The best evidence of how well Labor is defining the economic debate is how far the government is going to try to neutralise the advantage.



Labor’s “people first” strategy has been based on taking a risk with policies to raise more tax from what Bill Shorten likes to call “the big end of town” – closing loopholes used by wealthy individuals and multinational tax minimisers. It is populist, as the government claims. But it is also popular. And effective policy.

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Labor’s proposed royal commission into the banks plays to the same theme.

Scott Morrison initially ran the response lines that had been crafted under Tony Abbott – it was an irresponsible “tax and spend” strategy. Old school Labor. Ridiculous to even think about.

Superannuation changes, in particular were not going to happen; “The government has made it crystal clear that we have no interest in increasing taxes on superannuation either now or in the future ... unlike Labor, we are not coming after people’s superannuation,” the treasurer said last year.

Of course no one out-Tony Abbotts Tony Abbott. The former prime minister, ostensibly trying to be helpful, claimed that Labor was proposing not one but five new taxes “a carbon tax, a “housing tax” (reduced negative gearing), a “wealth tax” (a lower capital gains tax discount), a “seniors tax” (superannuation) and a “workers’ tax” on smokers, and that the Coalition would be having none of it. (Even he wasn’t game to attack the idea of raising more tax from multinationals.)

But now it turns out the government is likely to introduce at least two of those taxes in the 3 May budget – the tax on workers’ and seniors. According to Wednesday’s Sydney Morning Herald, the Coalition’s superannuation changes (reducing the threshold at which higher rates of contributions tax kicks in) will raise four times Labor’s proposals. According to the Australian Financial Review on Tuesday it will include further restrictions on how much debt multinationals can assign to their Australian operations – a prime mechanism by which they minimise tax here. And the government has also confirmed that it will increase cigarette excise, although it won’t claim the kind of revenue Labor says it can reap from the measure.

And on Wednesday the government announced its own plans for the Australian Securities and Investments Commission – more money – much of it raised from the banks themselves (which raises some obvious questions about the line between the regulator and those regulated) and more powers, to try to counter Labor’s call for a royal commission into the banks.

Shorten’s response was that the government was “trying to have some sort of competition to out-Labor Labor” which was “not going to cut the mustard” because “Labor’s been leading the economic debate in this country from opposition.”

But of course from a political perspective the government doesn’t actually need to out-Labor Labor. It just needs to neutralise the potency of attack line that “(rich) Malcolm Turnbull is unwilling to hit the big end of town” and the advantage of the extra cash Labor had at its disposal because of the revenue it was raising from its tax policies.

It leaves Morrison’s claim that Australia only has a spending problem looking a bit off-script.

But the government can still differentiate from Labor if it uses the money to offer tax breaks to business, allowing it to continue to claim it isn’t increasing the overall tax burden. It can still run its slogans, Labor is all about “taxing and spending”, the Coalition is about “jobs and growth”.

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The Coalition claims Labor’s plan – to raise taxes on those who can afford to pay and use the money primarily for services like hospitals and education – appeals mainly to the ALP base, and that the Coalition’s message – economic competence, a steady plan for a transitioning economy, policies aimed at creating jobs – has broader appeal in the marginal electorates that will determine the poll outcome.

But that claim is contradicted by the Coalition’s own moves to neutralise Labor’s advantage. Whether those efforts work will depend on the effectiveness and credibility of Malcolm Turnbull’s alternative policies. Well see them in the budget. For now Labor is framing the debate from opposition.