Latham's Law

Latham’s law – 11 August 2012

11 August 2012

3:00 PM

11 August 2012

3:00 PM

This is the story of an Australian Opposition Leader who cried wolf about a new tax. In the months leading up to the introduction of the impost, he barnstormed the electorate, predicting job losses, industry closures and unbearable cost of living pressures. Even though the government was paying large amounts of compensation into people’s bank accounts, this political opportunist was undeterred.

Unable to resist the electoral advantage of a scare campaign, the hollow man ploughed on. Even after the tax came into effect, with a relatively benign impact on industry and consumer spending, he toured the country talking of a ‘slow burn’ towards economic devastation.

That was Labor’s Kim Beazley in 2001, railing against the Howard government’s goods and services tax. When his scare campaign fell flat, Beazley was held to account by the nation’s media. In particular, his policy to ‘rollback’ key elements of the GST was heavily criticised. His most severe detractors were from the Murdoch press, which regularly lampooned the big man’s belly flop.

A wonder of Australian politics today is why Tony Abbott is not receiving similar treatment over his carbon tax hysteria. Six weeks after its introduction, the tax has had no noticeable impact on economic activity or our way of life. How could it? A limited number of big polluters are paying a minor amount on their carbon use, with the government designing its policy so as not to affect small businesses or consumer behaviour. Most families are better off financially, receiving more in government compensation than the expected price impact on their household budgets — modelled by Treasury at just 0.7 per cent of the CPI.

Economists call levies such as this a punitive tax, designed to punish people who consume a certain undesirable item. The ineffectiveness of the federal government’s carbon tax can be gauged by comparing it to other punitive measures, such as taxes on tobacco and alcohol. Imagine if the government paid back to smokers and drinkers all the money it collected from them. The impact on their consumption of cigarettes and alcohol would be minimal. The government’s decision would be attacked as a self-defeating policy prank — a joke on the nation’s intelligence.

Yet this is what Julia Gillard, Greg Combet and the Greens have done with the carbon tax. It was never going to have the ‘wrecking ball’ economic impact Abbott predicted during his daily schedule of workplace stunts, festooned in hard hats and hair nets. The Liberal leader has run the most fraudulent scare campaign in Australian political history, yet the media are remarkably mute. Far from holding Abbott to account, Murdoch’s tabloids have been trying to prove him right, fabricating stories about the impact of the carbon tax on funeral costs and tip fees.

When Gillard, Stephen Conroy and other Labor ministers point to media bias against their administration, on this issue at least, they are correct. Until such time as Abbott is given the same treatment Beazley received 11 years ago, the nation’s media houses should be judged as Liberal Party barrackers.


The Mal Brough affair should also be a major problem for Abbott. In late April, the former Howard Government minister dismissed suggestions he had advance knowledge of James Ashby’s court action against Peter Slipper, but then had to admit he had met with Ashby three times and sought legal advice on his behalf.

Two Mondays ago, following his preselection as the Liberal candidate for Slipper’s seat of Fisher, Brough denied asking Ashby for copies of Slipper’s daily diary. Yet documents lodged by Slipper in the Federal Court suggest otherwise. Brough requested emailed material from Ashby. After this had been sent, Ashby texted back: ‘Will need to get daily printouts tomorrow with greater detail.’

Brough has been lying in a manner no different to the disgraced Labor MP Craig Thomson. He is unfit to return to Parliament, especially given Abbott’s promise of high ethical standards under a Coalition government. As Ashby’s position continues to unravel, I expect him to withdraw his court action against Slipper, at which point Slipper may launch a counter-claim for damages. Either way, Brough’s involvement in the matter will continue to be subject to legal scrutiny.

The full details of the Liberal Party’s espionage against Slipper will eventually become known. It is difficult to see how Brough can survive as an endorsed Liberal candidate for the next election. At some point, Abbott will need to cut him loose.


The pre-eminent expert on Liberal economic policy, Peter Costello, has pointed out that Abbott’s chief inspiration in this field is B.A. Santamaria and the DLP. This is evident in the Opposition Leader’s policy to deter investment from China’s state-owned enterprises. Under Abbott’s strategy, privately-owned companies with links to organised crime in the Philippines will find it easier to invest in Australia that the Chinese — an insult to our most important trading partner.

As one of Santa’s little helpers, Abbott’s policy has abandoned the Keating/Costello legacy of economic openness. How can he successfully run Australia’s miracle economy if he doesn’t understand the policy fundamentals on which it is based?

Mark Latham is a columnist for the Fairfax-owned Australian Financial Review and a former Labor leader.

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