The Coalition has today adopted a shock-and-awe tactic to kick-start its election campaign: promised income tax cuts to cost $34 billion over three years, accompanied by aspirational talk of an Australia in which 98 per cent pay a marginal tax rate of 35 per cent or less. I won’t presume to discuss the promise’s target market at this point, but it should be noted that tax cuts at the past two budgets produced largely disappointing returns in the opinion polls (although the more recent round can be credited with a slight narrowing in Labor’s lead in August and September). Nonetheless, the announcement will fill the news bulletins with images of Peter Costello in his element, whereas Kevin Rudd will be forced to discuss those tax scales he couldn’t name a few weeks ago.
Centre-left economist John Quiggin makes the following observation on the troubled history of election tax cut promises:
I can recall (perhaps with error) at least two instances of such cuts being promised and then taken back. One was Paul Keating’s L-A-W tax cuts in 1993, which (as implied) were actually legislated in an attempt to increase their credibility. The other was the “Fistful of Dollars” tax cut of 1977 (so named for the ads which showed precisely that) promised by the Fraser-Lynch team going into the election and then (if my fading memory serves) taken back by Lynch’s newly-appointed replacement. Now what was his name again?
Inflation number comes out this week.
If it is outside the Reserve Banks parameters, all the talk from now till Novemebr 7, is about whether interest rates will rise.
In a situation where the Libs have to make up ground, how will they fend off all the inevitable questions.
Howard and Costello have fed in to a process that will do them over.
Another own goal!
paul k. you can call me Harry or Monica. Most people on this site know who I am. Just had a different take on their relative performances. Nothing about sin from me, believe, me, just a dialogue about what’s going on. Thought Howard defensive, particulary after the gaffe with the light weight ACA lass, and that Rudd didn’t fluff his lines and got in a nifty Howard/Costello wedge, done with a nice smile. Sorry about the delay in reply, the Exclusive Brethren coverage on Four Corners had to be watched. And what did you think of that, then?
Rowan, ABC Online is running a similar headline as well, plus it was covered on PM – audio available on the news page I’ve linked to.
I’m off for an evening walk!
Sure Swing Lowe – I agree that is probably what they are aiming for. But I do not think they expected JWH to announce on day 1.
I think the perception is not a good one for KR. All talk and no substance as came across tonight. They will be working OT to get it out real soon and to get it right.
It is never a wise move to announce huge unfair, inflationary tax cuts on the day that oil spikes up to wold record levels because of the Iraq situation.
“The price of New York oil smashed through 85 US dollars per barrel for the first ever time here on Monday.
New York’s main futures contract, light sweet crude for delivery in November, hit a record high 85.19 US dollars as traders feared more unrest in oil producer Iraq could further stretch tight global energy supplies.” – Brisbane Times.
It makes team rodent look like irresponsible high risk learners on L plates.
02 Harry ‘Snapper’ Organs I just posted on it. But because it was moderated it appears on the previous page.
ESJ,
Labor can now accelerate the launch as they now have access to the updated Budget figures – they were expecting these to come out 10 days into the election.
I think it would be good for Labor to get the tax policy out by the end of the week (ideally by Thursday), but it’s far more important to get it right (without any budgetary black holes) than to get it out soon. To be perfectly honest, I think by this time tomorrow, we’ll all be talking about another issue completely.
However, do you think that JWH has fired this bullet too soon – it’s surely going to be a “forgotten” promise in 5 weeks time – and it could have been used to get the Coalition over the line in a close election? Of course, I’m sure they’ve got other big policies saved up as well…
That program was awesome :):) ….. I learned so much I did not know. Thanks very much to the ABC for putting the facts of this story out to the public.
You are right, the planning of this program timewise in regards to the election campaign couldn’t have been better ;-).
Duh, in real terms it makes no difference whether the Govt or the people spend the money, it’s still pumping cash in to an already overheated economy and creating underlying inflationary pressure.
Costello is a dill.
Does anyone know if the Govt find out the Inflation rate before they go public? I would think they do but that’s speculation.
