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Aug 14, 2012

Can Labor win? Yes it can

As Labor begins the process of defusing carbon tax and asylum seeker policy as election issues, Tony Abbott's task will become increasingly painful. Does Labor improve from here?

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The Labor Party’s chances of pulling off a come-from-behind win at next year’s election took a big step forward yesterday with two expert panel reports, both of which would have been in line with the old dictum of “never have an inquiry unless you know the answer first”.

One deals with the problem of mobile capital, the other deals with the problem of mobile people. Both were hurting Labor, and both have been neutralised.

Separately the government is also reported to be planning to scrap the $15 a tonne floor price on carbon emissions trading from 2015 and replace it with a link to the European ETS, where permits are currently selling for less than $10.

Can the ALP really win? Definitely. The main problems remain the morale of the ALP itself, and Julia Gillard’s lack of public authenticity, stemming partly from the broken promise on carbon tax and her opposition to gay marriage and partly from her robotic style.

Against that, the economy is travelling very well indeed and the Coalition has a very big looming problem funding handouts without the taxes (carbon tax and mining tax) that go with them. The hole is said to be $70 billion, which will have to come from spending cuts or other taxes.

Gillard and Wayne Swan believe that if they neutralise boats and company tax as issues, then the $70 billion hole will sink Tony Abbott.

Also, they hope the carbon tax will be less of an issue because a growing number of emitting companies are already making a profit out of it. That’s because the compensation for trade-exposed firms is fixed for five years based on old industry averages; many are now emitting much less greenhouse gas and are ahead on the deal. They will squawk if Abbott repeals it.

What’s more, Abbott won’t be able to repeal it before 2015 because of the need for another election to do it, by which time companies may be buying cheap European permits.

That leaves boat people and company tax.

The review of asylum seeker policy led by Angus Houston has provided cover for the re-opening of the Nauru processing centre, no doubt as intended. It ensures that new legislation for offshore processing will pass parliament with Coalition support.

Opposition leader Tony Abbott would have read yesterday’s Houston Report with a sinking feeling: it means “Stop The Boats” will now not be an election issue no matter how much he claims credit for it.

The Nauru/Malaysia impasse was hurting Labor the most because policy failures are always, rightly, blamed on the government of the day; the Coalition was being rewarded for intransigence.

Prime Minister Julia Gillard had to find a way to cave and Houston has provided it, as both sides of politics would have known he would. No one will remember that it was the Coalition’s policy that stopped the boats, only that government legislation re-established offshore processing, thus removing asylum seekers from the Australian legal system.

It also helps distance the ALP from its damaging partnership with the Greens, who are sticking with their opposition to offshore processing.

Meanwhile mobile capital may been neutralised as an issue by the Business Tax Working Group, led by Chris Jordon, which has dusted off the old roadmap for Australia to join the global contest for capital through lower company tax rates, by removing a lot of depreciation allowances.

The fact is that a company tax rate is easy for foreign CEOs to understand while depreciation is complicated and opaque.

The intellectual argument for reducing targeted depreciation allowances to pay for a general cut in the company tax rate includes the idea that it would even things up between tangible and intangible assets. As yesterday’s report says: “The working group is also mindful of the growing importance of intangible assets in the generation of corporate profit. Intangible assets include brands, intellectual property, customer lists, internal processes, and copyrights which are often the result of investments such as R&D and marketing.”

Anyway, by suggesting that a company tax rate cut be financed by slicing depreciation and R&D allowances, Chris Jordan’s group has turned the debate from one between the government and business to one within business — basically between miners and the rest.

Thank you Chris. Thank you Angus. Now for some acting lessons.

*This article was originally published at Business Spectator

Alan Kohler —

Alan Kohler

Business Spectator editor-in-chief

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131 thoughts on “Can Labor win? Yes it can

  1. Steve777

    Xevram – Julia’s ‘no carbon tax’ pledge was NOT a lie. Informed electors knew that Labor supported Carbon Pricing, but had postponed its introduction until after the then next term of government. Another statement Julia made during the election campaign was “”If elected as prime minister, I will re-prosecute the case for a carbon price at home and abroad.”

    At the time she made both statements, she meant them. Labor had put carbon pricing on the ‘too hard’ pile for 3 years, because the Coalition had reneged both on what they pledged in the 2007 election regarding an ETS and more particularly on a deal that they had just struck with the government. No one was anticipating a hung parliament. Agreements had to be struck and compromises made. That is the way parliament is supposed to work. Tony ‘sell my _rse’ Abbott would also have had to make compromises had he won the support of the cross-benchers and no doubt he would have. Of course he would have got a much friendlier run in the media.

    In fact no one knows what Tony Abbott’s position on action on climate change is, including, I suspect, himself. He has espoused various positions at different times, adjusting his plans to suit the political winds. This is hardly shows honesty on Tony’s part.

    That being said, I agree with the general tenor of your post. In particular, you set out what Julia Gillard should have said 18 months ago when she announced that Carbon Pricing was to go ahead in 2012.

