We all thought we knew roughly how the lines of battle were drawn between Prime Minister Malcolm Turnbull and his enemies on the right. The latter were basically the old Tony Abbott gang with their roots in the DLP — big on religion, big on cultural issues, big on so-called national security.
Despite their habit of calling him a “socialist”, Turnbull’s enemies have never seemed particularly big on economics. As I pointed out back in September:
“Turnbull’s signature differences with the man he overthrew … are on climate change, same-sex marriage and the republic: none of them economic issues. To the extent that they involve government influence on the economy (e.g. carbon pricing vs direct action), Abbott’s view inclines more to the command-and-control model than Turnbull’s.”
But you might have got a different impression from last Thursday’s Australian Financial Review, where my friend John Roskam, executive director of the IPA, launched a full-throttle attack on Turnbull. Although he mentions those “signature issues” in passing, his centrepiece is taxes on superannuation: “Unbelievable. But true. The Liberals are now in a bidding war with the ALP as to who can increase taxes on superannuation the most.”
Superannuation is complicated in detail but simple in principle: to encourage people to save for their own retirement instead of having to rely on the age pension, the government effectively subsidises such savings by reducing the tax that would otherwise be payable on superannuation contributions.
But for people who are too wealthy to ever qualify for the age pension in the first place, that has never made a lot of sense. Now, in an atmosphere of fiscal difficulty, both major parties (in different ways) are planning to wind back this concession in the case of the very rich.
The fact that Roskam can’t see any economically liberal argument for this course of action suggests he’s given up entirely on the idea of tax neutrality.
Of course, in a sense, any removal of any tax concession is a “tax increase”. But it’s absurd to conclude that therefore every such concession, no matter how distortionary, should be retained in perpetuity. We wouldn’t, for example, say that a special 50% tax discount just for Muslims should be supported as a bold step towards lower taxes.
No one thinks that a special tax concession for a minority group is anything other than a subsidy — except, of course, when the minority group is the rich. And it’s especially strange that Roskam thinks that clawing back some tax revenue somehow counts against a “commitment to fiscal responsibility”.
There’s a thriving debate in America about just how to understand the hard-right tendency that in recent years has taken over the Republican Party. One argument, put regularly, for example, by Jon Chait at New York magazine, is that the constant in Republican policy is low taxes for the very rich, and that hard-right cultural policies are just there to build an electoral majority to back this key goal.
Others, including myself, have argued that economic issues are rarely fundamental to partisan division, and that while things like tax cuts for the rich might be a valuable fundraising tool, most people in politics are driven by deeper attitudinal issues that emerge in questions like immigration and same-sex marriage.
Moving back to the Australian scene — which takes so many of its cues from the US — I have to admit that Roskam’s column looks like evidence against my view. Turnbull’s foes, he seems to be saying, will tolerate his heresy on climate change and the like, but will die in the last ditch to defend the interests of the wealthy.
But I’m not entirely convinced. I think it’s possible to read Roskam the other way, as saying that Turnbull-hatred is pre-existing, cultural, even visceral, and that the moves on superannuation are just the latest issue that the Abbott group will latch onto in their effort to swing more mainstream opinion around to their point of view.
In other words, perhaps defence of the rich is not central to an anti-Turnbull view, but is more characteristic of the non-ideological heart of the Liberal Party, to which the anti-Turnbull forces are opportunistically willing to pander.
Whether that really paints the party in any better a light, however, is a matter of opinion.