13 August 2012
Test for Labor as it tries to move on
The Australian Financial Review
With federal Parliament returning from its winter recess, Prime Minister Julia Gillard and her team have a lot of work to do if Labor is to wrest the political initiative from Opposition Leader Tony Abbott, who continues to dictate much of the policy debate in Canberra.
Getting on the front foot on electricity prices did pay some political dividends for Ms Gillard last week. Her attack on state-owned electricity companies for driving up household power bills put pressure on the newish conservative governments in NSW and Queensland and made Mr Abbott’s anti-carbon tax mantra look deficient.
But another test will come with the report of Labor’s working group on business tax on how to fund her supposed “absolute top priority” of cutting the 30 per cent company tax rate. The money was supposed to come from the mining tax before Ms Gillard blew it on voter handouts in order to rescue her dire poll numbers. But the signs are that business won’t offer up extra tax revenue in order to pay for a lower corporate tax rate.
The findings of the Prime Minister’s manufacturing task force are also like to fall short, as the head of the Manufacturing Australia group, Dick Warburton, suggested last week. They will probably dodge any big contentious areas, such as genuine tax reform, winding back the carbon tax slug, or productivity - enhancing industrial relations policy.
Clearly Labor’s $23 and rising carbon tax is too high. To maintain the $15 floor price negotiated with the Greens for after 2015, it may now have to restrict one of the bedrock principles of the emissions trading: the ability for Australian businesses to fund emissions reductions at least cost, wherever they are in the world.
A review on asylum seekers headed by former Defence Force chief Angus Houston could well point to the political conclusion that Labor should cut its losses by agreeing to only use Nauru for offshore processing.
The government’s response to the Gonski school funding review is also due, but we are not convinced that this is not another big government spending program that fails to get to grips with the real determinants of student learning, including for disadvantaged students. As with disability support, the looming costs of all these spending projects extend beyond Canberra’s short-term political horizons.