Flat White

One impact of the budget: sales of white flags are booming

19 May 2017

7:24 AM

19 May 2017

7:24 AM

Sales of white flags are going gangbusters, with the Coalition buying out supplies. It isn’t surprising, as they’ve found so many things to wave a white flag over. There’s been a flutter of them in the school funding battle, after the Coalition gave up on arguing against the so-called Gonski plan that, in fact, was vastly removed from Gonski’s original proposals.

White flags have been hoisted over the concept of opposing personal tax increases and limiting bracket creep. Surrender has been called on holding back the overregulation (or over-taxation) of banks. More generally, the Coalition has stopped holding the line against the demonisation of larger business — in fact, they are piling on with many intrusive regulations and taxes specifically targeting larger business. Think the overreach with anti-market power regulations, multinational tax avoidance rules, and the bank levy that only applies to the largest five banks.

We have seen capitulation over health as well, with the government no longer fighting for economic reform in this area. Instead, the new ‘Medicare Guarantee Fund’ could just underwrite the inefficient business models of the medical profession.

The Coalition surrendered to anti-foreigner prejudice (perhaps even xenophobia) with the abolition of 457 visas, the various increases in taxes and charges paid only by foreigners, and a clampdown on foreign investment in houses and farms — even when the Productivity Commission argued foreign investment is essential for agricultural development and Treasury arguing that foreign purchases of housing had a minimal impact on prices.

The white flag has been raised over meaningful tax reform, industrial relations reform or reform of the federation, with major reviews in these three policy areas either shelved or binned. Don’t worry about disappointment for the many people and organisations that spend a great deal of time and effort making comprehensive submissions to these reviews.

The battleground has been vacated over gas reservation policies. And the Coalition has given up in arguing against increases in sovereign risk — instead themselves increasing sovereign risk through policies such as the bank levy.

But the largest white flag is over governing philosophy. It used to be that the Coalition fought for lower taxes, lower spending and reduced regulation. It now seems surrender has been complete and unconditional.

Michael Potter is a Research Fellow in the Economics Program at the Centre for Independent Studies.

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