Federal election 2019: Shorten’s Labor stakes out the centre

The Federal Labor Party has come a long way under Bill Shorten’s leadership since the days of Kim Beazley.

He’s managed to rebuild the Labor Party, over six long years, and concentrate its policy focus to the point where it may be returned to government at the election.

It’s largely thanks to Tony Abbott.

The former Liberal prime minister’s controversial 2014 Budget was a godsend for Shorten. It gave him something substantial to fight as the new leader of a demoralised Labor Party.

If you watch footage of Shorten’s Budget reply speech in 2014, you can see him laying the groundwork for the political “themes” his Labor Party would start pursuing, and has pursued to this day.

“This is just the beginning of turning Australia into a place that most of us won’t recognise — colder, meaner, narrower,” he warned of Abbott’s Budget.

“Millions of Australians now know what Abbott’s Australia will look like — if you need to see a doctor you will pay more, if you need to buy medicine you will pay more ... if you are a young person you will be left behind, if you rely on a pension you will be punished.”

Jump forward five years.

Consider the policy platform Shorten’s taking to the 2019 election.

A cornerstone of his election pitch is a $2.3 billion cancer package that will slash out-of-pocket costs for millions of cancer patients with free scans and consultations and cheaper medicines.

He’s trying to “remind” voters that Labor is the true believer in essential services that will protect and extend the Medicare system, rather than promote tax cuts for the rich. You couldn’t get a clearer example of the different philosophical outlooks of the two major parties.

Under the Abbott-Turnbull- Morrison governments, the Coalition has pursued tax cuts doggedly, pursuing the dual goals of returning taxes to individuals and businesses and shrinking the size of government.

(By cutting taxes, you reduce government revenue, thereby reducing its ability to spend, thereby shrinking its size. It’s called “starving the beast”.)

But under Shorten’s Labor, voters are being reminded that universal health care can only exist if they’re willing to pay some taxes.

His cancer care package serves the dual purpose of extending vital care to people in desperate need while reminding voters that a certain level of taxation can create a better society.

In the US, universal health care is anathema to conservatives — because it socialises health costs, they consider it a form of socialism and therefore devilish.

I’ve never understood it. Why wouldn’t a capitalist economy want workers to have the cheapest health care and education possible? Don’t you want as many workers as possible to be healthy and educated? Won’t they be more productive?

But political arguments from the Right in the US are constantly being imported to Australia, and Labor is cagey about any attempt to label it big spending or radical.

So Labor’s Andrew Leigh, the shadow assistant treasurer, gave a speech yesterday arguing that Labor’s economic agenda is “centrist”.

Centrist? Voters on the Right won’t believe it. And anyone on the Left who wants Labor under Shorten to pursue a muscular form of social democratic politics will be disheartened by it.

But Leigh made the case anyway, on the first day of the election campaign.

It’s worth noting because you may have missed it, and it will underpin much of Labor’s campaigning over the next five weeks.

“Today, I want to argue to you that there is really only one party that occupies the centre ground in Australian politics — the Labor Party,” Leigh said.

“When we look at three big policy areas — climate, wages and tax — the Coalition has given up searching for the centre, and become a party of pure reaction.”

Anyone on the Left who wants Labor under Shorten to pursue a muscular form of social democratic politics will be disheartened.

According to Leigh, Labor’s policies on climate change and renewable energy are mainstream, not radical.

“In Britain and New Zealand, the past decade has seen conservative governments implement sensible and effective climate change plans, grounded in solid science and sensible economics,” he said.

“They have shown what is possible when climate change stops being a partisan issue and becomes a national priority.”

On wages, he said a pay rise for “middle Australia” is what the economy needs. Even the Reserve Bank governor wants wages to rise.

“In the 1970s, we had a consistent period in which wages outpaced productivity,” Leigh said.

“Back then, the sensible centrist position was to acknowledge the ‘real wage overhang’, and develop policies that brought wage growth back into line with productivity.

“Today, we don’t have a real wage overhang. Over the past six years, wages have fallen below productivity. It should be uncontroversial to acknowledge that Australia has a ‘real wage underhang’. The centrist position today is simple: Australia needs a pay rise.”

On tax reform, Leigh said Labor’s pursuit of politically challenging decisions to close tax loopholes had been partly inspired by Martin Feldstein, Ronald Reagan’s chairman of the Council of Economic Advisers, who emphasised the importance of reducing tax loopholes.

Leigh listed as examples Labor’s decision to restrict negative gearing and reduce the capital gains tax discount, and end cash refunds of dividend imputation credits for people who pay no tax.

“Labor’s negative gearing policies will bring Australia into line with places such as Britain and the United States, which do not allow taxpayers to deduct investment losses from wage incomes,” he said.

“These changes do not affect existing investments, which are fully grandfathered. Reform of this kind was advocated by Joe Hockey in his valedictory speech.”

Will the Coalition allow Labor to claim the centrist mantle? Will voters? Let’s see.

Gareth Hutchens is The West Australian’s Economics Editor