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Federal

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?

Alan Kohler

Business Spectator editor-in-chief

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

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131 comments

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131 thoughts on “Can Labor win? Yes it can

  1. IC-1101

    Is this a joke…?

    “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.”

    What a pathetic, grubby rhetoric. Crikey is losing me by the day. The attacks on Abbott and the Coalition are relentless, while you always find ways to praise and hype the ALP. For an outlet so passionately in favour of the media inquiry, you’d think there’d be a little more balance and fairness in your arguments.

  2. Suzanne Blake

    Crickey cannot continue to have a stiff upper lip and support this Gillard corr upt dishonest shambles.

    It must be absolutely toxic in Caucus. They will have Gillard clean out the garbage, take the fall and hope a ‘white knight’ can save them.

    Who will take the hospital pass. Crean is my tip

  3. 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.

  4. John64

    Oh and I forgot to add… Everyone in the Labor party will be pissed that Gillard’s about to re-instate one of the Liberal party’s key policies. Those on the left in Kevin’s camp who wanted to go softly-softly will hate it, and those on the right who just hate everything Liberal will hate it.

  5. Patriot

    Backflipping, Iying Gillard will never be forgiven by voters for her backflips and Iies. She is unelectable. It’s just that simple.

  6. Billy Blogs

    @IC-1101
    This is Crikey and our ABC at their very best. Alan Kohler is but another ALPBC cheer leader dearly hoping that a putrid govt can find a way to con another term out of us.
    Gillard’s rein is about to end. She’s going to be forever known as the single worst PM our country has ever seen…..yet around here and on the ABC you’d be forgiven for thinking she has saved us.

    Between her and Rudd they’ve cost us billions of dollars and hundreds of lives. The reason we have new GBNT is because they have zero ability with money. And what we’re seeing with the economic management is but the tip of the berg.

    Like former labor state’s, the reality takes a loooong time to reveal itself.

    There is nothing that Labor, the greens or the ABC can do to stop this mob being tossed out on their sorry arses.

  7. Sancho

    Tony who?

    Are we talking about the amateur triathlete who pops up occasionally to talk about virginity and try to get birth control outlawed?

    The Liberal Party seems keen to keep him out of the media, so he must be a liability.

  8. Gocomsys

    This is not a competition. It is not a game. It is not about winning or loosing. Simply a matter of reasonable progressive “achievable” policies versus regressive party political short sighted and purely power driven motives cheered on by the usual vested interests.
    My Crikey renewal is due shortly. These days I get better and more balanced information from other sources, like this one: (please copy and paste)

    http://www.theconversation.edu.au/houston-panel-ignores-the-evidence-on-asylum-seekers-8815

    It is always annoying to be constantly reminded by some brainless posters how misinformed and ignorant the general public has become.

  9. Suzanne Blake

    @ Billy Blogs

    Here Here.

    About time we got more sane people on Crickey, cause its 98% loony Greens and ALP rusted on right now.

  10. Mr Denmore

    You know the Libs are worried, because their paid trolls on forums like these are sounding increasingly histrionic. Goodnight Tony.

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