27 April 2023
Suppose you have saved your whole life. These savings have been invested in areas such as property or in the mandatory superannuation system. You did this after having been told that your savings will be treated in a particular way. Those were the rules of the game.
Now, imagine that government changes the rules. Your savings and investments being taxed at a higher rate. Or, perhaps you can no longer claim expenses on certain investments. Or perhaps, the government will retroactively penalise you for saving too much despite encouraging you to make those investments in the first place. And, worse, they use incremental policy changes to see what it can get away with. If we can tax paper profits here, why can’t it happen there? Where does it end?
This is the situation Australia finds itself in with the ALP. We know the saying ‘don’t change the rules after play has started’. The ALP is currently ignoring that.
The ALP’s disastrous approach notwithstanding, the Liberal Party has performed poorly in a succession of elections. This includes the NSW state election and the Aston by-election. But why? And what’s the solution?
Certainly, the electorate is yet to warm to Peter Dutton. And, many star performers left after the 2022 Federal Election. But, there is also the issue of messaging. What does the Liberal Party stand for? And why?
There is a clear solution to this messaging problem. The Liberal Party must stop dithering and hit back against the ALP’s class warfare-laden rhetoric. Jim Chalmers’ ‘values-based capitalism’ discursion shows the roadmap.
The ALP now presents a vision of ever greater state control. The ALP posits a belief system that demonises success and that pretends it is a ‘privilege’ if the government does not seize your assets. But, by controlling the narrative, they have been able to promulgate this system with weasel words, obfuscations, and by ‘othering’ the direct targets of their policies. The ALP now decries success and ambition in a call back to the bad old days of tall poppy syndrome smallmindedness.
The Liberal Party must present an optimistic vision of success stand in stark contrast to the ALP’s politics of class warfare and envy. Economics is notoriously dry. It is infamously difficult to win an election based on competent economic management. However, this can be turned on its head if that economic management stands for something and dovetails into personal stories of success.
The Liberal Party must stand for letting you keep more of what you earn, not less. The Liberal Party should not want to seize your assets. The Liberal Party should want you to succeed, not tear you down. The Liberal Party should be a forward-looking party that lionises ambition rather than demonises it. The bones of this framework are already there. What is missing is a clear narrative and cohesive message. In short: cut through.
The ALP’s policies are a target-rich zone. The ALP has moved to penalise people for putting too much money into superannuation funds. Ironically, they were the brainchild of former Prime Minister Paul Keating, himself of the ALP.
The ALP proposes to impose higher taxes on superannuation savings above $3 million. This threshold is not indexed to inflation. Worse, they will tax ‘unrealised capital gains’, meaning that if an asset (i.e., property) goes up in value, you will be taxed on that gain even if you do not sell it. There is opacity over claiming a credit for unrealised capital losses. Here, the government has changed the rules after play has started and has done so in a badly designed manner.
Unfortunately, the Liberal Party was flat-footed. The Liberals dithered and were too slow to shred the ALP’s policies, letting the ALP control the narrative. By contrast, the Liberals should have highlighted that the ALP is not to be trusted here, the ALP has changed the rules of the game, the ALP is attacking hard work and savings. The ALP is hypocritically penalising people for doing precisely what they were encouraged to do. But, the ALP drenched sympathetic airwaves in class warfare rhetoric that was designed to demonise anyone more super balances above an arbitrary threshold.
The ALP has form. In the 2019 Federal Election, they proposed to changed property rules. They proposed removing ‘Negative Gearing’, which is the ability to deduct property-related expenses from income. This, of course, is vital in a high inflation and high-interest rate environment: After all, rents do not keep pace with interest expenses, builders fees, or strata levies. Therefore, negative gearing enables property owners to subsidise tenants and improve access to housing in Australia. However, the ALP couched its attack in class warfare rhetoric, hoping to appeal to the politics of envy.
The ALP has also vacillated over so-called ‘Stage 3 tax cuts’. The term ‘Stage 3’ is a misnomer: it is merely the third in a succession of already enacted tax cuts, with Stages 1 and 2 benefiting especially lower income earners. The term ‘tax cut’ is also a misnomer in that it simply offsets the impact of inflation by shifting Australia’s tax brackets. After promising to retain these ‘tax cuts’ in its 2022 election campaign, the Labor Party has been lukewarm on following through with that promise.
These are just three recent examples. But, they paint a picture. They set a precedent and raise fears that the ALP is on a ‘tax the rich’ crusade, with more such measures to come. The ALP has a deep-seated tall poppy syndrome. The ALP is intent on promulgating the politics of envy and class warfare. Rather than encouraging people to succeed, they appear intent on tearing others down.
A common theme emerges, the ALP appears to regard assets as its first and yours second. It is a ‘privilege’ or a ‘concession’ if they let you keep your money. If they let you keep more of it, it is a ‘tax break’. The ALP uses weasel words to cover this up, slathering it in a veneer of ‘values-based capitalism’. But, really, this is a façade to hide an attack on ambition, hard work, and success.
The Liberal Party must articulate a clear vision to counter the ALP’s disingenuous rhetoric. And what better than an optimistic vision of allowing Australians to keep more of the fruits of their labour.