Opposition Leader Bill Shorten is under real pressure for the first time since the 2016 election, as the government attempts to wedge Labor with a circuit-breaker budget.
Shorten used his budget-in-reply speech to appeal to middle Australia, putting forward an argument that Labor is the only party that can be trusted to deliver a fair go. He argued the government’s so-called “Labor-lite budget” is unfair, bringing benefits only to rich.
Since the election, it seems everything – including the polls – has gone Labor’s way. The Turnbull government has been plagued by infighting and its messages have failed to resonate with the electorate.
The 2017 budget positioned the government as more centrist. It contained several policy positions ordinarily associated with Labor.
The government’s three-word slogan for the budget was “fairness, opportunity and security”. It has tried to position itself as a “doing government”, taking on good debt to invest in infrastructure, funding the NDIS into the future, and adopting measures from the Gonski schools funding plan.
Shorten’s speech was framed around modern class politics. He claimed Labor is the only party that can be trusted to protect low-income workers, and look after the interests of the middle class in terms of Medicare, universities and schools.
Shorten refuted Prime Minister Malcolm Turnbull’s claim that the budget is a fair one:
This prime minister of many words has learned a new one – fairness – and he’s saying it as often as he can. But repetition is no substitute for conviction … This isn’t a Labor budget – and it’s not a fair budget … Fairness isn’t measured by what you say – it’s revealed by what you do.
It is highly unlikely that this budget will be viewed as negatively as the 2014 budget. But Labor needs to convincingly discredit it to the point that the government cannot use it to help restore its standing in the eyes of voters.
Labor will need to attack on two fronts. The first will be scare tactics. Voters will need to be convinced they are unnecessarily worse off under this budget.
There’s nothing fair about making middle-class and working-class Australians pay more, while millionaires and multinationals pay less.
He highlighted higher tax rates for low-income workers, as a result of the increase in the Medicare levy, as well as the traditional Liberal threat to Medicare. Shorten also posited schools would be much worse off due to the gap in promised funding between Labor and the government.
The second line of attack will be providing an alternative set of policy options that voters view as more attractive than those put forward by the government.
What is Labor offering voters?
In his speech, Shorten promised a Labor government would remove the Medicare rebate freeze, rather than wait for indexation to begin in July 2020 – thereby reducing the cost of health care. Labor will also restore A$22 billion to the schools sector.
As an alternative to the measures to assist first home buyers through a savings scheme, Shorten said Labor had a plan for affordable housing that would include the construction of 55,000 new homes over three years, and create 25,000 new jobs every year. He also noted Labor’s commitment to developing more public housing.
In what is likely to prove a popular idea, Labor will seek to close the loopholes allowing multinational companies avoiding tax in Australia.
Likewise, in an effort to halt tax avoidance by wealthy individuals, Labor plans to limit the amount an individual can deduct for the management of their tax affairs to A$3,000 per year. Shorten claimed that less than 1% of taxpayers would be affected, and that measure would save the budget A$1.3 billion over the medium term.
Shorten continued to argue that a royal commission into the banking industry is required.
Where does Labor stand on individual budget items?
Labor needs time to review the proposed legislation resulting from the budget in order to determine what it is willing to support. But Shorten outlined Labor’s position on several measures.
It supports the additional Medicare levy to fund the NDIS. However, it wants to limit the levy to the top two tax brackets, so that only those earning more than $87,000 per year will be impacted.
It supports the bank levy – but simultaneously put pressure on the government, claiming it is responsible for stopping the banks from passing the cost onto customers.
It does not support the cuts to universities or the proposed increase in university fees for students.
It does not support the plan to allow first home buyers to use up to $30,000 in voluntary superannuation contributions. Shorten described the policy as “microscopic assistance”.
In this game, it’s the message that matters
This is a political budget, and so we should expect in the coming weeks that both parties will attempt to appeal to voters’ base instincts, rather than presenting considered arguments for or against policies.
Thus, the government is focusing on forcing greedy banks to “pay their fair share”, secure in the knowledge that former Queensland premier Anna Bligh, as head of the Australian Bankers’ Association, is unlikely to be able to cut through the bank-bashing mentality of the average Australian voter.
Likewise, Shorten will campaign hard on the natural end of the temporary budget repair levy, which was introduced in the 2014 budget. He is claiming this is a tax cut for the rich at the same time as the government is making everyday Australians pay more tax through a higher Medicare levy.
Interesting times ahead
Shorten is right: this budget is about trust.
The government and the opposition both need to convince average working and middle class voters that their policies will provide Australians with the best outcome. In some ways, this is politics as usual.
But, with the polls leaning to Labor and voters’ faith in the government’s ability to deliver low, the stakes seem higher than normal – especially as voters are presented with two positions not as divergent as they have been in recent years.