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The long march of Fightback

By Stephen Kirchner - posted Tuesday, 13 December 2011


Twenty years ago this November, the Liberal-National Party coalition released Fightback, the most comprehensive and market-oriented policy platform ever taken to a federal election. Conventional wisdom holds that Fightback was a political folly that saw the opposition lose an un-losable election. Yet in the last twenty years, much of Fightback has been implemented and even enjoys bipartisan political support. Fightback was a failure only when viewed through the lens of short-term electoral politics rather than public policy.

The1993 federal election is still considered Paul Keating's greatest political triumph and John Hewson's spectacular failure. But this is to elevate personal political fortunes above public policy outcomes. Fightback's centerpiece, the goods and services tax, was supported by Paul Keating in 1985. It would be surprising if he now called for its repeal. Keating beat Hewson in 1993 but within seven years the GST prevailed and now serves to diminish Keating and his legacy.

Even with the advantages of incumbency, the Howard government's 1998 tax reform package was as politically risky as Fightback. It nearly cost John Howard both the 1998 and 2001 elections. Yet it made Howard's reputation as a reformer and few would argue with the economic legacy of the tax reforms introduced in 2000. As Paul Kelly has noted, if the Labor Party had implemented the 1998 tax reform package, the ABC would have been making documentaries about it for the next 50 years.

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For the public, if not for the ABC, the Labor Party's path from opposition to 'rollback' and finally acceptance of the GST contributed to perceptions that it was an opportunistic and cynical opponent of good public policy. The GST that was at the centre of Fightback and the Howard government's tax reforms ultimately saw off more Labor than coalition leaders.

For all the after-the-fact wisdom about Fightback, it was well received at the time of its release, not least by many in the press gallery. Major media outlets and many in the gallery thought the coalition would not only win the 1993 federal election, but more importantly, that it deserved to win. Opinion polls show the election was close right down to the finish. In the hands of a more capable politician than John Hewson, Fightback could well have been a political success. Unfortunately, policy and political skills do not always go hand in hand.

The contrast between the 1993 and 2010 federal elections could not be starker. The 2010 campaign was widely lamented as one devoid of policy substance. The electorate punished the government for its indecision and lack of direction, but the coalition offered little more than one-line slogans as an alternative.

The indecisive election result was surely not unrelated to this policy-free campaigning. The minority Labor-led government is now beholden to an unfortunate combination of rural protectionists, Greens and professional wowsers that has seen the government's primary vote collapse. Low risk, policy-free election campaigning has not made life any easier for the current government or the opposition.

The next federal election will likely be fought over the government's carbon and mining taxes. Yet it would seem unlikely the federal coalition will offer to do much more than repeal these new taxes and related policy measures.

An obvious alternative policy platform for the opposition would be to commit to legislating the bulk of the Henry tax review recommendations in its first term. This would put the government in the awkward position of having to shoot down its own tax review, a document already backed by the authority of Treasury. The government might have little choice but to match such a policy commitment, reducing its future policy flexibility and assuring a central place for tax reform on the agenda of the next government.

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Comprehensive tax reform would constitute a supply-side revolution for the Australian economy and dwarf Fightback and the 1998 tax package in its economic implications. It would almost certainly deliver a positive revenue windfall to the government because the dynamic benefits of tax reform are often ignored or underestimated.

Politicians have internalised the wrong lessons from Fightback and the 1993 election. The experience of the last 20 years shows that a willingness to seek election on the basis of major economic reforms can work politically as well as being good public policy.

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This article first appeared in ideas@TheCentre, the weekly email newsletter of the Centre for Independent Studies.



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About the Author

Dr Stephen Kirchner is a research fellow at the Centre for Independent Studies. He blogs Institutional Economics.

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