Actually, I was wondering what would happen if Rudd came out and said he’d halve the fuel excise? How would that play out both politically and economically?
ESJ @ 138,
The colour of your soxuality is of no import. But, you are a collective and you are not necesarily a man.
Courier Mail online site already has this.
Exclusive Brethren `funded Liberal Party ads’ – report
http://www.news.com.au/couriermail/story/0,23739,22591149-952,00.html
I can’t believe the number of people who think announcing tax cuts will be bad for the Coalition. You’re deluding yourself if you think that most people won’t be delighted to hear they’ll be ‘getting more money’. I don’t think it’s an election deciding issue, it’ll all be over within a few days unless Labor drags it out.
Labor aren’t going to turn down the tax cuts. They’ll just restructure them a bit.
More action, less talk from Labor needed all around. Less slogans, catch phrases or anything like that that’s likely to get on people’s nerves. There’s no quicker way to lose someone’s vote than to annoy them. And if Labor lose voters at this stage they’ll find it hard to regain them.
The Australian are running Howard’s slip up on interest rates.
http://www.theaustralian.news.com.au/story/0,25197,22589987-11949,00.html
They should get an interviewer out there to ask him what it cost him the last time *he* filled up his own car with petrol – or what the cost of the last loaf of bread was that he purchased at Woolworths – etc. etc.
Those sorts of questions would turn up how really out of touch he is. The gaffe tonight on ACA is only the tip of the iceberg for “how out of touch is he”.
Rowan, a look at the Reserve Bank Website is handy.
http://www.rba.gov.au/
[ Oh alright. I am a historian. ]
Edward,
How disappointing. I was so hoping you were a Grand Wizard of the KKK or the Youth Leader of a Neo Nazi group. Guess it’s the romantic in me.
212
Swing Lowe Says:
October 15th, 2007 at 9:39 pm
Actually, I was wondering what would happen if Rudd came out and said he’d halve the fuel excise? How would that play out both politically and economically?
It’d work OK in the bush.. but might alienate Greens etc… encouraging more CO2 emmissions, etc.
Swing Lowe
I think JWH will go with something on housing in the last fortnight of the campaign.
I think today may also spook KR they will be fearful of going first (like Latham with the tasmanian forests) and that should also work for JWH. I lead Labor follows ..
I’d imagine both parties will detail a willingness to move into ethanol and biofuels at some stage. Very popular move for country votes. In fact I’m sure there are plenty that are disgruntled that more hasn’t been done already.
Whilst John Howard and the rest of the coalition may affirm that workchoices wont become worse if the coalition is reelected, this is a commitment that should not be taken seriously. In each of his eleciton victories, Howard has interpreted the election result as a mandate of his policies. In 1998 despite losing the popular vote, he interpreted the result as a mandate for hs GST. In 2001, it was a mandate for his handling of terrorism. Whilst Howard and Costello will try and bury any real mention of Workchoices during the election campaign, dot expect the same if the coalition is reelected. A hypothetical reelection will only see howard viewing the result as a mandate for workplace reform and whilst he might not say it immediately, it will be the basis of furthur changes in the second or third year of the next term. A reelection will make this a definate possibility, any furthur increase in Howards majority will make it a certainty. If anyone is intending to vote coalition but disagrees with workchoices, remember that a vote for howard will inevitably be seen as an endorsement of workchoices.
Nice expose of the Bretheren on 4 Corners.
Whew, what a bunch of ratbags: Envelopes of cash, dodgy electoral ads and in like Flynn with the Libs.
Bet Howard now wishes he’d never heard of ’em.
ESJ,
I don’t see how today would make Rudd afraid of going first into a policy area – in fact, the fact that JWH has been able to set the agenda today would make it seem more likely that Rudd will try to seize the initiative by taking the lead in another policy area.
Greensborough G, agree the economists will do them over. One of the most stupid things they’ve done since the last stupid thing, which is basically daily, if not more than once daily. I’ll probably be accused of the “h” word, but this has supposed great leap into teh narrowing has all the hallmarks of the great banana skin entrance.
Can we recruit Kerry O’brien? He destroyed howard single handedly. I think he hates him too.
