“Class war” has made one of its periodic returns to our political rhetoric, courtesy of what appears to be a co-ordinated campaign between the Coalition, News Corp and the Australian Financial Review, all of whom have started using the phrase to attack Labor in the last 48 hours.
“Them-and-us class warfare prosecuted by Labor’s divisive rhetoric of faux-fairness and envy,” opined the editorial writers at the Fin. “They reek of a class conflict more familiar to immediate post-war Britain than to modern Australia,” offered their counterparts at Australia’s least-trusted newspaper, the Daily Telegraph. “Labor has laid bare a campaign of class warfare,” offered the ever-loyal Dennis Shanahan at the Oz. “Labor is setting itself up for a war on business; they are setting themselves up for some kind of class war,” the Prime Minister said yesterday. “Australians are over this class warfare, they are over the us and them,” said Scott Morrison, who has been insisting since the budget lockup that Australians aren’t interested in who wins and who loses from the budget.
It is not an auspicious start to the selling of the budget. The last Treasurer to reject criticisms of his budget as “class warfare” was Joe Hockey — about the ill-fated 2014 budget. Hockey defended that budget in a speech to the Sydney Institute in June 2014, saying:
“Criticism of our strategy has been political in nature and has drifted to 1970s class warfare lines, claiming the budget is ‘unfair’ or that the “rich don’t contribute enough”.”
We all know how well that went.
As I noted in 2013, the Coalition and its media cheerleaders love the “class warfare” line, and in opposition used it about, well, pretty much everything Labor did in government, including about policies that the Coalition itself adopted in government. Who can forget Joe Hockey attacking Labor’s pausing of cut-off thresholds for family tax benefit payments as “class warfare” and “the politics of envy” in opposition, but then go much further in actually cutting FTB payments altogether when he was Treasurer? Well, apparently quite a few people can.
But the Coalition’s invocation of its traditional mantra is much more confused now than the mere hypocrisy that attended Hockey’s use of it two years ago. Two of the most noteworthy features of the budget are exactly the kind of “class warfare” that the Coalition would have traditionally decried, and they’re in there because the Coalition has recognised the electorate has shifted its view. The government has targeted multinational tax avoidance and gone after superannuation tax concessions, precisely because Labor has deftly exploited both issues and voters have become incensed about what they perceive as the lack of fairness in the tax system. Voters want exactly the kind of “class warfare” in which the rich are being forced to stop using super as a massive tax dodge; they want to see big companies pay more tax.
That problem is neatly illustrated by the fact that one of the Telegraph’s far-right hacks was hurling the allegation of class warfare not at Labor but at the government itself. “The ‘Soak the Rich’ class warfare, which seemed quaintly retrograde during Wayne ‘postcodes’ Swan’s time, now is the new normal,” lamented Miranda Devine yesterday, before going on to attack Morrison’s “neo-socialist paradigm” under which “the Coalition’s base of hardworking ‘lifters'” would be “scalped”.
It gets more complicated when you work out exactly what Labor is doing to earn the “class warfare” jab: pointing out that low-income earners will not benefit from the tax cut that people earning over $80,000 will receive (which Labor will vote for). It’s almost as if the government and its cheerleaders had the “class warfare” line prepared on the basis that Labor would oppose the income tax cuts, and decided to use it anyway.
The other element is Labor’s opposition to the government’s plan to gradually increase the threshold at which the lower “small company” tax rate would apply and then, in the 2020s, cut the tax rate for all companies to 25% from the current 30%.
Because it’s over a 10-year period, the government only provided the cost of the cheap, early stage of that transition in the budget papers, which usually focus on four-year projections. A question about the full 10-year cost of the business tax cut was dismissed by Morrison on Tuesday on the basis that it was a Labor innovation to offer 10-year costings (the Gillard government offered one for its carbon pricing scheme) and he wouldn’t be doing it. But the issue broke out of the government’s control this morning, with media reports, fueled by Labor’s own costing work with the Parliamentary Budget Office, that the cost could be as high as $60 billion over 10 years.
It’s a potentially devastating number. Remember how Kevin Rudd was too scared to utter the huge deficit figure in 2009 ($58 billion) and it wasn’t included in Wayne Swan’s speech? Well, that’s exactly the place where Turnbull and Morrison currently are. The fact that they don’t want to draw attention to the number means they’ll end up drawing far more attention to it than otherwise. This morning, pressed by David Speers on Sky, Turnbull admitted that one costing, of around $55 billion, “may well be right”.
That’s $55 billion — cash that could have funded schools, and hospitals, and roads. Or paid down debt so that future generations aren’t burdened by our inability to rein in the budget deficit in recent years. Much of it to flow, under the government’s plan, to Australia’s, and the world’s, biggest companies — all based on an economic theory for which there is, literally, no real-world evidence.
Supposedly, it’s “class warfare” to question whether this is the best use of money when the budget won’t get back to surplus until halfway through the 10-year period. If it is, then it’s the kind of “class warfare” backed by voters, who are almost unanimous in wanting big companies to pay more tax, not less.
Warren Buffett famously said about the United States “there’s class warfare, all right, but it’s my class, the rich class, that’s making war, and we’re winning”, This may be one class war where the rich come off second best. We’ll see on July 2.