Extract from The Guardian
The major parties pick a fight over the issue of tax, and what it says about ‘fairness’ and ‘aspiration’
After
an important week in Canberra, and this was one, political editors tend
to observe the shift in the tectonic plates of politics, and divine
various meanings. But this weekend, I want you to come with me to the
seat of Indi in north-eastern Victoria. The seat is held by the
independent Cathy McGowan.
Before we head there, a brief recap in the event you’ve missed the parliamentary goings on. The political week just gone was all about the major parties setting up the fight they want to have at the next election about income tax cuts, and their competing economic visions for the country.
Now, to McGowan, who is an assiduous local member. After Scott Morrison handed down the budget in May, with its $144bn tax package, the member for Indi set about surveying her constituents to help inform her position on the inevitable parliamentary vote about the tax cuts.
Post budget she clocked up almost 1,000 constituent contacts through online surveys, postcards, listening posts, social media, emails, letters, supermarket conversations and focus groups. To ensure she’d tapped the views of young voters, she met with 134 young people in Mansfield, Wangaratta, Wodonga and Benalla before they went to school or Tafe or uni or work.
McGowan says 71.3% of residents in Indi earn less than $52,000, and only six companies have a turnover of more than $50m. When it came to tax – both company and personal – constituent feedback was clear.
She illustrates the local impressions with two examples. One told her: “There should be no tax concessions for big business. This money can be better spent on education and hospitals/medicine and infrastructure.”
“Low to middle income earners need relief not people earning over 100K. Small business needs the relief; it is hard enough to employ people as it is, so help is needed here – you cannot guarantee that big business such as the banks won’t just pass it onto shareholders and they will be the only ones to benefit”.
Another said: “Flattening out our progressive tax rate so that minimum wage earners pay the same rate of tax as high-income earners up to $200,000 is patently unfair. This proposed change will lock in further inequality in the system for decades to come and this is at a time when income inequality is more pronounced than at any other time in living memory”.
So the moral of this story is McGowan – one of the handful of MPs outside a party structure, and in fact entirely indifferent to the media/politico pontification complex – formed an independent judgment about the package informed by the views of her constituents.
Given the package had been bowled up to parliament by the government in a take it all or leave it form, McGowan chose to leave it.
She voted no.
The point of referencing McGowan is not to suggest she’s an outlier. The population of Indi would be very similar in demographic terms to the population of many electorates currently held by the Nationals. Yet the Nationals took a different judgment, signing on to the budget package with a hearty hear hear.
Electorates with similar demographics also make up the One Nation heartland, and yet Pauline Hanson also voted yes to a round of applause from Sydney’s Daily Telegraph. Onya Pauline.
One more touchstone of community sentiment before I broaden our field of vision. Rebekha Sharkie, the Centre Alliance lower house MP, (who is currently fighting one of the “super Saturday” byelections in the South Australian seat of Mayo), was “very clear”, according to her colleague Rex Patrick, that she did not want stage three of the tax cuts to go ahead (the tranche that gives cash back to high income earners).
Stage three has, in fact, been legislated, because Sharkie’s Senate colleagues voted for the whole package, having been spooked by the government’s take-it-or-leave-it game. But Sharkie’s default disposition is interesting to me, because I know, like McGowan, she is constantly polling her constituents, and right now, she’s out on the hustings, talking to voters, fighting to hold her seat.
Having touched down in Victoria and South Australia, let’s now grab a national perspective on voter perceptions of the tax plan by noting what our fortnightly Guardian Essential poll told us this week.
The poll said 79% of a sample of 1,027 voters supported stage one of the income tax cuts, which are directed at low and middle income earners, while only 37% supported stage three, which involves flattening the tax scales so workers earning between $40,000 and $200,000 pay the same rate. It also showed a five-point increase in support for Bill Shorten’s alternative tax plan since the budget.
So what can we conclude about all of this?
We can say the Turnbull government won a big procedural battle this week, legislating its budget centrepiece, creating a springboard for the Coalition’s re-election campaign. This is no small thing. The government has given itself a framework to get back in the fight.
