Australia – the government loses owing to tax

There is a three letter word the BBC and others does not wish to mention – tax. The main reason Mr Rudd, the previous Labour PM lost his job, was higher taxes. Parliament and people disliked his higher taxes and charges in the name of a climate change policy, and voted them down. Then he tried a new tax on resource companies. He thought that too would be popular – why not tax the rich and successful corporates. Australians instead thought he was taxing one of the foundations of their economic success, and they objected strongly.

Ms Gillard did her best to clean up the mess, but she too belonged to a party associated with damaging higher taxes. It should act as a warning to all who think higher taxes are fair , green and popular. In Australian they were seen as mean, damaging and unhelpful.

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20 Comments

  1. Tim
    Posted August 22, 2010 at 10:02 am | Permalink

    Have you not heard of argumentum ad populum Mr Redwood? Just because a lot of people think something does not make it right.

    • James J
      Posted August 22, 2010 at 10:51 pm | Permalink

      Or wrong.
      Have you heard of the Wisdom of Crowds?

      • David in Kent
        Posted August 23, 2010 at 8:16 pm | Permalink

        In a democracy, what the majority of the citizens think, is right.

  2. Tapestry
    Posted August 22, 2010 at 12:33 pm | Permalink

    ….and then they (held-ed)the election with postal voting(subject to doubts about how it was organised-ed). Reports speak of Labor's 'superior' postal voting campaign.

    Brown thought he' done the same, but amazingly lost the election by about ten seats. Who would doubt that if the LIb Dem plus Labour total had presented a majority that they would have closed ranks against the Conservatives? 2010 is Britain's miracle election.

    In Australia they weren't so lucky |(where queries about postal voting-ed) has stopped a Liberal government.

  3. Demetrius
    Posted August 22, 2010 at 12:50 pm | Permalink

    The essence of the problem in many jurisdictions is the growing tax gap between revenue that can be raised and spending commitments. Part of this is that there are many people with wealth who escape a great deal of tax and a growing proportion of wealth and money flows are now outside the tax net. This leaves a rapidly increasing burdern to be borne by those who cannot avoid them. Necessarily, the reactions are stronger. If tax gaps continue to grow then some very unpleasant things may follow, such as swingeing property taxes.

    • David in Kent
      Posted August 23, 2010 at 8:24 pm | Permalink

      The reason there's a growing gap is that voters decide to vote themselves a subsidy from the public purse, politicians are happy to buy their vote in that way and everyone assumes that 'the wealthy' will pay the tax.
      When 50% of the economy passes through the hands of the state taxes are going to be high for everyone and very high for the wealthy. No wonder people seek to avoid the state taking two thirds of the income they've worked for and giving it to layabouts.

  4. Robert George
    Posted August 22, 2010 at 1:31 pm | Permalink

    Oh dear John, usually I find it fairly easy to agree with you but this post is unmitigated nonsense from go to whoa.

    The election was extremely complex with swings going every which way for many, frequently local reasons. However Gillard lost 14 seats in NSW and Queensland where the state Labor governments are stinkers. The Queensland government is incompetent and the NSW government is both incompetent and corrupt (some of its members have gone to prison or been convicted of various offences.

    If tax of mining companies had been a big issue Labor would have been wiped out in the biggest mining State WA . They weren't.

    Incidentally John if you look at the numbers you will see that the conservative government of John Howard 1996 to 2007 was a profligate spender(especially on middle class welfare), whilst the Labor governments of 1983 to 1996 and 2007- 2010 had a much better record on controlling expenditure. This was achieved through a succession of outstanding Finance ministers.

    You might also care to note that the biggest new tax of the last 50 years in Australia was the introduction of GST(VAT) by John Howard in 2000.

    Facts are a nuiscance sometimes John but as an inhabitant of Sydney (50% of the time) and a committed conservative I have to admit that in the last 30 years the Labor Party in Australia has a better record on financial esponsibility than their conservative opponents! Ouch …but it is true.

    PS Rudd was hopeless and Labor was right to get shot of him. Only 2 of his own cabinet was willing to support him at the end.

    PPS It's Ms not Mrs Gillard, the lady has a partner but without benefit of clergy.

