Tuesday, August 10, 2010

Libs skate over the details - DEBATE 2010

TONY Abbott could end up as the Steve Bradbury of Australian politics. It had seemed that both Kevin Rudd and Julia Gillard were skating away from him. But then Gillard brought down Rudd and Rudd kicked out, almost bringing down Gillard and allowing Abbott to sail past her as the only one still securely on his skates.

Will he win? Time will tell. What makes this election so unpredictable is that so many young Australians are yet to engage with what seems to them a boring, irrelevant, repetitive slanging match. One suspects a lot of them will make up their minds only hours before they vote.

But Abbott has had a dream campaign, Gillard a nightmare. The media focus has been all on Labor, very little on the Coalition. What kind of government would it be? What kind of decisions would it make on the real issues we face, after having devoted so much energy to whipping up a confected issue on deficits and debt?

Yesterday, shadow treasurer Joe Hockey gave his answer while debating Wayne Swan at the National Press Club, setting out a five-point economic agenda for an Abbott government.

First, was the predictable "fix the mistakes made by Labor in the last three years". Hockey was disarmingly frank about the role of the planned debt reduction taskforce. "We'll be focusing in particular on identifying if Labor has not told us the truth about their programs," he said.

That suggests the real role of the taskforce is not debt reduction but the usual witch-hunt to try to find anything the new government can use to discredit the old.

After all those pledges to return the budget to surplus quicker than Labor, the Coalition now plans to arrive there at the same time, in 2012-13. And on its own costings the great bulk of which it has yet to submit for costing by Treasury and the Finance Department it would save a net $2.8 billion over four years. That issue, rightly, has faded away.

Second was what Hockey called a productivity agenda, but was really about lifting workforce participation. He foreshadowed a big announcement ahead from Abbott on reforms to get people under 30 "off welfare and into work".

A good aim, and one that's been a theme of Abbott's for many years. But there are good and bad ways of doing it. We'll wait and see.

Hockey also cited the Coalition's generous paid parental leave scheme as a move to lift workforce participation, along with one of the best policy initiatives of the campaign: its plan to pay employers a $3500 bonus for hiring unemployed older workers.

That's a long overdue move to challenge the HR managers' bias against hiring older workers a bias that must be overturned for Australia to cope with a rapidly ageing society. But will Abbott offer a similar bonus for employers hiring our 250,000 unemployed young workers?

And if it is to be real reform, giving taxpayers value for money, it should be paid for by removing the tax break of up to $500 for workers aged 55 and over. It's a useless handout: too small to influence anyone's decision to work or not, yet costing $1 billion a year.

Hockey's next two pledges were to improve the efficiency of our infrastructure by asking the Australian Competition and Consumer Commission to review the access regime for privately owned infrastructure, and by ensuring that future capital works (presumably major ones) must pass an upfront benefit/cost analysis. A pledge to publish the benefit/cost analysis of competing projects before decisions are made, that would be a welcome reform. If an Abbott government pledged to build those projects with the highest economic bang for buck rather than those with the highest political bang for buck it would be better still. I wouldn't hold my breath.

Finally, Hockey repeated his leader's commitment to revisit the Henry report over the next year and come up with a plan for further tax reform. That's a great aim but again, it all depends on how it's done. Will it be about cherry picking, giving us the electorally attractive bits and ignoring the rest?

Or will it be about giving us a fairer and more efficient tax structure, given Henry's repeated warnings that an ageing society will require more services and hence more tax, not less.

It is not encouraging that Abbott keeps claiming falsely that Labor has adopted only one of Ken Henry's recommendations. In fact, it has adopted at least six, three of which the Coalition is opposing: the mining tax, halving the tax rate on interest income, and introducing a standard deduction for work-related expenses. Labor has also increased tobacco tax, committed to cut company tax, and promised higher family benefit rates for older teens. It's not enough, but let's stick with the facts.

What matters now, as Ross Garnaut argued in his Hamer Oration last week, is to revive the impetus for real economic reform, which has died since John Howard's near-death experience with the GST. We need leadership that is not afraid to commit to changes that will ensure that resources are used where they will do most to lift our living standards, not the government's ratings.

I have one proposal. Abbott's pledge to retain Hockey as treasurer if he wins raises the question of what he will offer Malcolm Turnbull. I suggest he be given a cabinet-level post as minister for revenue in charge of tax reform. That could kickstart a new age of real reform.