With less than four months until Australia’s proposed federal election 18 May 2019, it is time for those long-term Liberal supporters who have been disgusted with the antics of the right and are proposing to change their allegiance, to take another look at Labor’s radical economic proposals. Will they be willing to accept possible adverse economic consequences of voting Labor?
Are Liberals Deserting a sinking ship or Is the Party undergoing a Renewal Process?
According to “Happy Jack” Scott Morrison’s confident reassurances, the Party is being refreshed by the changes now afoot, but to most onlookers it looks more like all is not well within the divided Coalition and they are about to be voted out of office:
- Current ministers Kelly O’Dwyer, David Bushby, Michael Keenan and Nigel Scullion are not seeking re-election for personal reasons.
- Several Conservative Liberal members such as Tony Abbott and Peter Dutton, face a voting backlash from their electorates.
- Julia Banks and Ann Sudumalis have left the Party with accusations of sexism and bullying.
- The National Party Member for Mallee Andrew Broad has resigned over admitted sexual indiscretions.
- SA Senator Lucy Gichuhi and NSW Senator Jim Molan have been demoted on their State tickets, and are unlikely to be returned.
- There have been rumours that former Turnbull Ministers, Julie Bishop, and Craig Laundy are also thinking of not running.
With the Coalition in disarray, is Labor a safe alternative for disaffected small-l Liberal supporters?
Federal Labor, in contradistinction to the Coalition, is presenting as a united Party ready to assume office with a talented team of near equal numbers of women and men, a commitment to the Environment, and a well intentioned desire to improve the lot of the less fortunate in society.
Believers in the core Liberal values of small government, and private enterprise, are likely however to be uneasy about Labor’s oft stated intention to end negative gearing except for new constructions, and properties already negatively geared. The current capital gains tax concession of 50% will be simultaneously halved to a 25% concession.
Ambitiously, Labor has three unrelated objectives for these two measures:
- more affordable housing
- wealth redistribution
- raising revenue to fund their reform initiatives.
In essence Labor is not prepared to construct and manage affordable rental accommodation itself, but expects investors to do so for them, whilst increasing their financial risks, and diminishing their return.
Savvy investors will undoubtedly consider options to thwart the government’s plan to increase their taxes, and at the same time to vilify them for being rich.
Does Labor have the discipline to manage economic uncertainty?
Labor governments aspire to being reformist, and good reforms are usually expensive. This is not to say that they are what Paul Keating derogatorily called “bleeding hearts”
He himself was a pragmatist, who did not hesitate to employ the economic levers available to him to meet Labor objectives. Unfortunately, the economy did suffer under his supervision, as he allowed interest rates to rise to a stratospheric 17% to control inflation. Business activity stalled under high costs, and faced with an election in NSW, he opted to restore the negative gearing he had abolished three years earlier.
Rentals increased 25% between1985 and 1987, but it was only in Sydney and Perth that there was an increase in Nominal Rents with the rent rise exceeding the inflation rate (then about 16-17%). Soon after restoring negative gearing, the stock-market crashed, plunging Australia into further financial crisis.