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Dennis Shanahan

Shorten a step ahead in bold tax move

Dennis Shanahan
Bill Shorten with Ged Kearney after she won Saturday’s Batman by-election. Picture: AAP
Bill Shorten with Ged Kearney after she won Saturday’s Batman by-election. Picture: AAP

Bill Shorten took a calculated and deliberate decision to unveil his contentious tax grab on shares in the week before the Batman by-election.

It was a short-term political risk Labor believes will pay off in the longer term.

Labor won Batman with a rising vote. Shorten has engaged in a tough political fight about “big change” and is intent on building economic credibility for the ALP.

There was a huge risk for Shorten and Treasury spokesman Chris Bowen to release such a tax policy before the by-election: if Labor lost it would have been blamed on the “tax grab” from retirees and superannuants and Shorten would have been in deep trouble.

Kim Beazley fought the 2001 Aston by-election, also in suburban Melbourne, with his “Knowledge Nation” policy against a politically struggling ­Coalition and prime minister.

But John Howard’s “hero of Aston” — Chris Pearce — won the seat, the ALP got a swing against it, the Coalition’s momentum picked up and Beazley never recovered.

Shorten faced the same circumstances and the same consequences.

Last Monday, as the Labor leader told his frontbench colleagues he would release the policy aimed at raising $59 billion, the ALP was ahead of the Greens in campaign polling 52 to 48 per cent on a two-party-preferred vote. When the campaign began the ALP had been behind 45 to 55 per cent.

Momentum was in Labor’s favour, Ged Kearney was in front and it was only four days to polling day.

Bowen warned his colleagues there would be a firestorm over the cash rebates, just as there was with Labor’s groundbreaking negative gearing changes announced before the last federal election.

But Shorten decided to release the policy on Tuesday and take the criticism head-on.

The arguments for taking the risk were that producing the policy after the by-election would be seen as cowardly and cynical. It was a chance to demonstrate Labor’s commitment to the big picture ­beyond a by-election; the policy could appeal to some Greens voters; and voters felt cheated after the New England by-election last December ­because Barnaby Joyce had not been forthright with them over his changing circumstances.

There was a firestorm of reaction but Labor won the by-election in an electorate where there are more than 20,000 people aged over 60. The two-party-preferred result will probably end up about 55 per cent.

Shorten’s decision, which was seen as self-defeating and destructive before the poll, has enabled him to claim credit for taking big decisions outside the soap opera of Canberra politics and beyond the narrow stage of a fight between Labor and Greens voters.

Bowen has changed the political dynamic on negative gearing despite a massive scare campaign and faces a similar battle on cash rebates. But Labor has cleared the first hurdle and, with some tweaking to protect the lowest-income earners, can emerge months ­before the next election with a credible tax plan that addresses the deficit and gives tax breaks to low- and middle-income earners.

The Aston by-election blighted Beazley’s leadership and blunted Labor’s momentum, the Batman by-election may have cemented Shorten’s leadership and boosted political momentum in the longer term.

Read related topics:Tax Policy

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Original URL: https://www.theaustralian.com.au/opinion/columnists/dennis-shanahan/shorten-a-step-ahead-in-bold-tax-move/news-story/61c357d32b013b213d16efd85f4a02e0