Editorial: Future shock for a nation under Labor

EDITORIAL: By their very nature, newspapers are journals of review. They record and look back upon recent events, local and international, and endeavour to place these events in an appropriate context.

Leader of the Opposition, Bill Shorten. Are you ready for a Shorten Australia? Picture: Lyndon Mechielsen / The Australian

BY their very nature, newspapers are journals of review. They record and look back upon recent events, local and international, and endeavour to place these events in an appropriate context.

On occasions, newspapers will also look back far further than yesterday. In the case of historical milestones, for example, such as the anniversaries of momentous events, newspapers will call upon their archives to once again analyse and appreciate events that have changed Australia and the world.

Today’s edition of The Daily Telegraph is a little different.

Instead of looking back, it looks forward to 2019 and what might occur during the first 100 days of a future Labor government led by Bill Shorten. Given the current Newspoll trend, which shows Labor holding a significant advantage over the Coalition government, such a scenario is far from unlikely.

Nor is there any lack of available data with which to construct the probable workings of a Shorten Labor government. Adding to Labor’s policies that were taken to last year’s election, and which brought Labor extremely close to victory, there have been any number of policy decisions and indications throughout 2017.

In the past week alone, Shorten and his team have added even more substance to Labor’s policy framework. The possible future PM has pledged during his first 100 days in office to, among other things, overturn the Sunday penalty rates cut, increase the top marginal tax rate, scrap negative gearing and potentially withdraw company tax cuts.

The Daily Telegraph’s crystal ball isn’t exactly uninformed. Rather, it is telling us no more than Shorten has told us already.

The most important element to consider is how Labor’s policies will work in practice should Labor win in 2019. In brief, they largely won’t work well at all. Just about every Labor promise contains the risk of penalising growth, strangling the economy and punishing incentive.

Jennifer Westacott is cuttingly precise when she warns that reduced job creation and an inability to compete globally will occur if Australia is “hamstrung by backwards thinking and frankly populist policies”. The Business Council of Australia chief executive believes, and historical evidence is on her side, that boosting taxes and reversing the decision on Sunday penalty rates would put Australia’s economy in reverse.

“The opposition talks a lot about progressive politics but in truth there is nothing progressive about returning to tax and industrial relations policies that belong in the 1950s,” she said.

Among Shorten’s pledges is a plan to permanently increase the top marginal tax rate by 2  per cent, which would take it all the way up to 49.5 per cent. This means that of all income earned in that top bracket, almost half would go straight to the government. Thus the incentive to strive for an earning capacity of $180,000 or beyond would be swiftly removed.

It would be replaced by another form of incentive. In previous, less flexible eras, when businesses and individuals were largely confined to working, earning and banking within their home nations, governments could impose such high taxes with impunity. It was not as though taxpayers had a great choice of options.

But today commerce can much more easily go to wherever its benefits may be maximised. The top marginal tax rate in New Zealand is 33 per cent. In the UK it is 45 per cent. In the US it’s 45 per cent. Why would successful businesses remain in a country where taxation is so much more punitive?

The other major element to consider is the current Turnbull government’s role. Beset by all manner of difficulties, the government gives the impression of having no larger plan than merely surviving week to week.

Turnbull gave a fine example of his government in microcosm by announcing one day he would quit parliament if he lost the prime ministership before declaring the next day he’d be PM “for a very long time”.

This is the sort of muddled messaging that could make today’s Daily Telegraph a very prophetic document indeed.