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Missing inaction

I thought my ears were deceiving me when I listened to PM on Tuesday evening. But no – here was Mr Hockey, a former minister in the Howard Governmentahead of Malcolm Turnbull as preferred Liberal leader in this week’s opinion polls – admitting that there was an arguable case for the Federal government's not proceeding with the tax cuts promised before the 2007 election, describing as “reasonable” the proposition that under Howard too much money had been spent on middle class welfare, and saying that the previous Coalition government would have been wiser to have squirreled its large surpluses away against such times as we are facing now.

I haven’t been able to source the text of Mr Hockey’s address to the CEDA lunch, but here – finally – is the transcript of the Q&A session that followed his address and that was broadcast on PM on Tuesday evening.

I wonder how much this will help Mr Hockey’s leadership aspirations. Were those his thoughts at the time? In thirty years, no doubt, we shall know.

MARK COLVIN: A senior Opposition frontbencher says income tax cuts in Australia may have gone too far.

Joe Hockey, the shadow treasurer, told a business lunch today that the Rudd Government had a case for reneging on its promised tax cuts and it should have considered doing so to rein in the budget deficit.

Mr Hockey also gave a candid assessment of the Howard government's economic record. He conceded that in hindsight the Howard government's family tax benefits were too generous and it should have saved more of the massive tax revenues during the boom years.

Joe Hockey was speaking on a panel chaired by our economics correspondent Stephen Long, who filed this report.

STEPHEN LONG: He's being touted at the alternative Opposition leader, a future prime minister. He'd settle for less.

JOE HOCKEY: Oh how I miss being called Minister. (Laughter)

STEPHEN LONG: Joe Hockey was a senior minister, though not of course treasurer, during the Howard years. But now as the Opposition's treasury spokesman he agrees there were flaws in the Howard government's economic management.

Speaking at a lunch in Sydney today hosted by the independent think-tank CEDA (Centre for Economic Development Australia), Mr Hockey said that in its latter years the former government handed out too much money in tax transfers and benefits and it should have delivered even bigger budget surpluses.

JOE HOCKEY: Oh look I think that's a reasonable criticism. I mean the family tax benefit that we had was very generous.

STEPHEN LONG: Although it all seemed fair enough at the time.

JOE HOCKEY: And that's because we wanted to target families because families were facing the greatest cost burden; the price of residential real estate was, you know, rising significantly; and as we all know in Sydney basically you needed to have a two-income household to pay a mortgage.

Some people call that middle-class welfare but I seem to recall everyone crying out for more childcare, tax deductible childcare - you remember that debate? Everyone remembers that. There's been a whole range of those debates. And they were outraged when we had surpluses of $20-billion. So you know there's a lot of hindsight heroes around at the moment.

STEPHEN LONG: Alright but in hindsight, if you could have your time over again you would have had bigger budget surpluses going into this downturn?

JOE HOCKEY: If we had our time again I would better explain the future fund and I would have set up the other funds earlier; the higher education funds for infrastructure and the health and hospital fund.

STEPHEN LONG: In other words: squirrel away more money for the bad times. He denies that seven consecutive years of personal income tax cuts under the Coalition was too many. But what about the latest lot - Labor's me too tax cuts, now L-A-W law?

Should they have gone ahead?

JOE HOCKEY: Well, um, that's a good question. (Pause) God, I'm just saying it's a good question.


STEPHEN LONG: Can you give me a good answer?


And he did.

JOE HOCKEY: Look the honest answer is there would have been a legitimate justification for the Government to say our debt, you know, our recovery, our economic recovery will be slower if we are running a big deficit and I think it should have been considered as part of the mix.

The fact of the matter is that at some point you've got to make hard decisions in government when you're spending money.

STEPHEN LONG: Don't adjust the radio, you heard right - Joe Hockey, a senior Coalition minister says tax cuts may well have gone too far and the Rudd Labor Government should have thought long and hard about scrapping them to rein in the budget deficit.