    PPPS you might be interested to note that transferable preference voting has produced a hung parliament in both houses something some pundits claimed could not possibly happen.

  5. Mark
    Posted August 22, 2010 at 1:46 pm | Permalink

    The other important issue for Australians also parallels the issues that were important for the UK election: immigration policy. The Australian Coalition were prepared to be firm in their policy in all these areas. They do have the luxury of a strong economy based on exports of raw materials to China – a country whose attitude to man made climate change is honoured more in the breach than the observance. Carrying coals to Newcastle still has meaning in Australia.

    Greens do hold the balance of power in the Australian Senate, so the hostage to fortune that arises from having STV according undue power to the smallest minority is well illustrated.

  6. Alan Jutson
    Posted August 22, 2010 at 2:49 pm | Permalink

    Another hung Parliament.

    What a surprise.

    People everywhere are getting fed up with big brother knows best politicians spending someone elses money on pet projects, daft ideas and social engineering schemes.

    Many of the population in many Countries will soon be thinking of running their own alternative economy (the cash and barter system) which has worked for years abroad, and is growing in many Mediterainian Countries, so fed up are they with the State taking more than half of all earnings.

    All Governments need to wake up, as soon as you take near to half of anyones earnings, you get increasing resentment.

  7. SJB
    Posted August 22, 2010 at 3:01 pm | Permalink

    The analysis I have seen suggests that the Australian Labor Party lost votes to the Greens because the government abandoned measures to charge industry for their carbon gas emissions. At time of writing (Sunday, 14:00), the first preference percentage swing for Labor is down 4.87% while the Greens are up 3.63%. http://vtr.aec.gov.au/HouseStateFirstPrefsByParty
    btw, in the last election to the House of Representatives the Greens achieved a 7.8% share of the vote.

  8. Nick Gulliford
    Posted August 22, 2010 at 6:29 pm | Permalink

    I agree. To what extent do you think that the proposal to raise the tax threshold to £10,000 should be implemented quickly in order to make work pay better and to soften the blow for pensioners having some benefits such as winter fuel allowance reduced of scrapped?

  9. julia
    Posted August 22, 2010 at 8:07 pm | Permalink

    MISS Gillard

  10. Ian Pennell
    Posted August 22, 2010 at 11:21 pm | Permalink

    Dear John Redwood

    Sir, tax and immigration were both factors affecting the outcome of the Australian Election, and whilst not the only factors one cannot underestimate their importance. People are concerned about how a potential government will affect their finances and job prospects (of which immigration is percieved to have a big impact on), they are also concerned about crime and public safety and then about the quality of public services.

    The Conservative Party in this country would do well to consider why, after a Labour Government that has presided over rising crime, a spate youth killings in cities, Gordon Browns capitulation over the Lisbon Treaty and worst of all the excessive taxes, waste and vast government debts that stand as their legacy of 13 years in power, that they failed to win a mandate to govern outright. The Conservative Party got no more than 36% of the national vote in the General Election in May.

    I do not for a moment believe it is just because Britain is packed to the rafters, so to speak, with socialists who were frightened of the spending cuts that Labour said Conservatives would inflict. That was undoubtedly a factor but so too were the following in a general order of importance:

    1) Too many people did not see the Conservatives would put in place policies that would improve their living standards or job prospects. In other words, for want of a bit of courage Sir David Cameron did not offer substantial tax cuts to a wide proportion of the population for fear that he would be labelled as "friends of the rich".

    2) The Conservatives did not provide policies that really addressed the fear of violent crime that millions living in towns and cities have, in other words more police on the streets, a major prison-building programme to back up a shift towards long prison terms for those who threaten society and having armed police in rough city schools, on buses, trains and at train/bus stations to properly protect the public.

    3) David Cameron's percieved capitulation over offering a referendum on the Lisbon Treaty once this had already been ratified. The Conservative leadership did not offer any concrete policies to reassure those members of the public, concerned about the encroaching take-over of this country by a vast federalist organisation, that if elected they would fight to retain Britain's sovereignty and reduce red-tape along with Eastern Europe immigration. A Referendum Lock is not a concept that is concrete enough to reassure sceptical voters.

