Features Australia

Motherhood, apple pie and reform

Changes are not necessarily genuine reform

14 November 2015

9:00 AM

14 November 2015

9:00 AM

The recent election in Canada has got me thinking about reform here in Australia. That’s the six letter word that is being thrown around with gay abandon these days. (Delayed trigger warning: You might be offended by that old-fashioned use of the term ‘gay’. Personally, I couldn’t care less if you are.) Paul Kelly wants reform. The Australian and virtually all of the in-house columnists want it. Central bankers want it. Heck, even the ABC in these post-Abbott days is talking about the need for it. Birds want it; bees want it; even Labor like to tease they want it.

But what does it mean to be in favour of reform? I mean that question seriously, not rhetorically. You see it often appears as though people are conflating or confusing reform and change, any change at all. So if the government changes how much its GST rate will be, say, that in and of itself counts as reform. Or if laws are changed surrounding working hours, that’s reform. Or if the tax rate on superannuation savings is changed, again by some sort of mystical and ineffable process that ‘change’ will in and of itself be deemed to count as ‘reform’.

Let’s face it. That’s bonkers. Change is a necessary, but not sufficient, component of something counting as a reform. What is also needed for the change to count as a reform is a value judgment to be made that this particular change is a good one, that it will be advantageous to Australia’s long-term prospects. And of course once you concede the truth that all talk of reform carries with it an implicit value judgment about the worth of that change, then it’s also the case that you know up front that people will disagree in the conclusions they reach about what will be good or not.

And I mean that smart, nice, well-informed and reasonable people – folks you’d go out and have a beer with at any time – will differ from you in their conclusions. Some of your ‘this is good’ will be their ‘this is bad’ judgments. Two big things follow from that. First off, reform is not the blindingly self-evident undertaking that so many of today’s Anything Goes commentators seem to suggest. One’s underlying political views and principles affect what one will see as reform as opposed to changes for the worse. That leads to the second corollary. There are unlikely to be many ‘reforms’ that are open to bipartisan agreement. In fact things in a country will have to fall into a pretty awful state of affairs before there will be all that many changes that will garner the agreement of, say, both small government conservatives and communitarian social democrats. Or get the nod from both the human rights lawyers’ brigade and those who still value parliamentary supremacy over the core social policy calls that must be made in any country. Or that will see unionists and small business owners concur. And so on. Heck, even when a country is in dire straits my guess is that there will be little consensus about which changes are likely to be for the good and which for the bad.


So my take on reform here in Australia is that all this blathering about bipartisan consensus is a recipe for lowest common denominator stuff, and stuff that I predict will lean to the left politically. It will be a lot easier to get the Senate to sign off on revenue raising as opposed to any spending cuts at all – just think back to how willingly the Senate agreed to just about any new spending foray in those halcyon Rudd-Gillard-Rudd years.

Likewise it will be easier for Mr Turnbull to get Labor to agree to take more tax out of superannuation than to lower taxes. And cutting welfare? Bipartisanship there seems a hopeless cause.

And so now let’s go back to Canada for a moment. Consider a couple of the ‘reforms’ that were undertaken by the former Conservative PM Stephen Harper during his decade-long tenure, one that just recently ended with a fairly clear election drubbing.

Here’s one. Mr Harper ‘reformed’ Canada’s GST. How? He lowered it. Twice. That’s right, he cut how much the government took of your money. After all, those who are committed to a vision of smaller government are supposed to value that sort of thing. Meanwhile here this Turnbull government is mooting increasing the GST by, wait for it, 50 per cent. That’s a whopping tax increase. That’s not what one normally thinks of as a desirable change if you inhabit the right hand side of the political spectrum.

But we’re told that this whopping tax increase will be combined with off-setting lower income tax rates and bands, and maybe even lower company tax rates. What government actually takes will stay the same. That’s the line. But I don’t believe it will be true in the medium to long term. Income tax rates will creep back up, or they certainly will when the left side of politics gets back into office. And inflation will over time once again push people up into higher brackets, whatever fiddling is done now. This ‘GST for lower income taxes’ is a trade-off that will favour bigger government in the long-term and produce more government spending as a percentage of GDP. The evidence from overseas – all those Euro countries that the higher GST proponents like to point to when saying our GST is on the low side – is pretty clear on this.

If you agree with me on this that means that for you, as for me, the label ‘reform’ ought not to be attached to any hiking of the GST. Yes, it will be a change. But it will be a bloody awful one. And I haven’t even bothered to go into the terrible, incentive-killing way in which the GST is distributed to the States. Or put differently, a conservative government tends to cut taxes, including the GST, as Stephen Harper’s did in Canada.

Here’s a second Harper ‘reform’. Canada’s Parliament repealed their equivalent to our 18C hate speech laws. Gone. They exist no longer. When Turnbull very recently gave up on any sort of repeal to 18C he made a rather disingenuous genuflect in the direction of how we all think free speech is important (which is untrue), but then said that it had to be balanced by social harmony type concerns. But if that’s the trade-off why not look to see how social harmony is doing in Canada since repeal (totally the same is the answer) or how, say, Muslims fare in the US where there are no hate speech laws at all versus in Europe where they have proliferated (far better in the US is the answer).

Of course that Turnbull line, mimicking the earlier Abbott one, is a complete red-herring. Repeal of 18C would be real reform, real change for the better, if you have a right-leaning set of political values. The fact Mr Turnbull has killed it off tells you all you need to know about his liberal credentials. (We already know about his conservative credentials.)

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