Displaying the same type of agility he’s recommended to the rest of the nation, yesterday Prime Minister Malcolm Turnbull simultaneously bowed to popular opinion while dancing nimbly away from the unpopular proposal to increase the goods and services tax.
Turnbull telegraphed his abandonment of the GST increase on Friday, saying his consideration of the matter was guided by three stipulations: the overall tax burden would not increase, the changes were “rigorously” and “absolutely” fair, and it would “drive jobs and growth”.
Having created the context for retreat, the PM then declared on Sunday:
At this stage I remain to be convinced or persuaded that a tax mix switch of that kind would actually give us the economic benefit you’d want in order to do such a big thing.
Even though the PM argued that any final decision would be made by the Cabinet, his statement pretty much relegated any GST increase to the “dead, buried, cremated” folder, at least until after the election.
Turnbull deliberately tried to frame this decision as being about the effectiveness of the policy proposal, to fend off accusations that the politics got the better of him.
Telling his interviewer on Sunday: “You have got to first decide: is this policy going to give you the economic outcome you want? Then you have to assess the practical politics.”
Turnbull argued the GST income tax swap proposal had not yet passed the first test. We are meant to infer that the political dimension had not even come into his consideration.
Yet no matter how much he might protest otherwise, the attempt by this Coalition Government to increase the GST has always been about politics as well as economics.
The business community, which is exempt from the tax, sees an increase in the GST as a magic bullet that will “painlessly” raise the money for the corporate tax cut it claims is the way to “boost productivity”. The sector has worked through its lobby groups and corporate flaks to increase political pressure for the change.
Most state and territory governments have buckled under the Federal Government’s political extortion efforts, acceding to the proposed GST increase as the only way to restore Commonwealth funding for health and education.
And then there is the Coalition itself, for which the GST is a totemic political issue after John Howard took it to an election and still managed to win. There remains a belief within Coalition circles, although perhaps an ill-founded one, that close adoption of the Howard approach would deliver a similar outcome for the current regime.
However, it seems the faith of Howard acolytes has been shaken by the Abbott-like anti-tax campaign being run by the Labor Opposition. For surely, in voters’ minds at least, one great big tax is as bad as another.
There are also some Coalition MPs, like Turnbull supporter Russell Broadbent, who vividly remember that Howard’s GST election “win”involved the loss of 18 Coalition seats.
To paraphrase another Australian prime minister, politics may not have been the whole reason for Turnbull’s retreat on the GST, but it was certainly a factor.
Labor will certainly claim Turnbull’s abandonment of the GST increase as a win, and have already laid the groundwork for it to be depicted as an embarrassing backdown for the PM.
Shadow Treasurer Chris Bowen was quick off the blocks yesterday, saying the PM was in a “muddle” on GST, didn’t have the political backbone to back the policy, and if he didn’t “proceed with increasing the GST, which we all know he wants to do, it will be humiliating for Malcolm Turnbull”.
It’s also likely the Opposition will try to confect a schism between the PM and his Treasurer, who appeared to be gung-ho on the GST increase until as recently as a week ago.
However, the most damaging criticism that Labor will level at the PM is that his GST backdown is yet another example of Turnbull abandoning his principles to mollify detractors within the Coalition parties.
This line of attack is reportedly one of three being rolled out by Labor in the lead up to this year’s federal election.
The Opposition hopes to win back “soft” Labor voters attracted to Turnbull’s progressive views, and who have tentatively switched their vote to the Coalition, by casting doubt on the PM’s willingness or ability to stand up to his conservative colleagues and deliver on those views.
The tactic was given its first major outing on the first day of Parliament when the Opposition moved immediately to suspend all other parliamentary business to give the PM the opportunity to reaffirm his commitment to matters of principle that he’d previously supported, such as an emissions trading scheme, marriage equality and a republic.
The Government unsurprisingly shut down the debate, providing Labor with the justification to argue Turnbull doesn’t have the “ticker” to pursue the matters he believes in. That sentiment was echoed in Bowen’s weekend comment that the PM doesn’t have the political backbone to defend the GST increase.
Even so, being accused of political cowardice over the GST may turn out to be the least of the PM’s concerns. Much more devastating are the ancillary questions that have started to emerge: If Turnbull doesn’t stand for emissions trading, marriage equality, the republic, or a GST increase, what does he stand for? And if he stands for offshore detention, cuts to health and education funding, and a plebiscite on same-sex marriage, why did the Liberals bother changing leaders in the first place?
This is a question Turnbull cannot afford to become a mainstream preoccupation, given much of his appeal is currently vested in not being Tony Abbott.