Policy-free Labor and Coalition lack courage on economic reform

If 2015 was the year of ideas for Opposition Leader Bill Shorten and federal Labor, this rather prompts the question: What is 2016? It’s actually hard to recall Labor’s key ideas from last year.

There was something about ­extending the high income superannuation charge (30 per cent) on contributions to those earning more than $250,000 a year — it is now $300,000 a year — and ­imposing a 15 per cent tax on superannuation retirement earnings above $75,000 a year.

The revenue estimates were a bit vague — $14 billion over 10 years, which was a strange way to present the figures, but what the heck. And the practical difficulties of taxing superannuation retirement earnings were basically overlooked. (Will the tax apply to earnings of non-­concessional contributions? What about capital gains? What about deferred tax assets?) Then there was that other favourite: taxing multinational companies some more. Here the figures are rubbery but, more to the point, Labor’s idea of imposing an average gearing ratio for tax purposes on multi­national conglomerates is very poor policy. The likely impact would be to deter foreign investment.

Of course, there was the usual stuff about inequality and spending even more on welfare, even though there is little evidence that making more people welfare-­dependent helps either the people or the economy. Opposition spokeswoman for disability ­reform Jenny Macklin is firmly of the view there is no waste or fraud in the welfare budget and the real solution is to spend — she prefers the term ‘‘invest’’ — even more.

The less said the better about Labor’s aspiration — not a target, please note — of 50 per cent renew­able energy by 2030.

Appeasing union comrades is always top of mind for Bill Shorten and his colleagues, and this was on show last year. Opposition employ­ment and workplace relations spokesman Brendan O’Connor never fails to take the most ­un­ashamedly pro-union stance on any policy topic, irrespective of the merits of the arguments.

While continuing to block the re-establishment of the Australian Building and Construction Commission and the establishment of the Registered Organisations Commission, Labor devised some pathetic alternative that would have the Fair Work Commission, that friend of the union movement, refer ‘‘very serious’’ (undefined) instances of union misconduct to the Australian ­Securities & Investments Commission. And if that were not bad enough, O’Connor linked this ­deliberately toothless suggestion to reforming political donations.

It’s hardly surprising, therefore, that Bill Shorten has decided that he’s had enough of ideas and opted instead to make 2016 the year of opposition. “We will ­oppose every day between now and the next election the Liberal plan for a 15 per cent GST,” reads the tweet. One wonders how this singular approach will end if the Coalition government decides to leave the GST where it is or all the states, including the Labor ones, publicly endorse an increase in the rate and/or coverage of the GST.

But in the meantime, we are being asked to nominate our favourite type of lettuce. Bill’s answer is: “My favourite lettuce is one that doesn’t have a 15 per cent GST on it.” Does he think that voters are primary school kids?

Mind you, there is no cornucopia of policy ideas being served up by the Coalition government, with the instalment of a new prime minister making no palpable difference to the vigour of the policy debate. We have the interminable tax reform debate in which interest group after interest group ­delivers its preferred options. We are told the government is toying with two alternatives — one with a higher GST, the other keeping the GST at 10 per cent. Putting a cap on deductions for the pur­poses of negative gearing and ­imposing higher taxes on super­annuation contributions are said to be on the menu.

But whoever thought that raising more tax revenue, even if the mix is more efficient, is the key to lifting the rate of economic growth? All taxes are bad; some are just worse than others. And some of the ideas being floated in the tax reform debate are particularly loopy; they would produce both unintended consequences and less revenue than expected.

And even if the package of changes is revenue-neutral, which is hardly likely to be the case, it is absurd to think that tax reform is the most important policy reform the government should be contemplating. The reality is that the government is also a desert when it comes to economic policy, branding any suggestion that wasteful, ineffective and unjustified government spending should be cut as a case of ‘‘hairshirt economics’’ — the term used by rookie Treasurer Scott Morrison.

At this rate, federal government spending as a proportion of GDP will soon exceed the heights achieved by former treasurer Wayne Swan — and at least he had the excuse of the GFC.

What about other policy areas? I won’t be holding my breath that anything substantive will be achieved in health. Reviewing the byzantine and dated Medicare Benefits Schedule makes some sense, but granting the Australian Medical Association the effective right of veto over any significant changes is akin to the government agreeing to merge the roles of poacher and gamekeeper.

The fact that the government is not prepared to stand up to the AMA shows us just how gutless the government’s policy stance is when it comes to health matters. When the minister brags about ­removing 23 MBS items — there are about 5700 items in total — and saving $7 million (the MBS now costs in excess of $20 billion), we know that progress is likely to be slow or non-existent.

Notwithstanding former education minister Christopher Pyne’s description of himself as a ‘‘fixer’’, it’s not clear that he fixed anything at all. The government’s higher education and schools policies are a completely mess. Some of the higher education savings from the 2014 budget remain on the books but have not been ­enacted. Of course, I haven’t mentioned the Greens or most of the Senate crossbenchers, whose policy ideas are hopeless distractions.

At this stage, public policy in Australia in 2016 looks like a complete wasteland where none of the players has the courage to confront the main challenges — ­excessive government spending and red and green tape regulations stifling business and investment. Rather, both the major parties plan to spend considerably more than is raised, drive up government debt and, all the time, use unconvincing rationales to justify their vote-buying tendencies.

Now perhaps the electorate has short attention spans, is swayed by social media and fads, and is more than happy to discard unwanted items, including prime ministers. By contrast, it is just possible that voters recognise duds when they see them.

Were a leader to make the case for sound public policies, even if some involve sacrifices, it could just be that people would be prepared to be patient before the full benefits emerge. New Zealand’s John Key is a case in point.