Read my lips: no more big taxes

For once you have to sympathise with Tony Abbott. His parental leave policy may be a disaster, but if so it is not for the reasons being trumpeted by the government and the media.

In spite of what his apologists are now claiming, there is no doubt that its unveiling was both rushed and rash. Abbott may have spent some months reconsidering his old “over-my-dead-body” stance on paid maternity leave, but there is no sign that he took more than a few micro-seconds working out the details of his new one.

This explains his remark about it being easier to apologise to his party room after the announcement rather than asking its permission beforehand. Had he done so, it is hardly likely that it would have emerged in its present amorphous form.

The idea of six months leave on full pay for everyone is appealing in its simplicity, but it hardly adds up. Giving the cleaners $600 a week to have their babies while the executives get $3000 a week seems, at the very least, a trifle unfair. Abbott obviously subscribes to the view articulated by a correspondent to The Sydney Morning Herald back in 2004: “The rich need more money than the poor because they have greater expenses.”

But considerations of equity aside, the scheme is vastly more generous than the government’s, and more than 10 times as expensive and the money has to come from somewhere. Abbott proposes a levy of 1.7% on companies that earn more than $5 million a year – or perhaps that turn over more than $5 million a year, or perhaps that pay tax on more than $5 million a year, or perhaps that pay more than $5 million a year in tax, no one seems entirely sure. The levy would be, we think, on the total taxable income of the companies, but again we are not quite sure.

What we do know is that only the 3200 biggest companies in the country would be affected, and that they can all afford it. If not, they could always try putting a levy of their own on the salaries of the CEOs and directors – about 75% might be appropriate.

The companies are kicking of course; even Peter Anderson, the die-in-a-ditch Liberal Chief Executive of Abbott’s normally rusted on support base, the Associated Chambers of Commerce and Industry, said the policy didn’t make sense and Heather Ridout of the more moderate Australian Industries Group said she couldn’t believe Abbott was serious: the priority should be to lower company tax, not raise it.

And when not only the feminist groups but the Greens came out in support of Abbott, the economists crowed that this proved the idea was totally crazy: fairies in the bottom of the garden stuff aimed at undermining our prosperity and destroying our way of life.

But this criticism was mere distraction from the big problem, which is that Abbott, as Opposition leader, is proposing a Big New Tax. This breaks the first rule of opposition: never, never admit that you might increase taxes in any way, let alone introduce a new one.

Even in government it’s a huge risk, as John Howard found out with the GST; in 1998, after a gigantic campaign funded by all the resources the taxpayers could provide, Howard barely scraped back with less than half of the popular vote. In opposition it’s suicide: just ask John Hewson, or for that matter Mark Latham, who in 2004 refused to play the tabloids’ silly game and guarantee no tax increases.

There are times when good policy cannot be delivered without tax increases, even a new tax: if Kevin Rudd is serious about reforming the health and hospitals network to the standards the media are demanding, taxpayers – or some of them – will have to foot the bill. But you can bet he won’t spell this out in an election year. He is not that crazy-brave.

There is much to criticise in Abbott’s policies and this column will continue to do so. But right now he is being pilloried not for a matter of substance, but for having the courage to defy one of Australia’s more mindless political shibboleths. Like I said, you have to sympathise.

But save your real applause for the Indonesian president, Susilo Bambam Yudhoyono, whose visit to Australia last week was a long overdue breakthrough. SBY, as he likes to be known, was serious, frank and supremely constructive. And he identified the biggest problem between his country and ours: not the governments, but the people, who remain mutually suspicious and still feel vaguely threatened by each other.

I can relate to this; only a few years ago I regarded Indonesia as a sort of post-colonial Javanese empire, dominated by doctrinaire Moslems and tenuously held together by a corrupt and expansionist military, an international loose cannon which could only be treated as potentially hostile to Australian interests. But in an astonishingly short time it has all changed: Indonesia is now emerging as a fully-fledged secular democracy, increasingly prosperous and confident of its place in the world, an unambiguously good neighbour. There is still work to be done but SBY, building on the foundation laid by the brilliant, if eccentric, Abdurrahman Wahid (Gus Dur), has helped to transform not just his country, but the entire region, for the better.

The politicians on both sides accept and welcome this, but the public in general has not caught up: a recent survey showed 54% of Australians still regard Indonesia as irresponsible in international relations, and we can assume the sentiment is returned in the archipelago. This outdated view must be corrected.

Educational and cultural exchanges and even tourism will help, but the most important step is to restore the teaching of Asian languages, and particularly Indonesian, in Australian schools and institutions. The program was thriving until it was inexplicably terminated under John Howard. Kevin Rudd has promised to reinstate it; SBY’s visit should encourage him to start doing so at once.


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