Cormann describes Labor’s policies as akin to communist East Germany

In a strident speech, Mathias Cormann has described Labor’s policies as akin to communist East Germany.

Mathias Cormann’s speech is expected to be viewed as an attempt to seize back the economic agenda. Picture: Gary Ramage

Finance Minister Mathias Cormann has laid down the economic gauntlet to Bill Shorten, describing Labor’s policies as akin to communist East Germany’s, in a speech to the Sydney Institute last night designed to set the philosophical and political battleground for the next election.

In one of the most direct ­attacks on the Opposition Leader by a Turnbull cabinet minister since last year’s election, Senator Cormann accused Mr Shorten of being an economic charlatan attempting to take Labor back to the era of socialism by committing to more than $150 billion worth of new taxes.

He accused the Opposition Leader of a shameless descent into the politics of envy used by past socialist leaders. “As he looks ahead to the next election, he has made the deliberate and cynical political judgment that enough Australians have forgotten the historical failure of socialism,” Senator Cormann said.

“The Berlin Wall came down 28 years ago, which means roughly 18 per cent of Australians enrolled to vote were born after the fall of the Berlin Wall and the failure of a system of government that destroyed the economies of eastern Europe.

“Bill Shorten now believes the politics of envy will work for him politically if not economically; that people will believe him when he pretends that the path to a better life for them is to tax their neighbours, their friends and their family members harder; to demonise aspiration and go after hard-working Australians and successful businesses.

“His rhetoric is the divisive language of haves and have-nots. It is socialist revisionism at its worst.”

Senator Cormann’s speech, delivered shortly after credit rating agency Moody’s yesterday maintained Australia’s AAA credit rating with a stable outlook, is expected to be viewed as an attempt to seize back the economic agenda as the government flounders in a political quagmire over the citizenship controversy.

Critics within the government have been frustrated over the government’s failure to get traction with its economic agenda as Labor capitalises on the internal Coalition battles over second-order issues such as gay marriage.

Senator Cormann’s economic assault against Mr Shorten came as the government, led by Employment Minister Michaelia Cash, increased ­pressure on the Labor leader’s union links.

Senator Cormann described an Australia under Mr Shorten as “duller, poorer — and less equal”, and said Labor’s policy of raising taxes on the wealthy would ­destroy the economy, lower wages and increase inequality.

“The next election will be an ­incredibly important choice for ­people across Australia,” he said. “Bill Shorten believes he has ­already won the next federal election. He is getting increasingly cocky. He believes that his divisive politics of envy will propel him into The Lodge. And in his pursuit of his personal ambition he has even been prepared to trash the legacy of Hawke and Keating, taking Labor back to its failed socialist roots. Bill Shorten wants to stoke grievance and resentment with sneering attacks on millionaires. He wants to slide into office with the politics of envy and the economics of snake-oil. There was a reason for the historical failure of socialism.”

“Shortenomics”, Senator Cormann said was a “recipe for economic decline and social division”. “Bill Shorten has overreached in his shift to the left … Pursuing the socialist ideal of equality of outcome leads to mediocrity and ­stagnation.”

Senator Cormann pointed to a pattern of economic policy by Labor to bring one section of the community down to lift others up. He pointed to Labor’s plans for a permanent top marginal tax rate of 49 per cent, reversal of business tax cuts, and tax policies that would affect stay-at-home mothers as being not dis­similar to the socialist French government’s 2012 plan for a 75 per cent income tax on earnings above €1 million, which had to be shelved after wealthy French left the country for other parts of ­Europe.

“By any international standard, modern Australia has kept faith with the spirit of the fair go while at the same time becoming the envy of the world when it comes to economic growth,” Senator Cormann said. “Australia has achieved 26 years of continuous economic growth and gross household income per capita has grown at an average annual rate of 1.5 per cent above inflation over the past 30 years. Despite the slowdown of wages growth in recent years, according to the OECD, Australia has the highest hourly minimum wage rate in the world — ahead of Luxembourg and Belgium respectively in second and third position.

“Now, Bill Shorten recently said in a speech that ‘the wealth of your parents is becoming the ­defining feature and source of your future … your success in life is predetermined by your parents’ income’. This statement, like many he has made before, is ­patently false.”

Senator Cormann pointed to the 2016 Stanford Poverty and Inequality Report, which ranked Australia sixth out of 24 middle- and high-income countries for ­offering opportunity to succeed.

Scott Morrison last night welcomed Moody’s credit-rating announcement. The Treasurer said risks to the AAA credit rating cited by Moody’s included “potential opposition to the government’s plans to balance the budget”.

“This is a further reminder for the parliament, particularly the Labor opposition, to continue to back our plans to drive economic growth, avoid higher debt and ­reduce the deficit,” he said.

Read Mathias Cormann’s full speech below.

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