    The Conservatives should not have taken traditional supporters for granted, they need to be offered policies that ensure their continued loyalty whilst we reach out for new voters. We are now paying that price by having to work in-hock to the Liberal Democrats to form a notionally Conservative Government. We cannot now impose policies that would safeguard our future energy security (by subsidising the cost of building nuclear power stations), really get to grips with violent inner city crime (by putting armed police on the streets, at stations and on public transport), safeguard our sovereignty (by standing up to the EU properly) or ensure that our economy continies to grow in the face of austerity (tax cuts on higher earners) without causing the almost-certainty of the Liberals bringing down the Government!

    There is a real risk that if we dont toughen up and state to the Liberal Democrats "Actually this is what we believe. Britain needs its sovereignty protected, we need to protect wealth creation by cutting bureaucracy and taxes and we must safeguard our energy security by funding the build of more nuclear power stations. We will all be in trouble if the economy tanks and the lights go out!. You can either support us or face electoral oblivion if you bring down the Government". And if the Lib Dems dont like it we can fight the ensuing Election on the policies that I have hinted at above and have a reasonable chance of winning outright.

    Sir, even if we lose an election caused by the Lib Dems walking out on the Conservative-led Coalition such loss will be as nothing to the obliteration we would face in 2015 if the lights go out and the economy slides back into recession (because of Vince Cable style "rich-bashing" taxes, it would not be because of spending cuts though doubtless Labour will succeed in portraying it as such to the electorate)! It would not just be obliteration of the Conservatives because of voters drifting back to Labour, there is a risk of UKIP or a new Right Wing Party winning rich and middle class voters on a strong platform of MUCH lower taxes, very tough on crime/immigration and anti-EU policies. The Conservatives would be squeezed from both Left and Right.

    Yours, etc

  11. Alex
    Posted August 23, 2010 at 4:25 am | Permalink

    I don't agree John. Labor's opinion polls went down hill when they ditched the emission trading scheme (at Gillard's suggestion). The way Rudd was removed went down really badly too. Most of the Labour->Lib swings took place in Queensland where Rudd is from, and the Greens had big gains and now control the Senate – so an ETS is now likely to happen if the new government wants to pass anything.
    The chances are if Rudd had stayed in place then Labour would have won this election.

    • Robert George
      Posted August 23, 2010 at 11:05 am | Permalink

      The problem with that thes is Alex is that one of the largest swings against Labor was in Rudd's own seat. The Labour to Lib swing was equal in NSW and QLD but more marginals in Queensland meant a greater loss of seats.

      Incidentally in Australia the party is always Labor, a point I am labouring to make.

  12. john malpas
    Posted August 23, 2010 at 9:33 am | Permalink

    My electricity bill was too high , food was too high , he hospitals are crap and the weather is cold. So i kicked the government out.
    Simple.

    • SJB
      Posted October 10, 2010 at 10:08 pm | Permalink

      It's October 2010 and the Labor government, led by Julia Gillard, are still in power.

  13. Peter Richmond
    Posted August 23, 2010 at 1:01 pm | Permalink

    From a UK perspective, it is interesting to see that a hung parliament has emererged from the AV method of voting. We are being told here in the UK that this cannot happen with this scheme which is much superior to our present method. So much for Lib Dem propaganda.

    • James Sutherland
      Posted August 29, 2010 at 11:40 am | Permalink

      I have always understood it to have the opposite effect, empowering minor parties – which of course is why the Lib Dems want it.

      In principle I would like more proportional representation in some way, and STV seems a good approach, but I doubt it would reduce the chances of a hung parliament: indeed, that's my one reservation about it!

  14. christina sarginson
    Posted August 24, 2010 at 10:20 am | Permalink

    I think this is a bit like the pot calling the kettle black. I was very comforted by the election results in Australia, it felt like we were not the only country who was undecided

  • About John Redwood


    John Redwood won a free place at Kent College, Canterbury, and graduated from Magdalen College Oxford. He is a Distinguished fellow of All Souls, Oxford. A businessman by background, he has set up an investment management business, was both executive and non executive chairman of a quoted industrial PLC, and chaired a manufacturing company with factories in Birmingham, Chicago, India and China. He is the MP for Wokingham, first elected in 1987.

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