Raise the Rate, but don’t say by how much

Brayden Johns

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Art by Emily Savage

Many Adelaide students have been on Newstart, and many will be on Newstart during the brutal graduate job hunt. For them, Labor’s commitment to only open a review into raising the rate, instead of backing the called-for $75 increase, falls short of the mark. It seems like a poor early showing from Labor in the lead up to a 2022 election.

Or maybe Labor are finally catching on: real policies are dead weight.

Newstart’s gotta go up. It’s not gone up since the 90s. If I had my way, it would get that $75 boost, because keeping people poor is bad economics. Newstarters who are struggling to make rent pinch all their pennies, and small businesses feel that pinch. The government tells voters we can’t afford it — but they could afford a reckless handout like a tax cut for the top end. Cut taxes find their way to offshore accounts, Caribbean beaches, and Newstart goes back into local pockets.

… But let’s not give government spin-doctors any numbers to play with.

Raising the rate by the $75 “catch-up increase” would reduce poverty by 0.8 per cent, and Deloitte estimates the economy would be more than $32 million better off. The net cost to the Federal Budget would be $2 billion. A policy argument justifies this budget expenditure: one that uses expert modelling and compares the likely economic benefit with that of tax cuts, the competing stimulus policy. It’s just that at the end of the day, $2 billion is bigger than $32 million.

Labor brought nuanced policy arguments to the last election. Labor’s proposed changes to dividend imputation would have raised $56 billion over the next decade; Labor’s proposed reduction of the capital gains tax discount and limitation of negative gearing would have raised $32 billion. Padding out the budget’s bottom line would support a broader agenda of reform, including $34 billion on childcare worker wages, dental care for pensioners, and childcare subsidies for families.

Other Labor policies included a High Speed Rail Planning Authority to pursue its infrastructure agenda, recognition of Indigenous people in the Constitution, a Minister dedicated to consulting Australia on becoming a Republic, a National Gender Centre to provide support and advocacy for transgender Australians, and a target to make 50% of Australians’ cars electric cars. Labor also had policies to restore penalty rates, abolish special union regulators, invest $14 billion more in public schools, increase university places by 200,000, introduce a $2.3 billion cancer treatment plan, create an Australian Health Reform Commission, increase humanitarian immigration intake by 27,000, and more. Only a few months on from the election, which policies do you remember?

At election time, the average Aussie remembered:

  • The Retiree Tax
  • The Death Tax
  • The “Bill” that Australia can’t afford.

The big target didn’t pay off. Franking credits reform? A tax on the worse off, like retiree couples with a combined taxable income of just $15,000. Nevermind that they would have $3.2 million in super, their own home, $200,000 in Australian shares outside super, another $130,000 a year in superannuation income, plus $15,000 a year in dividend income — that first number told a story. A policy targeting the top end was spun into the ground because it started talking numbers.

The lesson? Slogans cut through. Policy is dead weight.

What gave Labor the confidence to go so big in 2019? After the knives Rudd’s back, then Gillard’s, Labor was supposed to be out in the political wilderness for decades. Instead, Labor rode out and cut Turnbull’s majority down to one by spending almost 75% of their war chest on negative advertising. Today, the Coalition faithful call it “Mediscare”. Labor called it “Save Medicare”. By the last leg of the campaign, 81% of voters thought that the possible privatisation of Medicare was a cause for concern.

What about Kevin 07? Howard was a four-term Prime Minister, still widely praised today for taking bold action on guns, and wheeled out by the Coalition to the hustings. This titan was unseated by a very fresh, inexperienced Labor leader, but the Australian electorate’s mood for change in 2007 has been oversold in retrospect. Throughout the campaign, Rudd repeatedly claimed that he was an economic conservative, to the point that Howard tried to call him out on his me-too politics. Was this a wildly different policy vision to the current Labor movement? Not at all. Just hammering WorkChoices and talking about your cost of living.

Today, we look back on Rudd as being so much more revolutionary, hip, and trendy because voters don’t do the maths. Putting yourself out there with a real policy, with real numbers, just gives the other side’s spin doctors a 6 to flip into a 9. Newstart is no different. Keep it simple. Stick to slogans.

Has Labor lost its fire with Newstart? No, voters have forgotten. Again.

Conflict of Interest disclosure: I am a card-carrying member of the Labor Party and was a campaign volunteer in the last election.

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