We can also note that conventional wisdom suggests Labor’s strategy of saying no to stage one and two of the tax plan is risky. What political party in its right mind rolls back a tax cut once it’s legislated? Surely that’s asking for trouble.
So yes, it is risky, but a few caveats need to be borne in mind.
One: the field evidence suggesting the top end tax cuts are not very popular.
Two: no one will experience the tax cuts Labor is intent on repealing until 2022-23, and then in 2024-25. Low and middle income earners won’t even experience stage one before the next federal election, because it will come to them as a rebate some time after next July. None of it is tangible.
Three: if voters can engage meaningfully with hypothetical tax cuts, they will learn Labor is promising low and middle income earners a more generous tax rebate than the government’s.
So while Labor is engaging in risky business by promising to take something away from people who probably don’t perceive themselves as high-income earners (because who does?) – the Coalition is also in risky territory once this debate hits the business end, and people begin to focus on the respective offerings. Voters on the frontline of Australia’s big wages squeeze will twig that Labor is promising a better short-term offer.
Perhaps that’s why the prime minister was so high concept this week, talking loftily about aspiration and workers living their dreams, harking back to a comforting Howardism, rather than arraying the tin-tacks of his offering, which according to some government MPs, voters haven’t yet grasped.
I get why framing matters. Voters in our hyperconnected age are so bombarded with inputs it can be hard to make sense of anything, so the vibe of the thing is important. Turnbull is also not the only player indulging in heuristics, Labor was flat out this week lobbing its own rule-of-thumb, casting the prime minister as a snob, as arrogant, as out of touch, the merchant of Point Piper.
But I suspect when it comes to income tax, swinging voters will screen out the noise and look at the fine print.
They will ask “does this benefit me?” and when and if their household circumstances permit the luxury of broader reflection, they’ll think about what’s best for the country. Depending on where their default inclinations lie, they might be troubled by Labor’s dream-crushing taxes (to borrow a Turnbullism) or they might worry whether lower taxes on higher income earners is fair, and whether it inevitably means less services.
Who says modern politics is about nothing? What a fascinating battle this will be.
Before we head there, a brief recap in the event you’ve missed the parliamentary goings on. The political week just gone was all about the major parties setting up the fight they want to have at the next election about income tax cuts, and their competing economic visions for the country.
Now, to McGowan, who is an assiduous local member. After Scott Morrison handed down the budget in May, with its $144bn tax package, the member for Indi set about surveying her constituents to help inform her position on the inevitable parliamentary vote about the tax cuts.
Post budget she clocked up almost 1,000 constituent contacts through online surveys, postcards, listening posts, social media, emails, letters, supermarket conversations and focus groups. To ensure she’d tapped the views of young voters, she met with 134 young people in Mansfield, Wangaratta, Wodonga and Benalla before they went to school or Tafe or uni or work.
McGowan says 71.3% of residents in Indi earn less than $52,000, and only six companies have a turnover of more than $50m. When it came to tax – both company and personal – constituent feedback was clear.
She illustrates the local impressions with two examples. One told her: “There should be no tax concessions for big business. This money can be better spent on education and hospitals/medicine and infrastructure.”
“Low to middle income earners need relief not people earning over 100K. Small business needs the relief; it is hard enough to employ people as it is, so help is needed here – you cannot guarantee that big business such as the banks won’t just pass it onto shareholders and they will be the only ones to benefit”.
Another said: “Flattening out our progressive tax rate so that minimum wage earners pay the same rate of tax as high-income earners up to $200,000 is patently unfair. This proposed change will lock in further inequality in the system for decades to come and this is at a time when income inequality is more pronounced than at any other time in living memory”.
So the moral of this story is McGowan – one of the handful of MPs outside a party structure, and in fact entirely indifferent to the media/politico pontification complex – formed an independent judgment about the package informed by the views of her constituents.
