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Bad advice means Gillard has blown a lot of political capital
The Age
Saturday January 29, 2011
The Prime Minister faces a lot of potential grief for little gain. JULIA Gillard's ham-fisted explanation of the flood levy raises the question, yet again, of just who is advising Labor on the selling and implementation of its policies.How you can find yourself having to defend an idea that was based largely on goodwill, and will not cost anyone earning less than $100,000 more than a cup of coffee a week, is a mystery.Carping opponents of the levy are either mathematically challenged or disingenuous, it is hard to say which and they are being aided and abetted by lazy media, and others, describing it as a tax of which high and middle-income earners will "bear the brunt". The brunt of what being hit on the wrist with a wet tram/bus ticket?Average earnings, based on the last ABS figures, come in at about $65,500 a year. People on that will only pay the 0.5 per cent levy on the $15,500 they earn above $50,000, which runs out at less than $1.50 a week and a "whopping" $78 for the entire year that the levy should apply.You have to be earning more than $50,100 a year before the levy costs you more than 1 a week so it is basically going to cost more to run the computer program to collect your money than it will cost you.Perhaps Gillard's problem in getting the message across lay in chanting the government's mantra of "responsible fiscal management", and maintaining its target to return the budget to surplus. Speaking like economists might make you sound as if you know what you are doing, but it does nothing for the clarity of your message with ordinary people (or "working families", if you insist)."By 2012-13, our economy will be running very strongly, very near capacity. And in those circumstances we've got to manage demand in our economy," said Gillard on the ABC's AM program yesterday morning. Say what?Clearly this was the fall-back position of her advisers, having seen that the first salvo on why the levy was important had not clicked in the community, and was copping quite a bit of return fire. This was helped by media outlets finding "victims" who think they are going to have to pay "thousands" the levy will only cost you $1000 for the year if your combined gross household income is more more than $180,000, in which case you probably do not fall into the battler class.What Gillard appears to have been trying to do was counter some of the early criticism from retailers and others in the private sector, who are already worried about low levels of consumer confidence, and fear that the spectre of a new tax hanging over consumers will make them pull back further on spending.So, she is arguing that if her tax does dampen consumerism, that will be no accident; she meant to do it because the government is also worried about the fact that the thirst for labour and materials to repair flood damage over the next few years will drive up wages and prices, and send inflation running.She's dreaming. Once people discover that the levy is not exactly crimping their lifestyle, they will judge their spending on the same, not always rational, terms that they normally do "is there room on the card?", "the power bill's not due for two weeks" and "I need a treat".That said, the tax is an enormous waste of time, and probably money. It sadly means that Gillard, like her predecessor Kevin Rudd, does not seem to understand how easily you can squander political capital. In this case, she faces a lot of potential grief for very little gain.She was never going to win on this one the opposition would bag her regardless of her government's response to the floods. Either way she would be criticised for spending money in all the wrong places, and inadequately monitoring who got it and the growing list of cancelled or retooled programs like insulation, clunkers, carbon tax and schools will continue to be trotted out.As most of us who run a credit card sensibly have discovered, a little debt is not a terrible thing (buying a house no longer counts as "a little debt"). You do less of some things because you want other things more. What you generally do not do is hit up your mates for money that you have no intention of giving back they do not stay your mates for very long after that.Most Australians could accept that argument quite easily for a delayed return to surplus, a little more debt and a deeper list of trimmed, delayed and abandoned government spending programs than outlined this week.And let's face it if you want to live in a society that affords you health, education, reliable utilities and transport, you should be paying your full, fair freight in income tax in the first place. Everyone else ends up paying more, or getting fewer services, because of those who spend a lot of time, and money, finding loopholes that enable them to push their tax burden into someone's else's backyard.If more of those at the top end of the earning scale (you remember those poor mites bearing the "brunt" of the levy) accepted that responsibility, then Gillard et al would have more money in their clean-up kitty to spend in the first place.
© 2011 The Age