I love the last coment “priminister, I look forward to many more of the conversations in the coming weeks”.
JWH ” Oh I’m sure you are”.
Grilled and flipped like a burger!
KR, cool calm and collected, but Kerry was clearly playing favorites.
Harry,
Agree, but dare to use the correct terminology. It is “Horsedroppings”.
Going first or second wont matter much. He will go first on the issues we know about starting with education or health policy I would think. give’s him something easy to talk about during the debate. He will have to do something with tax though, he will need to give a confident answer in the debate.
I still want to know where Howard goes from here. each announcement has to top the tax announcement for him to have continued traction.
Howard stumbles with interest rate gaffe
http://au.news.yahoo.com/071015/2/14oi1.html
Harry and GG,
To be perfectly honest, I think the Coalition would be very happy to “sacrifice” an interest rate rise on Nov 7th for the early momentum in the campaign generated by massive tax cuts.
Any movement (or lack thereof) of interest rates in November would have been either neutral or a net negative for the Coalition regardless. By pushing the tax cuts out so early in the campaign, they may be able to get the early momentum and raise morale and expectations of a Coalition victory. If they had not done this, then 1 more bad week of polling would have meant the predicted “narrowing” would not have occurred and Labor would have been considered a shoo-in. At least, the tax cuts give the Coalition a chance of getting some sort of narrowing…
222, yes bob katter says he will support any government to form a minor government as long as the pass a bill for compulsory use of 10% ethanol Australia wide
[Howard stumbles with interest rate gaffe
http://au.news.yahoo.com/071015/2/14oi1.html ]
Yay! It’s spreading, which means it will be in lots of papers.
Overall, I would score a slight points victory today for the Libs, only because they were the ones who pitched the big policy. However, is was deadened a little with the interest rates mistake on ACA, and the fact that he was drawn to talk about WorkChoices (ALP turf, will remind the voters of it, maybe cynicism toward government) as well as every headline that says interest rates could go up.
However, since the Libs are coming from so far behind, the will need a lot more resounding day wins, not like the slight one today, to get anywhere close.
BTW, I scored yesterday as a draw.
This was what the RBA had to say about interest rates in August.
http://www.rba.gov.au/MediaReleases/2007/mr_07_11.html
The RBA will not raise rates before December period. They did not intervene in 2004 they will not now.
Delude yourself about today but JWH clearly will go down fighting.
Swing Lowe,
I understand what the rationale is for the Libs going early which you articulate very well.
However, will it have the desired effect?
Rudd can now hold off his tax policy till after the next Reserve Bank meeting on the grounds that he really needs to know where the economy is going before committing.
On the other hand promises of tax cuts at some time in the future will be forgotten by this time on Thusrsday.
Howard has always been a two trick pony Tax cuts and IR reforem. What is he going to talk about for six weeks now he has fired his best shot?
Swing Lowe,
“Any movement (or lack thereof) of interest rates in November would have been either neutral or a net negative for the Coalition regardless”
I have to disagree with you on the interest rate thing. That’s why I wanted to know about early knowlege on the Inflation rate. An interest rate rise will be historic so will get news and you will have headlines saying “tax cut swallowed by interest rate rise”. The best environment for introducing a tax rate rise would be with no movement on interest rates? If the rise is coming, it might be better to have released the tax cut after for a sence of relief to the struggling mortgate holders.
Edward… history, eh? I have rels in the history business… what patch have you staked out as your own, if that’s not too much of a giveaway?
On petrol initiatives mentioned above, this is another area that does my head in. On the one hand, we have politicians’ deep concern about Global Warming and emission target chat and so forth, on the other hand we have politicians’ angst over petrol prices and what a burden they are.
If we’re going to tackle AGW we’re going to have to put a realistic price on carbon. Petrol prices have to go up, not down. Mixing ethanol in might help in the short term, but not for long. Not if the community’s serious about the atmosphere.
And yet we have this double-speak, endlessly.
[The RBA will not raise rates before December period. They did not intervene in 2004 they will not now.]