  2. Karen

    @Patriot – I was not intending to imply that in my post. It is true that many refugees are already traumatised (eg. PTSD) by the time they travel and will require assistance from their host country. No doubt about it. Then again, others are not. Them’s the breaks when it comes to susceptibility.

    However, the evidence is clear that many perfectly sane people, when faced with indefinite detention, mentally deteriorate, significantly and relatively rapidly. Twelve months. Those with a pre- existing illness or condition are left in an even worse situation, as the trauma of detention exacerbates the pre-existing ailment. Milne talked about these issues it in her interview this morning.

    You would be aware of many examples of this occurring, including Nauru, which prompted the Rudd govt, in part, to abandon the policy.

    Presently, there is a Tamil who has been refused ‘security clearance’ from ASIO. This is a controversial decision as there are cogent reasons to believe that his case should be reviewed. At present, he is stateless and, ergo, in indefinite detention. His ‘cell mates’ (for want of a better term) are saying that this man has regressed to an infantile state – screaming, letting go of his bodily functions in his cell etc. Now this is the sort of stuff, we are going to have to put up with as a nation, going forward.

    This is, quite apart from the issue, that off-shore processing whilst not only unethical (in my view) is also still, arguably illegal, under international law.

    If Australia buys this policy, then its going to have to spend billions and billions to put detainees in appropriate facilities, for them to be regularly monitored and screened, and then sent to the mainland for expert treatment, as and when the need arises (which it will). This is assuming the government wants to avoid being fingered for human rights abuses. I can see this as an unnecessary, punitive and costly exercise with the potential for significant litigation. Quite apart from which it won’t stop the boats coming.

    So, you might want to consider ‘turning back the boats’. Well, PNG has come out and said it won’t accept ‘turned back’ boats because its jurisprudence says that detention, in the absence of crime, is illegal. Fair enough. And Indonesia won’t come to the party, we know that.

  3. Dogs breakfast

    Gawd, an analytical piece by Kohler suggesting that Labor could still win has brought all the nutters out and sees them claiming bias.

    Ergo, we all must walk around constantly chanting that only Tony Abbott can win the election, or suffer the slings and arrows of the synaptically challenged.

    It’s an analysis piece guys. Labor could still win, this is politics, things move quickly IF the momentum shifts.

    “Oh no, we’ll never forget etc etc” Oh the vehemence, and yet forgetting that John Howard invented the term non-core promise has been your forte. You can forget Howard taking us to a pointless war (that causes mush of the ‘push’ factors for asylum seekers) but obsess over a carbon tax, which is unlikely to cost you as much as a cup of coffee a week.

    If this change to asylum seeker processing works, then basically the issue is off the table. If it doesn’t work, Tony Abbott will have to come up with some new bluster to impress the crowds. Either way, it is no longer the same electoral issue.

    That’s not bias guys and girls, that is stating the bleeding obvious. The fact that you would read this as cheer-leading just reflects on you personally. Go back and read it again. It’s pretty straightforward.

    And as for being obsesses about non-lying politicians, what do you make of a man who ‘promises’ to repeal the carbon tax, and somehow let everyone keep the compensation, and yet knowing that there is next to no chance of him winning the senate, in which case he cannot do it.

    Isn’t that a form of dishonesty, or is this where you can find all those ‘exceptions’ that mean that anything TA says doesn’t actually count?

  4. IC-1101


    People do think. No one brought up John Howard. Whenever someone has something negative to say about Gillard, ALP or Greens: “But, HURR DURR, JOHN HOWARD!”

    Who gives a shit about John Howard? Do you people realise that you can be against one thing, without necessarily being in favour of the other?

    It’s like, God forbid you be a fiscal conservative, but still be in favour of gay marriage. To ALP and Greens supporters, unless you support those political parties, it automatically means you’re an evil capitalist conservative… *sigh* There’s many a Coalition voter that leans that way for reasons other than what you might imagine. You’d be surprised how many gay LNP voters there are, for example. You’re the one being so closed-minded.


    You miss the point.

    Crikey is well within its right to publish stuff like this. It can be a spokesperson for the ALP and Greens if it wishes. But don’t be trying to set a moral benchmark about media performance when you contribute the same unbalanced, unfair political commentary as News Ltd outlets. What, because Crikey is decisively pro-ALP, pro-Greens, that makes it the “better” outlet? Why?

    If Crikey wants to cry about how unfair the mainstream media is, it might want to look at how unbalanced and left-leaning its own coverage is. It’s fine to be like that, but don’t be criticising others for doing the same thing, just because they disagree. That is EXACTLY what Crikey does.

    It’s as if Crikey thinks it knows best, so therefore it has the capacity to critique those that disagree. It’s exactly what is meant when some suggest the media inquiry compromised free speech.