Given the package had been bowled up to parliament by the government in a take it all or leave it form, McGowan chose to leave it.
She voted no.
The point of referencing McGowan is not to suggest she’s an outlier. The population of Indi would be very similar in demographic terms to the population of many electorates currently held by the Nationals. Yet the Nationals took a different judgment, signing on to the budget package with a hearty hear hear.
Electorates with similar demographics also make up the One Nation heartland, and yet Pauline Hanson also voted yes to a round of applause from Sydney’s Daily Telegraph. Onya Pauline.
One more touchstone of community sentiment before I broaden our field of vision. Rebekha Sharkie, the Centre Alliance lower house MP, (who is currently fighting one of the “super Saturday” byelections in the South Australian seat of Mayo), was “very clear”, according to her colleague Rex Patrick, that she did not want stage three of the tax cuts to go ahead (the tranche that gives cash back to high income earners).
Stage three has, in fact, been legislated, because Sharkie’s Senate colleagues voted for the whole package, having been spooked by the government’s take-it-or-leave-it game. But Sharkie’s default disposition is interesting to me, because I know, like McGowan, she is constantly polling her constituents, and right now, she’s out on the hustings, talking to voters, fighting to hold her seat.
Having touched down in Victoria and South Australia, let’s now grab a national perspective on voter perceptions of the tax plan by noting what our fortnightly Guardian Essential poll told us this week.
The poll said 79% of a sample of 1,027 voters supported stage one of the income tax cuts, which are directed at low and middle income earners, while only 37% supported stage three, which involves flattening the tax scales so workers earning between $40,000 and $200,000 pay the same rate. It also showed a five-point increase in support for Bill Shorten’s alternative tax plan since the budget.
So what can we conclude about all of this?
We can say the Turnbull government won a big procedural battle this week, legislating its budget centrepiece, creating a springboard for the Coalition’s re-election campaign. This is no small thing. The government has given itself a framework to get back in the fight.
We can also note that conventional wisdom suggests Labor’s strategy of saying no to stage one and two of the tax plan is risky. What political party in its right mind rolls back a tax cut once it’s legislated? Surely that’s asking for trouble.
So yes, it is risky, but a few caveats need to be borne in mind.
One: the field evidence suggesting the top end tax cuts are not very popular.
Two: no one will experience the tax cuts Labor is intent on repealing until 2022-23, and then in 2024-25. Low and middle income earners won’t even experience stage one before the next federal election, because it will come to them as a rebate some time after next July. None of it is tangible.
Three: if voters can engage meaningfully with hypothetical tax cuts, they will learn Labor is promising low and middle income earners a more generous tax rebate than the government’s.
So while Labor is engaging in risky business by promising to take something away from people who probably don’t perceive themselves as high-income earners (because who does?) – the Coalition is also in risky territory once this debate hits the business end, and people begin to focus on the respective offerings. Voters on the frontline of Australia’s big wages squeeze will twig that Labor is promising a better short-term offer.
Perhaps that’s why the prime minister was so high concept this week, talking loftily about aspiration and workers living their dreams, harking back to a comforting Howardism, rather than arraying the tin-tacks of his offering, which according to some government MPs, voters haven’t yet grasped.
I get why framing matters. Voters in our hyperconnected age are so bombarded with inputs it can be hard to make sense of anything, so the vibe of the thing is important. Turnbull is also not the only player indulging in heuristics, Labor was flat out this week lobbing its own rule-of-thumb, casting the prime minister as a snob, as arrogant, as out of touch, the merchant of Point Piper.
But I suspect when it comes to income tax, swinging voters will screen out the noise and look at the fine print.
They will ask “does this benefit me?” and when and if their household circumstances permit the luxury of broader reflection, they’ll think about what’s best for the country. Depending on where their default inclinations lie, they might be troubled by Labor’s dream-crushing taxes (to borrow a Turnbullism) or they might worry whether lower taxes on higher income earners is fair, and whether it inevitably means less services.
Who says modern politics is about nothing? What a fascinating battle this will be.
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