How do you know? Stevens has told several comittees that rates will go up if the board thinks they should. Why would he say that if he didn’t think a rate increase was at least possible?
[Delude yourself about today but JWH clearly will go down fighting.]
Who said Howard wouldn’t go down fighting?
ShowsOn, Because the RBA was petrified of appearing to intervene in politics in 2004 (when it was all about interest rates and they felt the ads were very misleading) why would they not wait a month to raise rates. If they raise rates in November – they will wear the blame for ever more for JWH losing. Not something cautious bureacratic types will want.
Peter Martin says strap yourselves in for a wild ride.
http://petermartin.blogspot.com/2007/10/strap-yourselves-in-and-expect-still.html
Yes, 223 Historic Election.
Kevin should ramp and keep it up on the unspoken promises Howard and co. will have made for themselves. Track record on mandate presumption is exactly the case.
I took it as read that Howard thought Work Choices would run past we keepers, based on his reading of how it worked for the GST.
Except, as I have said before, Work Choices is a clear and ever present danger, not something it is too late to do anything about.
The mere fact that Howard denies emphatically that there is no plan for the next go is enough to create grave suspicion. Specially as the company refers to it..Minchin, Costello. May as well have added never, ever.
Rowan,
My assertion is that the Coalition released this policy purely to get the early momentum in the campaign. If there is an interest rate rise on Nov 7th (and ESJ, the difference between now and 2004 was that in 2004, Macfarlane was governor whilst Stevens is governor now), the Coalition will lose votes – but if it had let things drift (or not released this policy until after Nov 7th), it would have likely been so far behind in the polls that any bounce it could have gotten from the release would have been effectively meaningless, even if interest rates don’t go up in November.
Has Howard prematurely fired his bullets? It looks like desperate politics to me. Will he get his Exclusive Brethren mates to do some more dodgy newspaper ads spruiking the benefits of the tax cuts? LOL
ESJ – you are wrong. We have a new RBA governor who has clearly indicated that he will move if and when necessary. If the inflation data next week indicates a rate rise is necessary the markets will be expecting it to happen (they are already pricing in a 50% chance). If the RBA fails to act under these circumstances it would be seen as a clearly political move in support of JWH.
The RBA didn’t want to intervene in politics in 2004, and they don’t want to in 2007. But to fail to act when necessary because of the political situation is itself an intervention into politics. The only way to be completely impartial is to ignore what is happening in politics, and this is what Stevens has indicated he will do.
Hey ESJ,
Glen Stevens will be thinking “I’ve got a lovely bunch of coconuts” running this government right now.
Howard and Costello have paid their money and made their choice.
A fearless and independant bureaucocy is what is required right here, right now!
#242 Steve, yes Peter Martin has it absolutely right, Costello is an economic fraud;
There is no way Rudd should have tried to answer that question – that is a dangerous question the govt and commentators would love to hear and have ripped apart – and that would be the headline. Remember that theme is Howard’s major theme – so it is best to have all the tax policy looked at and their own tax policy updated to include the new growth figures. AND put the low employment narrative in context with growth and IR.
The Govt too a big risk in shooting their biggest gun up front. They can’t reload this one. In a few weeks or more the noise would have covered it. They are hoping for a quick jolt to the electorate to shake a few off Labor’s tree. It will be a dim memory soon – something about some nice tax cuts – but in the future.
Labor will not and should not release their tax policy until 2 or 3 weeks before the election – it is the big gun, the one you want people to have in their minds – the later you can leave it the better. So they will leave it as late as possible – unless the press really give them a tough time over it – OR they start losing momentum and need the silver bullet. But they shouldn’t fire it now without good reason.
They will have a very thourough tax plan for sure – they just need to adjust it for the new growth.
Howard should have released this tax cut on Friday lunch time – to hit the radios, tv and Saturday papers.
Greeny at 237
“What is he going to talk about for six weeks now he has fired his best shot?”
Blackfellas and reffos.
I also smell and infrastructure plan.Not quite as bad as smelling a dam coming on as one does when the Qld elections are on, but I’m sure I smell something expensive and probably white and big and has a trunk.