line because the ALP is in ruins.


Anyway. To policy.

The Libs announced that they would be cutting company tax by 1.5%… from July 2015.

That’s a ways off, so were I a company director I wouldn't go locking it in just yet.

The main reason the LNP is cutting the tax is because they’re increasing the company tax for big business by 1.5% to pay for their Paid Parental Leave Scheme.

At present though we don’t actually know what their PPL will end up looking like. My belief is there is no way a 1.5% levy on big business will cover the cost of their original scheme and so it will have to be altered. They’ll probably not include state public servants, or some other such.

The reason is (as I have written in The Guardian) that when Abbott first announced that a 1.5% increase in company tax would pay for it all the amount of company tax expect to be raised was a heck of a lot more than it is now.


Back in the 2010-11 budget, corporate tax revenue for this current financial year was forecast to be over $75bn; in this year’s budget it was forecast to be only $71.6bn. The writedowns from the 2011-12 budget are even more severe. Back then, $81.5bn in company tax revenue was expected to be raised in 2014-15; in the May budget, the Treasury was expecting just $72.8bn. In last Friday’s Economic Statement they are hoping to get $70.15bn!

Clearly 1.5% of company tax revenue ain’t what it used to be…

Now the Libs are saying the cut will improve growth, and sure it probably will. But the benefits are easy to exaggerate. The Government's Business Tax Working Group noted in its draft final report that:

A cut in the company tax rate of two to three percentage points would be needed to drive a significant investment response.

It also looked at how the tax cut was funded:

Treasury modelling commissioned by the Working Group indicates that a reduction in the statutory company tax rate from 30 to 29 per cent would increase gross domestic product (GDP) and household consumption in the long run.

Importantly, the modelling assumes that the cut in the company tax rate is offset by a reduction in lump sum transfers to households to keep the government budget balanced. This is a standard technical assumption. The benefit of potential policy reform packages would, of course, depend upon how the rate reduction is funded.

Also bear in mind, for most companies this is not a cut – they will pay 1.5% extra for the PPL and then receive a 1.5% cut. This tax cut won’t even affect most small businesses because, as former AIG CEO Heather Ridout told ABC radio:

"Most small businesses pay tax through the personal income tax structure, so the gains for corporate tax reductions are much more for bigger companies, and for particularly foreign-owned ones."

Now yes Australia's company tax rate is high compared to many of the OECD nations: and Media-Publications-2012-BTWG_Draft_Final-Downloads-PDF-BTWG-Draft-final-report.ashx

But it’s not so simple as that, as Professor Rick Krever, director of the Taxation Law and Policy Research Institute at Monash University told the ABC’s Stephen Long:

… in many European companies, companies pay much higher social security taxes than they do income taxes. So if you just comparing income tax rates, you're not comparing anything, you're not comparing the true costs of companies of operating in different countries.

Also there is the issue that cutting the company tax rate provides greater incentive for high income earners to operate as an independent contractor and pay company tax rather than income tax. image

So we have a policy that doesn't really cut the tax rate for the companies who will most drive any GDP growth you would expect to get from a cut in the company tax rate. We have a cut in the company tax rate at the time when expectations of company tax revenue have been declining.

It’s worth remembering that back in 2006-07 company tax revenue was equal to 5.3% of GDP; last year it was 4.3% of GDP.

Just imagine how much easier it would be to run your budget if you had an extra 1% of GDP in your accounts!

So to recap:

A cut that is not really a cut just a split into two taxes: 28.5% +1.5% (gee that sounds efficient).

Thus extra growth unlikely to be anywhere near what would it might be were it a real cut in company tax.

And it is a cut in revenue at a time when revenue is declining.

Interesting way to go about fixing a “budget emergency”.


One final thing about today. When the Libs announced this policy they provided the documents to the press gallery after the actual press conference started. Andrew Tillett from The West Australian tweeted that they were passed out 5 minutes after it started.

One journalist (I’m not sure but it might have been Andrew) noted this when he asked Abbott a question about it. Now I realise campaigns don’t want their policies leaked, but this policy HAD been leaked – it was in all the papers. If they are not prepared to give the documents 15-20 minutes before the announcement so journalists can actually ask some question that relate to the policy then they should be called out as dodging accountability.

I have in the past (rather infamously) had a go at the press gallery following the leaders around, but it is not all their fault – the parties are doing more than ever before to avoid scrutiny. But it needs to be called out – and the journalists should have no compunction about doing so. It is not about journalists making themselves the story, it is about leaders dodging tough questions – and I think that is a newsworthy story.


Tomorrow the latest employment figures come out. A big day in the campaign.


UPDATE. A few mates on Twitter remind me that at this point in an election voters usually aren’t listening. And that is true. Also Abbott had a shocker of a first week in 2010 and he came home with a wet sail. I don’t think it is over. But as I say, the ALP needs to improve. The one reason I think they might is they haven’t announced really anything yet, whereas the Libs have already gone in big with a $5b policy.

Still. 4 and half weeks to go…. Don’t put down your glasses just yet.


Darryl said...

There's no graph that can demonstrate that the electorate, rather than the prospective government, is rolling itself into an echidna like little ball.

Like Col Allen said, it is gut feeling time.

Abbott is dead. The will to repel is gone. The electorate fear change and that is why Rudd will win. And he will win handsomely. Call.

Greg Jericho said...

Hmmm. I always am a bit skeptical when it gets down to the argument that people won't be able to bring themselves to vote for someone.

The Libs thought that in 2007 because it did work in 2004. The ALP thought in 1996 people wouldn't vote for Howard.

I think the ALP are still behind. But I think they also *might* be playing it a bit cool. They haven;t really announced much - though the after-school care thing will run well and is worth plugging.

A long way to go, but the ALP wouldn't want the election to be held tomorrow.

Penny said...

I don't get the Seven Pillars thing either.

It seems particularly dumb because the Coalition advertising (including the blue booklet) talks about the Five Pillars of the strong economy, or some such.

It's all a bit 'my dick is bigger than yours' and I couldn't begin to tell you what a pillar is here, except that there are four indestructible ones in the banking industry.

Sincerely, Confused.

Frappe said...

It's a bit like the first round of a heavyweight title fight: jab here and there but no big swings.

The governments in 07 & 10 wheeled out the artillery in the first week (tax cuts & workchoices redux) and was easily neutralised that it became a fizzer.

Surely both sides are laying a bit of ground work to see which themes and lines are getting traction in the key electorates for some big hitting closer to the big date.

The first debate and a fresh set of polling will certainly recharge the batteries for both sides.

Jaeger said...

"Also Abbott had a shocker of a first week in 2010 and he came home with a wet sale."

That should be "a wet sail".

I think both parties are keeping their powder dry in these early days; it's more a tacking duel for position before bring their guns to bear. :-) (Same sex marriage?)

Thanks for the election summaries, Greg - a pocket of sanity amongst the excruciating minutiae (saturation photo-bombing) and complete unhingement (News Ltd.)

Greg Jericho said...

Lulz - yes "wet sail" whoops. Thanks Jaeger will fix.

Geoff said...

Regarding Professor Rick Krever's comment about the total value of "business costs" in European and other countries, do you have an authoritative graph or data set for this? It would be great to push to some of my "doubting" friends.

Anonymous said...

Abbott promised a job subsidy today for Tasmanian long term unemployed - but as far as I can see this subsidy already exists