The hard left and the hard right have monopolised public debate in Australia.
There is no reason to wonder why so many voters have registered their ballots at pre-poll stations this election. Australians are dismayed by a political system that has magnified the fringe at a loss to the rational centre.
Throughout history, Australians by far and wide have voted in the majority for the Coalition’s economic record while maintaining an interest in considered positive reform. It is fair to say that former Labor Prime Minister Kevin Rudd did not snatch government from the indomitable John Howard on a platform of leftist economics. Rudd’s self-depiction as a “fiscal conservative” neutralised the key economic debate and won him government on a promised apology to the stolen generations and commitment to the Kyoto Protocol.
In 2019, Labor pictures Australians as wage-slaves, dependent on state bureaucracy and incapable of self-help. At the opposing end, the Coalition, captured by its reactionary elements, believes we should fear the future and must safeguard existing arrangements against any reform.
None clearer is the dictatorship of the periphery than in our nation’s perturbed debate over climate change.
The energy reality tells us that, for now, coal-fired stations provide more affordable electricity than renewables due to sunk capital costs. Equally, non-dispatchable renewable sources (such as wind and solar) cannot be relied upon to deliver sufficient power at times of high demand as battery technology is as yet insufficient.
However, the important qualification has been made by CSIRO Chief Energy Economist Paul Graham; “Solar and wind generation technologies are currently the lowest-cost ways to generate electricity for Australia, compared to any other new-build technology”. What this means is that although coal provides for more reliable and affordable electricity today, as battery technology develops and as investment shifts, renewables will come to dominate our energy grid.
Nine months ago, we sat at the precipice of a sensible consensus. Malcolm Turnbull’s National Energy Guarantee premised engineering and economics, supporting whichever technology satisfied investor confidence and could attract the market with lower prices.
In the end, Turnbull lost his job because five ‘Liberal’ backbenchers decided they couldn’t allow the market to determine our energy future. Turnbull’s pragmatic approach to energy and climate change died with his prime ministership.
At this election, Labor has embraced a type of climate irrationalism that premises ‘doing more’ rather than ‘doing better’. Shorten says questions on the cost of his policy are “dumb” and “dishonest”, demonstrating an alarming lack of awareness as to the realities of the energy market. Of the 9732 megawatts of new generation expected in the years until 2020-21, 9000 are to come from non-dispatchable sources. This is the trajectory Turnbull sought to arrest by installing Snowy 2.0 and Tasmania’s ‘Battery of the Nation’ as dispatchable renewable base-load systems. For Shorten to impose a 50% renewable energy target without commensurate planning for the installation of further dispatchable power is idiotic and irresponsible.
Furthermore, Labor wants to allow Australian companies to offset their emissions by purchasing international carbon credits. These carbon credits may actually do more to worsen climate change as it was revealed last week that Europe has generated credits by burning wood in place of coal-fired power stations. Burning wood actually emits more carbon than coal but the EU has bypassed that important qualification by categorising the practice as genuine biomass.
In a parallel vein, the Coalition is beholden to its medieval warriors Abbott, Dutton and Abetz, who believe climate change is “probably doing good” and who joke about vulnerable Pacific communities that have “water lapping at (their) door”. It is no surprise that Morrison dropped Turnbull’s plan to regulate a 26% emissions reduction and gave a breath of life to Abbott’s old climate reduction fund.
In a display of Labor’s hard-left inflection, Shorten labels franking credit cash refunds “a gift” while Chris Bowen has decried an “unfair revenue leak”. They both fail to make an important distinction. Franking credit cash refunds are not an optional allocation of the government spend; they are corrections to excessive taxation.
The franking credit system refunds cash with the same logic that allows those who earn below the tax-free-threshold to have their withheld tax returned at the end of the financial year. A worker who brings home less than $18,200 in a financial year will often still be taxed as though they fell into the 19% or 32.5% tax bracket. To remedy this error, they receive a refund from the ATO of the amount taken from their pay in tax throughout the financial year.
Just the same, the franking credit system provides a refund to those investors who earn below $18,200 in a financial year. The key difference is that the investor has earned their income in dividends as opposed to paid work.
When a company pays a dividend of $700 to a shareholder, it has effectively generated $1000 on behalf of that shareholder of which $300 (30%) is paid in company tax. The shareholder has therefore earned $1000 (assuming no other income) which falls well below the $18,200 tax-free threshold. They are not obliged to pay any tax and so the franking credit refunds the $300 tax paid on their behalf.
With its franking credit changes, Labor wants to tax those shareholders who fall below the tax-free threshold. Shorten should be honest with the Australian people; his policy is not to end “cash bonuses”, it is to impose a new tax.
His characterisation of franking credit refunds as a “gift” reinforces a damning worldview that taxpayer income belongs in property to the government. Shorten wants to lead his party away from the growth agenda of Hawke and Keating to a redistribution narrative that pits Australians against each other.
We are already beginning to see this play out. Aside from the suite of higher taxes promised to fund an erratic high-spend agenda, Shorten seemingly believes he has an endless fiscal inventory from which to alter and adjust the economy to his satisfaction. He has promised to publicly fund pay increases for childcare workers, has given lip-service to the same for workers in aged care and has said he will impinge the Fair Work Commission’s independence to drive up the minimum wage and penalty rates.
It is an extraordinary about-face from the Labor Party which in its last term of government, created the independent Fair Work Commission with the intention of removing political opportunism from the determination of base wage levels.
There is an interesting psychology behind Shorten’s plan for the economy. He seems to think that having people out of work is better than having people in work where wages growth is, for now, slow. At a time of global headwinds and technological transformation, it is productivity and competition, not government intervention and redistribution, that will provide for our continued prosperity.
While the Coalition at least has a finer conception of fiscal responsibility, it too vacates the challenge to bring Australian industry into the 21st century. Treasurer Josh Frydenberg’s April Budget effectively killed and cremated the Innovation and Science Agenda of 2015. The forward estimates slashed $1.35 billion from the research and development tax incentive, an absurd decision when the sector has shrunk from 2.2% of GDP five years ago to 1.8% today.
At this election, many voters are lost for a sensible and pragmatic plan to the nation’s future. They want effective action on climate change but without having to abandon the liberal economic philosophy that underpins our prosperity.
It is my view that the sensible elements are stronger within the Liberal Party than they are within Labor. Shorten promises a regress to socialism and fails to provide a properly considered response to climate change. Although reactionary Liberals maintain incommensurate authority over the formation of Coalition policy, with generational change and a likelihood that Abbott and Dutton may lose their seats, there is reason to stand by modern liberalism.
For that reason, I encourage you to vote Liberal or National on Saturday.
Disclaimer: The opinions expressed in this article are the author’s own and do not necessarily reflect those of Lot’s Wife. Tom is a University of Melbourne student who has submitted an opinion piece to Lots Wife after the magazine received no response to an article request from the Monash University Liberal Club. The author has stated that they are not a member of the Liberal Party. To find out what other students had to say about the election: read the ‘Why you should vote Labor’ and ‘Why you should vote Greens’ articles which are available in Edition 3.