JOE HOCKEY: Having said that, and I want to make this, emphasise this, the Liberal Party believes in lower taxes and you know it would have been incredibly hard for us to support the removal of the income tax reductions.

STEPHEN LONG: And of course given your statement and very reasonable analysis, it would have been highly unlikely that yourself or Malcolm Turnbull would have been out there saying Labor's broken an election promise by not delivering on the tax cuts?

JOE HOCKEY: You're such a cynic.


STEPHEN LONG: His deep philosophical support for low taxes is it seems outweighed by Joe Hockey's fear of the evil debt. He says Australia's government borrowings risk rack and ruin. Never mind that it's a dribble in the bottom of the glass compared to the trillions being borrowed by governments overseas.

JOE HOCKEY: If we're an alcoholic and the guys down the road are alcoholics, just because we consume less alcohol doesn't mean we're any less an alcoholic.

STEPHEN LONG: Maybe we're just a social drinker.


JOE HOCKEY: Binge drinking!

STEPHEN LONG: Joe Hockey was stone cold sober at the lunch. He's in training, walking 14 kilometres a day as he prepares to take on a pinnacle, bigger perhaps, than the party's leadership.

Many of you may not be aware that Joe Hockey is in training to go on a climb up Mt Kilimanjaro. Is it true that that training is to prepare you for the rigours of leadership?


JOE HOCKEY: You know how many people want me to die on that mountain? (Laughter) It increases by the day.

MARK COLVIN: The shadow treasurer Joe Hockey with Stephen Long.

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Everyone placed in the big tent

The value in the system I propose is that it places politicians in their rightful democratic position - that position is servant of the people. In a true democratic state a politician would never use the word "leader". In a true democratic state that is one thing they of course are not.

My system is simply the stakeholders (taxpayers) budgeting a year in advance (minus exceptional circumstances). A standard practice for most organisations, and many individuals.

A politician would propose and list order of priority (depending on funds). The stakeholder (shareholder) is now obliged (the best way possible through their pocket, and it's surprising how successful it can be), to give careful consideration. Such a system of course has now a inbuilt, and absolute "promise" detector.

When your investments perform below expectations, you dump them. Most certainly you don't throw a constant never ending bale of money at them. That's personal responsibility and accountability, that individual standard of which can then be transferred in community and ultimately country.

The known knowns

Paul Walter: "Paul Morrella suggests a sort of honour system, with a little shame and blame at the end for those not prepared to put in their whack, but I have a mental vison of mobs of non taxpayers angrily lynching dissident tax payers for breaking the metaphoric picket line and proclaiming their paying of their dues."

The legendary lynch mob, always promising, though never being sighted.

Religion has used such a system for eons (it's much older than democracy itself), and nobody could call religion a monetary failure.

The system of course relies on personal responsibility and accountability. Minus personal responsibility and accountability one cannot tranfer the positives of such into community and country. And of course most don't. And of course that's why we have the world we have; a world where such things are outsourced, and that's usually toward the next self-serving charlatan with the nicest pillow talk.

I unfortunately share a world with recidivist dumpees, waiting for the bus (always waiting), after the oh so promising night has ground to a halt - rambling about "lack of democracy", and just itching to get right back in that next passenger seat.

a different bounty

Back to the consequences of denialism. In SA, Dodgygate has claimed the career of oppposition leader Martin Hamilton-Smith. Like their federal colleagues, the SA libs forsook rigorous self examination and the hard work of policy development and fell into the lazy habit of trying to run an easy smear campaign without having even the wit to check out the evidence first.

Read against SA events that are so much forerunners to the federal libs' situation, it is impossible not to realise that Joe Hockey is now looking at the leadership. Turnbull is has lost the support of his colleagues over his astounding lack of diligence, judgement and ethics and others are looking to the lifeboats for a fresh start free of Captain Bligh.

What a surprise...

Well, it's actually an interesting posting.

Firstly, a tacit admission finally from a politician on what has become the underlying feature of politics in this country over the previous generation, the massaging of the mortgage belt. This along with the parallel, corporate welfare.

