ALP review: economic credentials scared voters away

The sheer volume of Labor’s spending announcements ‘created a sense of risk’ in the minds of voters.

The Coalition’s campaign against Labor’s planned tax overhaul was effective.

Labor’s “most controversial” election policies — a crackdown on negative gearing and franking ­credit refunds — exposed the party to a Coalition attack telling voters the measures would undermine the budget, economy and the jobs of low-income workers.

The Emerson-Weatherill review of the ALP’s 2019 election campaign found the policies to limit negative gearing concessions to new dwellings and end cash refunds for excess franking credits, which were used with other revenue measures to fund large spending initiatives, drove the Coalition’s assault against Labor’s agenda.

The sheer volume of spending announcements totalling more than $100bn over a decade backfired and “created a sense of risk in the minds of the main beneficiaries of Labor’s policies — economically insecure, low-­income voters — about Labor’s economic management credentials”.

“Many submissions to the ­review argued against Labor’s withdrawal of franking credit ­refunds and the restrictions on negative gearing of rental properties. Going into an election campaign with unfunded expenditure of more than $100bn would have exposed Labor to a highly effective attack of massively increasing budget deficits and debt,” the ­review states.

“If the extra spending was to be funded by revenue measures, which was the Labor leadership group’s position, then alternatives to negative gearing and franking credit ­refunds would need to be found.

“Since Labor was already proposing an increase in the top personal tax rate to 49 per cent and opposing the Coalition’s tax cuts for higher-income earners, the only alternative revenue source would be from lower and middle-income earners. The voters most affected by the franking credits policy actually swung to Labor.”

Internal statistical analysis commissioned by the review was not able to identify either of the policies as significant vote-­changers in their own right, but the Coalition’s campaign against the overhaul targeting low-income Australians, renters and retirees was effective.

The review says: “Some blame Labor’s negative gearing and franking credit policies while supporting the spending they funded, forgetting that unfunded Labor spending running into hundreds of billions of dollars would have ­invited a highly effective campaign about Labor creating a debt and deficit disaster.”