Both sides have kicked off the campaign playing to their strengths – with Kevin Rudd and Julia Gillard popping up in Ipswich to talk about WorkChoices (and forcing Howard to deny that he has a “secret IR agenda”… gosh, I mean he didn’t before the last election, did he?) and Howard and $weetie the Subprime Minister (whatever happened to that meme? That’s right, now it’s “right leadership”, team!) offering a fistful of dollars. Sort of.
They really are going for broke. It removes any chance they have of getting any mileage from tax in the next term, but I imagine they don’t think there will be one, so…
But before everyone spends their $15 in advance on the credit card and gets in quick before the Reserve raises rates on Melbourne Cup day, it’s worth thinking about this policy announcement from the point of view of distributional equity. Andrew Leigh has been:
To see how the new Howard-Costello tax cuts would bite, take two examples. If you’re a federal MP (base salary $127,060), then your total tax savings from 1 July 2007 to 2010-11 are around $3800. If you’re on the minimum wage ($27,150 for a full-time minimum wage worker), then your total tax savings over the same period are about $1280. A spending plan this regressive would be met with howls of outrage.
If the priority is moving low-skill workers into the labour force, does it really make sense to give three times as much to federal MPs as minimum wage workers?
And it’s not as if there aren’t people living in poverty or otherwise struggling in this putative land of plenty. It’s just that they don’t make it onto five second election news grabs.
You have to give this masterful Hawke-ian, Whitlamesque bold leader full credit. He’s just snookered the little dictator Kevin Rudd. So long as K.Rudd poses as an ‘economic conservative’ he will never match the tax cuts. And so long as tax cuts increase overall revenue so long we shall have progressive and progressively pinker old-time Labor party policies.
Who does care what color the rat is so long as it fetches the cheese?
John Howard is wide awake – John Howard is our light on the hill.
I’ll be having a look at the report on poverty you linked to, Kim.
On tax, I don’t know that Howard made his case well on the 7 30 Report (and he was generally rattled and all over the place – not very “on message”). Rudd, I thought, swatted away the silly “Labor must produce a tax policy by yesterday” theme very elegantly.
Yes Mark, Howard’s performance was poor. Even after the interview was ‘over’, his parting remarks suggested a man under pressure.
Rudd would do well to publicise Leigh’s observations.
On the other hand, Polly is putting $38,674 towards the public good, whereas Mini is contributing only $3,495. Mini’s government benefits probably outweigh her contributions.
So if Polly gets back $3,800 of her own money, then good on her. Good on Mini for getting back $1,280 of hers too.
Lefties have this misconception that tax breaks are manna from the government. In fact they’re really just not taking as much money off the people who earnt it.
Via Paul K at Poll Bludger:
And here is the ACA Interview Video.
http://ninemsn.video.msn.com/v/en-au/v.htm?g=730b93b4-4f8c-4fc4-abab-15f2a2eb6c27&f=&fg=copy
Oil Price spiked up today too. Not a good day to announce inflationary and unfair tax cuts.
“But when asked at the end of a Nine Network interview on Monday night if he could nominate the reserve bankâ??s official rate, Mr Howard answered: â??Itâ??s 6.25 per centâ??.
In a separate interview on Nine aired shortly after, Opposition Leader Kevin Rudd correctly quoted the figure of 6.5 per cent.”
Come on Frank , he always said that interest rates would be lower under the Liberals.
By hook or by crook….
Yes, didnâ??t Howard just release his tax policy, like, as late as today?
Out of interest, who remembers â??TEH BOUNCEâ?? tax cuts back at budgie time?
No? Me neither- someone reminded me today. Guess I wasnt paying attention in masterclass, like 56 %2PP of the punteriat.
If I were Rudd, this is precisely where Id make good on the promise to spend less than the drunken sailor – and suggest instead that the $34B will go into infrastructure.
After all, what $15pw compared to saving 10k a year per kid, for the mortgage, becasue weâ??ve got decent public secondary schools?
etc
LOL Murph!
True
BTW, the ACA Video of Howard’s interview with the gaffe is currently in moderation – probably cos of the large URL.
Rhetorical question by Leigh if ever I saw one.
Rudd will, IMHO, wait to see how this dog runs, cut it significantly and tweak it to benefit the greatest number of lower income earners (ie single mothers screwed in more ways than the government can think of). A little dose of utilitarian theory will be applied.
With the polls on his side, Rudd will not be stampeded into going off half cocked. The fact that LNP policy has been revealed so soon tells us exactly this: fricken desperation to gain traction.
(Great post Kimberella btw–especially “and forcing Howard to deny that he has a â??secret IR agendaâ??â?¦ gosh, I mean he didnâ??t before the last election, did he?” LOL)
Sorry to be ‘off message’ here but I reckon that Labor should match and raise the Coalition on tax cuts. As well as throwing them politically, it would also mark a decisive turn away from the ‘tax-and-spend churn’ that has dominated the last six years of Federal govt., and the last three in particular.