Paul Morrella suggests a sort of honour system, with a little shame and blame at the end for those not prepared to put in their whack, but I have a mental vision of mobs of non taxpayers angrily lynching dissident tax payers for breaking the metaphoric picket line and proclaiming their paying of their dues. I can't help feeling that civilisation as we know it would collapse, yet it is true that the fight for community over piracy must continue. It's interesting to note that most people have some form of resistance up and running to the system, anyway, and life and society in this context are only the means by which the human nature conflict of altruism versus self preservation is played out, anyway. All people like to put one over a system that they feel acts against them when things don't go their way, not just delinquents. Whether it is the respectable person who kicks the dog in private to work off her frustrations, or tax dodgers, welfare cheats or even hippies dropping ecstasy to show they are not overwhelmed by conformism. Even the conformism of wowsers usually has an underlying transgressive element, when examined more closely.

I think Paul's proposal is pretty much the way things are, depending on your "wherewithall". You get to have things more or less on your terms anyway; it's up to us to make the effort to be honest with ourselves and we still face consequences when we won't admit our own bullshit to ourselves, as something related to "character".

In any case, in our society, people rarely suffer outright - if you go bust, you file for bankruptcy and lower your expectations, maybe do a little clink if it's serious enough, you don't starve. Only in poorer countries are people threatened with the true consequences of error-creation, as in India or Africa where you can starve to death if you get things wrong and even if you get them right, in many places.

One digresses.

Events in SA, where the Liberal opposition is reaping the whirlwind of Dodgey gate, a slightly previous event strikingly, eerily similar to "Ute gate", contextualise what Hockey is really about.

Hockey is a likely leadership candidate in the later or nearer future and his stance can be read as a response to jockeying for position or safety within the Liberal party in the wake of destabilising Utegate. There are real world consequences for ill-considered events like Dodgy and Utegate.

For if the federal libs follow the SA events, which led to a leadership spill that worse still for them remained unresolved due to a tied vote, the real impact of Turnbull's disastrous handling of Utegate will become apparent as his position remains untenable thru lack of credibility.

Of course Hockey is not the first Lib since Howard's defeat to suggest a break from Howardism. Turnbull himself tried to do this after Howard stepped down, but was blocked by the denial-ridden Liberal Right plumping for Nelson to counter him. Hockey knows that the lazy Rightist clique controlling the inner workings must be overthrown before the Liberals can metamorphose and move forward. Issues like migration/refugees, middle class and corporate welfare and authoritarianism, now associated as negatives and with Howardism become open to scrutiny as negatives rather than positives, because these were already tried and often found wanting, during Howard's time.

The old guard want to cling to the old ideas and ways, but the realist new generation knows that Liberalism must be reinvented away from the old dogmas and resulting policy liabilities, even if that means upsetting the heartland a bit as to cherished old notions(prejudices?), and disturbing little empires within a currently moribund Liberal party. But for a while the Liberals risk tearing themselves apart, as two tendencies battle it out.

What's there at the moment is something aimed at defending entrenched privilege rather than the liberalism of improvement and growth, but the custodians for that see it as actually defending values against pragmatists and opportunists.

Actually, thinking on it, Labor is a de facto "liberal" party in the traditional sense - pragmatic rather than revolutionary, but still interested in change and willing to allow and legislate for change if not too disruptive. Of course Labor has it its negative right wing drones as well and ALP government is going to be similar to Howard's era, as to the playing out of conflict between opportunists and visionaries.

Simple, fair and liberating

My preferred tax system would be a voluntary personal income tax regime (not corporation). How would this work? Each taxpayer would nominate in advance what percentage of their true income (and there isn't any reason to falsify) will be paid in the coming tax year. The taxpayer could well opt for a rate of zero (obviously making one a non-taxpayer).

One rule, call it a trade off for freedom: The percentage (not gross figure) selected by every single taxpayer is placed openly in the public domain, for absolute public consumption.

A word for the doomsayers: human behaviour under the right conditions never fails to surprise.

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