With one click, the Liberals inadvertently unleashed the ultimate election scare campaign

On January 24 in Proserpine, a small Queensland town midway between Mackay and Townsville, two words were uttered that would have a profound impact on the federal election just four months later.

"This government is running a needless scare campaign," Bill Shorten told a journalist who had asked about Labor's plans to clamp down on negative gearing. "I mean, I don't know what they are going to dream up next. I wouldn't put it past this government this year, because they are so desperate, to say that Labor wants to introduce death taxes."

Two-and-a-half thousand kilometres away in Treasurer's Josh Frydenberg's Melbourne electorate office, a staff member started typing one of the election campaign's most potent press releases.

The release - titled "DEATH TAXES - YOU DON'T SAY, BILL!" - pounced on Shorten's off-the-cuff remark in Proserpine. Labor was already proposing to tax Australians "from the cradle to the grave", the document claimed, and so "it is certainly not out of the question that Labor would consider taxing people beyond the grave."

The release triggered an extraordinary chain of events. Over the coming months, the death taxes rumour would spread like a wildfire beyond the control of both major parties. Tens of thousands of posts would appear on social media, boosted by hundreds of conservative Facebook pages. In the days after their election loss, shell-shocked Labor MPs complained of being bombarded with questions from voters about things that were not included in their policy manifesto - like introducing an inheritance tax.

How the death tax claim went from Shorten to social media

The death tax claim made the transition from Frydenberg's press release to the world of Facebook via two Queensland Liberal National Party MPs.

On January 31, senator Ian Macdonald pasted part of the release onto a post headlined "Death Taxes under a Shorten government!". It was shared 280 times.

A week later, conservative backbencher George Christensen shared a photo of a seven-month old article about the ACTU endorsing an inheritance tax, with the caption: "Is Labor going to bring in a death tax as their union bosses want them to do?" That was shared more than 2000 times. Christensen's post landed on at least a dozen conservative Facebook pages that cumulatively boast more than 200,000 followers.

Christensen was following a path finessed by US President Donald Trump. In past elections, mainstream media was the gateway between politicians' thoughts and their audience. As Trump demonstrated with great effect, there are now several avenues for that information to be disseminated.

Christensen's post was the start of a prolonged death tax campaign, spinning furiously across Facebook even as the Liberal Party moved on from the line of attack.

By the middle of April, the phrase "death tax" was being searched online nine times more often than "retiree tax". Every few days a new death tax post would go viral.

Three weeks out from the election, the posts changed tone. Courtesy of one little-known independent candidate, the Facebook community found a symbol it could tie to Labor's phantom policy with chilling effect: the grim reaper.

Sandy Turner, who was running an independent bid for Labor frontbencher Shayne Neumann's Queensland seat of Blair, posted an image of Neumann and Shorten in front of a black and white grim reaper with the words: "Death taxes were abolished in 1978… Bill and Shayne want to bring them back".

"I did it on Microsoft Publisher," Turner now says proudly. "And people pushed it left, right and centre - it was fantastic."

His original post was shared over 700 times - considerable for the Facebook page of a fledgling candidate who received a little over 2 per cent of the vote on May 18. But it was also distributed across over a dozen major conservative pages.

A Liberal Party campaign truck in the Australian Capital Territory.

Shorten spoke up days after grim reaper imagery appeared to accuse the Coalition of spreading "fake news" and demand Facebook remove incorrect claims surrounding a death tax.

Morrison responded by doubling down, suggesting Labor had "struck a deal" with the Greens, who were "up for death taxes".

"Even [former Labor frontbencher] Andrew Leigh is up for death taxes, let alone the union movement," the Prime Minister said.

The Liberal Party soon woke up to the potency of the viral death tax campaign and commissioned paid advertisements on Facebook likening Shorten's death tax denials to Julia Gillard once ruling out a carbon tax.

By election eve, for every person typing "retiree tax" into Google there 30 were searching the term "death tax".

Facebook: we don't have a policy against lies

Facebook argues it should not delete posts that spread lies because it sets a dangerous precedent about censorship.

"We don't have a policy that prevents individuals from sharing false information," a spokesman said. "If John Smith wants to make a false claim on Facebook and it's shared we wouldn't prevent people from doing that."

The spokesman added that Facebook set up fact-checking infrastructure in Australia ahead of the federal election, signing an agreement with Agence France-Presse to have a reporter monitor misleading content online.

Facebook expanded its anti-fake news operation to Australia amid international pressure over the platform's role in 2016 US presidential election, in which Russia allegedly used Facebook to spread lies in the hope it would change the result.

Under the agreement with AFP, Facebook flags content using a combination of algorithms, user reports and its own employees and sends potentially false posts to the external company, whose South-East Asia division also fact-checks Facebook content in India, Sri Lanka, the Philippines and Pakistan.

"We get hundreds of pieces of content coming through the claim check feed each day," says AFP's Hong Kong-based fact-check editor Catherine Barton. "If something is going viral that does tend to come up in the feed and then we can choose to fact-check it on merit."

On April 30, AFP wrote that Labor had not signed an agreement with the Greens to implement a 40 per cent inheritance tax once in government, flagging two Facebook posts from private accounts appearing to belong to two Australians.

"People who shared the post were notified that it had been fact-checked and rated as false," the Facebook spokesman said. "As a result, the original post and thousands of similar posts received reduced distribution in news feed."

One of the viral Facebook memes that spread like wildfire during the election campaign. Credit: Facebook

According to Facebook guidelines, once a post is declared false it loses 80 per cent of its predicted future views.

But the social media giant ultimately believes the buck stops elsewhere.

"We saw the re-elected government sharing this [death tax claim] on social media," the Facebook spokesman said. "The bigger issue here is the government had it on their homepage and were also running ads on it too."

Jill Sheppard, a lecturer in politics at the Australian National University, believes misinformation "rarely changes people's minds".

"I don't see a feasible way of policing this kind of information, and for now I'm not sure it's a significant problem in Australian elections."

But others say Facebook should be subject to stricter government oversight.

"It is incumbent on the government and statutory authorities to produce regulations that compel transparency and provide greater critical oversight over what is happening," says University of Melbourne associate professor and digital communication expert Scott Wright.

Glenn Kefford, a senior lecturer in digital campaigning at Macquarie University, says the Australian Electoral Commission needed expanded powers.

"There are no simple solutions to this problem, but at a time when dissatisfaction with democracy is rising, the AEC needs greater investigatory and enforcement powers and more pressure needs to be applied to Facebook to try to ensure that the integrity of our elections are maintained."