    Anyway, back to the article…

    Julia Gillard has done an OK job…for those that lean to the left. People fail to understand that those on the right just don’t appreciate her fiscal achievements, much in the same way the left would never appreciate Coalition fiscal achievements. No one is perfect. Gillard will not win the next election. A better article might be to look at how the ALP can improve on its current positioning, and earn more seats than what is predicted.

    But to suggest she can win? Absolute garbage, and it dilutes any worth Crikey’s political opinion had.

    Can we please get an article tomorrow discussing why Gillard CAN’T win the next election? Wouldn’t that be the fair coverage Crikey so often cries out for?

    (PS. I don’t mean to seem so full of malice, it’s just that I am frustrated at how aggressively this outlet has critiqued mainstream outlets, when it seems to be just as guilty of the things it criticises so heavily).

  5. Karen

    Good piece Alan Kohler. Tells it like it is, unfortunately. Yes, it neutralises the asylum seeker issue for Labor to some extent, which was only ever a political issue pushed by the Libs and the MSN. Its a tragedy that JG felt so pushed by polls that she had no option but to pursue this course. What does it say about the public? But let there be no mistake that the Houston policy, in and of itself, is absolutely appalling.

    It is inhumane and punitive. The cost to the economy will be astronomical (it will cost billions over the forward estimates), not only in terms of off-shore accommodation, slow claims processing, and the attendant appalling deprivations and mental illness, which the Australian tax-payer will have to pay for. Frankly, the cost is morally and economically unsustainable.

    The cost is better absorbed with the no detention, on-shore processing model. Why? Asylum seekers will have better outcomes in Australia because they will be processed humanely and more quickly (thereby reducing the risks of illness). The consequences are obvious. They will be better able to establish themselves in businesses and the job market, which most immigrants do, thereby adding to society and the economy.

    On the other hand, you take broken people from an off-shore island, these people will end up on the mainland for the Australian to support for the rest of their lives. I wouldn’t be surprised, if such people or their families launch massive class actions against the government for maltreatment and mental illness that have rendered their lives unproductive and useless. We are just cutting off our noses to spite our faces on this issue. Hopeless.

  6. Thorn

    Houston’s Report was entirely predictable, and has highlighted the gap between the mainstream Australian political consensus on refugees and the Convention that established the concept of asylum. I understand the reasons why Labor has adopted the reports findings, and while I applaud their attempt to establish a real deterrent to seeking asylum by sending people arriving by boats to Malaysia; it is sad to see that a situation that represents such a tiny problem for Australia being instrumental in defining what kind of a people we are.

    I can see no reason at all why sending people to Nauru or PNG will affect the numbers of people willing to come here by boat. They will virtually all end up here anyway, and they know that – so why should this make them not attempt the journey? If the no-advantage thing is applied then we will end up supporting them on Nauru for as long as they would have spent waiting to be cleared to come here from Indonesia, and that will be years and years. If I was a refugee in Indonesia I would make the trip, get sent to Nauru and have all my needs met by the Australian Government for as long as it takes – it would sure beat having to scratch out a meagre survival in some slum in Indonesia. The no family reunion clause would be a nuisance rather than deterrent as well, and I don’t see how that could be carried forward for years anyway. Turning back the boats, while technically possible, is dependent upon the cooperation of the people on the boats and as this is entirely improbable this is patently no deterrent at all – and that is leaving aside the fact that Indonesia won’t accept them anyway.

    There is no reason why Labor couldn’t win the next election, especially with this issue defused, and as long as the Liberals stick with Abbott. He is such an obvious incompetent that he is the single biggest threat to Liberal victory next time. Electing Abbott would be the equivalent of electing Palin in the USA, and even the Yanks are not that stupid.

  7. John64

    “That’s because the compensation for trade-exposed firms is fixed for five years based on old industry averages; many are now emitting much less greenhouse gas and are ahead on the deal. They will squawk if Abbott repeals it.”

    Abbott’s probably banking on it. Let’s face it, companies making millions of dollars out of taxpayer subsidies that Abbott wants to revoke – won’t make Abbott look bad.

    “No one will remember that it was the Coalition’s policy that stopped the boats”

    People will remember, much like they’ll remember Gillard promising not to introduce the Carbon Tax. People will remember that it took Labor 5 years to finally re-instate the Pacific solution that they abolished in the first place. Here’s a public exercise you can try: Find a random stranger and say “Nauru”. Now see if they remember -> John Howard, Liberal Party.

    Thanks to Labor’s constant talking about it, it’s firmly fixed in people’s minds that Labor was against it. “It wouldn’t work” and every day it does, you’ll have Scott Morrison crowing about it.

    Plus we’ve already seen footage in the media of Gillard railing against Nauru back in 2003. Once again, it’s something that makes her look like a flake (which is how it was protrayed incidentally) – promise one thing, deliver the opposite.

    We now have a Government that introduced a Carbon Tax it didn’t want to (because of the Greens) and an Asylum Seeker policy it said wouldn’t work (because of the Liberals, sorry I mean “expert panel”)… They don’t appear to be in control.

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