On infrastructure, a lot of the proposals are frankly b.s. and pork-barreling. How many times can the Pacific Highway be fixed? Labor would be better served, and I suspect it is their gut instinct, to focus on 4-5 key areas (say, childcare, health, universities, early childhood, and broadband) and focus new spending commitments on them, rather than throw $100m her and $100m there at a bunch of things.
I suspect most LP readers would end up better off out of this, as they don’t live in the marginal seats that get new lighting for the sports ground’ or a ‘community access’ IT thingy because they live in a marginal seat.
On Labor and tax, see my post at http://www.youdecide2007.org/content/view/231/103/
Cheers, Peter!
No need to be because we don’t do “on message” here!
I’m not sure matching them on tax is that important. It’s a “fork in the road”. It should really enable Rudd to set out different priorities on both the purpose and direction of tax policy and on spending (agree that targeted spending makes sense). Fingers crossed.
Kim, the media will obsess over the ‘$ better off per week’ numbers. Perhaps they’ll even have ‘Liberal’ and ‘Labor’ columns so the punters can run their fingers down the wage levels. Matching the tax cuts will probably be important whether the Filthy Liberal likes it or not.
BBB
Howard is driving semi trailer loads of pork to all marginal seats. This is an absolute disgrace. After cutting funding on Greenhouse CRCs, health (hospitals) and putting the screws on the unemployed.
Rudd handled this well be saying they needed to look into the numbers further. No good handing out tax cuts to win elections when the planet is burning and about to flood. At least no instant me too this time.
How does Howard, Abbott and Costello they get away with their blatant shysterism? Hopefully they won’t this time. Rabbit #9 I think – an expensive one at $34b
BBB, maybe. But there’s a risk in promising tax cuts way out down the track. Remember L.A.W.?
And then, following up on Lefty E’s point, there’s this:
http://blogs.abc.net.au/thepollvault/2007/10/a-penny-or-make.html
Howard also doesn’t have that simple a message as he’s trying to fight defensively on too many fronts at once. Reference all the stuff about “modern families” blah blah. He’s also trying to sound in touch and not “too old”.
Make it harder for them to diss Labor’s plans for the “future” with action and numbers way out in the never never since they’ve copied the tactic.
The tax cuts have to be matched for impact. And with $34 billion to play with Rudd’s got endless options to take. Keep (or better, increase just for the hell of it) the low wage cuts – and go some way towards the top tax rate cut.
No big deal, anyway. These are not large numbers over the time-frame. If world economy keeps ticking these cuts will pay for themselves – and if it all implodes then all bets are off anyway. We are talking non-core promises here.
Peter Kemp’s right though – the Libs are desperate if they have to blow their one and only big idea on the very first day. Yes, Rudd should take his time – let the tension build – let ‘em wait – and then match it with a yawn and an air of gravitas rather than the sweaty tugging at the nation’s elbow with which Howard and his lofty mate announced this off the back of a truck “policy”.
Rudd’s consistently said that he will be more fiscally responsible than the Coalition. If they’re not matched, then he can play the “interest rates” card as well as establish a point of difference on priorities.
I think he can play the fiscal manager as well as give people what they really want, Kim. People fear interest rates and unemployment; they lust after tax cuts. Rudd needs to and can attend to both passions. There is so much money here to play with. And half the Liberal’s cuts are on the never never anyway.
Tax cuts are the last thing this country needs. But the first sign the polls show tax cuts are the issue – Rudd should neutralise it.
Can’t see why he can’t neutralise bad tax policy with good tax policy cheaper, wbb, as I’m arguing in this new post:
http://larvatusprodeo.net/2007/10/16/false-economies-ii/
Certainly room for improvement – but it has to look and smell like a fistful of dollars nonetheless. Howard’s ploy will set people to expecting something tangible for their vote. Plasma screens all round is the Liberal’s policy. What a statesman.
Yes surely there is an argument for Rudd to come out and say here’s Howard being desperate again. He’s had your money for 11 years and hasn’t invested a cent in national institutions. Now he’s looking down the barrel of defeat and he’s bribing people to vote for him. The only problem is that it is still geared to the upper end, the majority of whom already vote for him. Perhaps he is counting on the perceived benefit of tax cuts among battlers, who might forget about the looming interest rate rise.
On Kym’s post above, I mentioned also that tax cuts do not add any capacity to the economy. And higher interest rates are the reality of a near capacity economy. And it’s either interest rates or inflation. Choose your poison.
The question is whether the promise of money (the tax cuts don’t take effect immediately) will still stimulate consumer spending and goad the Reserve to take action.
On a disability pension. Don’t get a tax cut.
Where are these ‘national institutions’, Nahum?
BBB
Like 21,999 other people in my area I am as poor as the proverbial church mouse.
Howard’s tax cuts will deliver me not one brass farthing.
If these cuts contribute to inflation they will actually cost me money as the cost of living rises.
I’m sure that you can figure it out for yourself BBB.