Back in December 2013, in the wake of Labor’s election loss, shadow treasurer Chris Bowen rose to his feet at the National Press Club.
He said for the Coalition to be a success, it needed to pass four economic tests.
First, unemployment must be below 61⁄4 per cent. Second, Australia must be in the top 10 wealthiest countries. Third, Australia’s AAA credit rating must be maintained; and fourth, tax to GDP must be below 23.7 per cent.
On each count, the Coalition has not only met these benchmarks, but exceeded them.
Unemployment is at 5.1 per cent, significantly below the 5.7 per cent it was when we came to government. More than 1.2 million new jobs have been created in the past five years with the number of women and young people in the workforce at record highs. Australia remains in the top 10 wealthiest countries in the world, with living standards rising through the year, whereas they were falling under Labor.
Australia is one of only 10 countries with a AAA credit rating from all three leading credit rating agencies, with Standard & Poor’s praising our ‘‘fiscal prudence” and ‘‘budget performance”.
At 23.1 per cent, our tax-to-GDP ratio is well below both our speed limit of 23.9 per cent and the benchmark set by Bowen.
It’s a tad ironic, or one could even say hypocritical, to see Labor at last week’s national conference walk away from a commitment to putting in place a tax-to-GDP limit, saying to do so would be ‘‘an arbitrary cap” and ‘‘not fulfil any useful economic purpose”.
This is because there is no limit to Labor’s appetite for tax increases.
In contrast, the mid-year budget update showed the economy is growing strongly and the government’s books are in their best shape in more than a decade. This has been achieved without imposing new taxes.
Compared to what was estimated at budget time in May, the deficit for 2018-19 has been cut by two-thirds, the surplus for 2019-20 has almost doubled, and the cumulative surpluses over the forward estimates have doubled to more than $30 billion. The rate of spending growth is at 1.9 per cent, less than half of what we inherited, and the lowest level of any government in 50 years.
The number of working-age Australians on welfare is at its lowest level in 25 years and net debt to GDP is coming down from 18.2 per cent today to just 1.5 per cent in 10 years. These are numbers Chris Bowen and Labor could only dream of, given when they were last in government growth was lower, unemployment was higher, debt was rising at more than 30 per cent per year, and investment was in freefall.
Labor couldn’t even deliver a surplus despite being blessed with the best terms of trade in more than 100 years and iron ore prices that were consistently more than double what they are today.
This makes a mockery of Bowen’s desperate attempt to belittle Australia’s and the government’s economic success by saying the MYEFO numbers merely reflected ‘‘global strength and domestic weakness”. How pathetic.
What would lead to domestic weakness is Labor’s plan to impose $200 billion of new taxes on Australian families and businesses.
Chief among them is Labor’s plans to abolish negative gearing as we know it and increase capital gains tax by 50 per cent.
Even Corbyn and Sanders’ new bedfellow, Labor president Wayne Swan, said when he was treasurer it would be ‘‘economically disastrous” to abolish negative gearing as Labor’s plan will hit home owners and renters alike.
Bowen has revealed he needed to take his negative gearing policy to the shadow cabinet 19 times, but his colleagues still can’t get their lines right. Bill Shorten says it will drive prices down, Jim Chalmers says prices will go up, and Joel Fitzgibbon has a bet each way, saying prices will go neither up nor down.
In fact, Labor’s negative gearing changes are such a shambles, they can’t even tell you the starting day of their policy, which, if delayed, will blow a $6 billion hole in their budget costings.
Labor’s retiree tax is also ill-timed and illconceived, breaking years of bipartisanship around the principle of double taxation.
In fact, when Howard and Costello introduced the full refundability of franking credits, shadow treasurer Simon Crean said ‘‘we have no difficulties supporting the proposal” as ‘‘it improves the current taxation situation faced by low-income investors, especially retired Australians”.
The impact of this policy will not only be felt by more than 900,000 individuals and 200,000 self-managed super funds who will be worse off, but also by the many Australian companies whose ability to raise capital and grow their businesses has, in the past, been enhanced by their offering to Australian investors of fully franked dividends. The burden of Labor’s new tax is also extended to discretionary trusts, superannuants and income earners, be they policemen, school teachers or crane operators.
No one is spared from Labor’s farreaching tax grab. However, there will be one group of big winners if Shorten gets the keys to The Lodge. The unions.
While Kevin Rudd, Peter Beattie and others have sought to distance themselves from the CFMMEU, Shorten has grown only closer. They were in the front row at the national conference and in government they’ll sit at Labor’s cabinet table.
Industry-wide bargaining, the abolition of the ABCC and widespread industrial disputation would be a consequence of a Labor government, haunting business and damaging the economy.
There is no clearer sign of things to come when Shorten said ‘‘as Labor leader, I still think like an organiser”, and the head of the ACTU says it doesn’t think there is a problem with breaking the law.
The differences between the major parties at the next election are clear.
The Coalition has delivered a strong and growing economy, with MYEFO confirming next year’s budget will be back in the black.
In contrast, Labor has a big-taxing, bigspending, pro-union agenda that will squander the hard-fought gains of the past five years and derail our positive economic trajectory.
At the national conference, you could see their hubris, declaring victory, to quote Bowen ‘‘before getting to the finish line”.
Such a presumptuous attitude is a mistake, as between now and election day there is a long way to run.
Josh Frydenberg is the federal Treasurer.