Hewson's view

Hewson's view

Bowen’s budget rebuttal scored points, but the key point will be trust

Duncan Storrar is the man of the moment. Source: ABC website

Shadow Treasurer Chris Bowen’s National Press Club address this week on Labor’s “agenda setting economic plan” has echoes of Kevin ’07. Bowen admits to being a “progressive” from the “left-of-centre ”; he says, “I too am a fiscal conservative”; indeed, he is a “better one”. The clear inference is that Labor has a BIGGER plan than the Turnbull/Morrison Jobs and Growth plan.

Both sides have relied on spin and hypocrisy more than substance when it comes to budget repair – both essentially kicking the task down the road, mostly beyond the two-year budget forecast period.

Both sides are still committed to significant additional expenditure, especially spreading into and through the next decade, in the key areas of education, health, defence, the National Disability Insurance Scheme (NDIS), the NBN and other infrastructure. Both also seek to create the impression that they can do this with a minimal increase in the tax burden over all, while “reforming” the tax system.

With our economy likely to remain locked into slow growth, at best, in a particularly volatile and challenging, weak, global economy, and with sluggish international trade, a budget surplus, from either side, is still probably a decade or so away.

Of course, Bowen didn’t attempt to offer the detail of an alternative budget, but he did paint a clear alternative approach, admitting to more expenditure funded by higher tax. He attempted this while claiming to defend our AAA rating, and by committing to a mini-budget, based on a more realistic economic assessment than the optimistic one assumed in the Government’s budget, within three months of being elected.

To give credit where credit is due, the Shorten-led Opposition has taken the political risk of attempting to set the political agenda by their clear commitments to more significant spending on education and vocational training, and health, and by identifying certain areas where they would increase tax to notionally pay for it.

Specifically, they have proposed placing limits on negative gearing, capital gains tax and superannuation concessions, increasing the tax on tobacco, and by keeping the deficit levy on high income earners, while opposing the government’s proposed cut in the corporate tax rate for large business.

Obviously the inherent political strategy is to consolidate their traditional base, in particular hoping to pull back those who flirted with an Abbott-led government. This echoes the successful strategy behind the “surprise” wins in the recent Victorian and Queensland State elections, where the focus was on these traditional “bread and butter” issues.

They would also hope to attract new voters by being prepared to take the political risks of attempting to lead the debate on controversial issues, against the Turnbull alternative that - while popular - has been seen to vacillate and dither, and to be “unfair”.

By comparison, Turnbull is obviously hoping to gain some broader electoral credibility by claiming to have a “plan” for our future, and by being prepared to disadvantage his own base by promising to pare back the superannuation concessions that are biased, so conspicuously, in favour of the wealthy, while protecting middle income earners and encouraging small business.

Interestingly, so far, at least, neither side has responded to the “Duncan moment” on the ABC’s Q&A this week, which generated a considerable focus on the plight of low income earners, who were not receiving any significant improvement in their benefits or incomes, when many benefits, such as Newstart and the aged pension, are below generally accepted poverty lines.

Bowen did score a significant point by focusing on the fact the Government’s “Jobs and Growth” plan to drive the “transition” from a resource/construction boom-based economy, to whatever, was completely silent on the “whatever”.

Here he highlighted the proposed “cuts to infrastructure”, the decline in public investment, the neglect of renewables as a new growth sector, the cuts to CSIRO, the underfunding of schools, the second-class NBN, and limits on housing affordability, and so on.

However, the key point in this election is whether the electorate will actually believe what either side claims or promises. It will be an issue of trust.

Bowen’s claim is essentially that the ALP can also be trusted to manage the economy – he would say that they should be trusted more – against the long-established electoral perception that favours the LNP in economic management, while playing to their electoral edge that the ALP is better able to manage education and health, and with greater fairness.

The framework for this campaign has been set – now for the detail, please!