The 18 July 2013 edition of On Line Opinion published an article by Graham Winter, Prime Minister Abbott – can he really step up? Neither the article nor the 14 subsequent comments contained any mention of direct interaction with Tony Abbott. May I relate two stories that give some insight into whether he will be able to step up to the job? One is personal and the other is from a die-hard Labor supporter.
I worked for 25 years in the venture capital industry. While governments around the world have tried all sorts of different programs to promote entrepreneurship there is no doubt the most critical factor is the rate of capital gains tax set for both entrepreneurs and investors. Following the 1985 introduction of CGT by Hawke/Keating the rate for a successful entrepreneur was 50% which was just too high and way above the CGT rate for example in the USA of 18%.
Thus I will never forget November 23, 1998 when the first Ralph Report, A Strong Foundation, was released. I read it with increasing dismay as it was firmly directed at the big end of town. Ralph recommended that investors who owned shares in the 2000 publicly listed companies should get capital gains relief but those who owned shares in the 1.5 million private companies should not. Only someone who was a Pay As You Earn employee and had PAYE advisers could have drafted that report. In absolute frustration I went along to my local MP, Tony Abbot in January 1999 and said I need your help and explained the problem. Tony Abbot, sitting in his surgery on Manly beach, began by admitting that capital gains tax was not really a topic of interest to him. However after I explained the problem he was incredibly helpful and laid out a three point plan.
1. First he said I had to get an article in the Financial Review. He said Senator Alston had just written an article arguing for tax breaks for the IT industry and suggested I write one in reply.
2. This I managed to do. The second step was that armed with this article Tony Abbot said he would get me in front of a chief ministerial adviser. His comment was straight out of Yes Minister. Don't bother lobbying Ministers they will never remember you. You must get to a chief adviser. True to his word, Tony set me up with a meeting with David Hickman, who was the chief adviser to Peter Reith.
3. Tony then said at the meeting I had to hand over 20 page or so report arguing the case which would stand up to Treasury. He suggested that I get an Economics think tank to do it. I decided that I had had enough training in economics to do it myself. Also I was playing golf every week with an economics professor, Peter Abelson. Hence for about six weeks as we playing the back nine at Wakehurst, Peter would hone my arguments. I met with Hickman in April 1999 and handed over the report. He started skimming it and then after a ten minute read said this is very good and promised to make sure it is circulated in the right places.
4. In June 1999 I was then invited to participate in conference organised with Alston's office and Treasury. I actually participated on the telephone. It lasted three hours and I would say two hours were consumed with me arguing with the three Treasury representatives. They finally said would you give up averaging and indexation for major cut in the CGT rate. I said without question and you know it will be the right decision as the accountants will immediately start complaining due to the loss in fees. The rest is history. The Howard government in September 1999 introduced the new CGT regime replacing that introduced by the Hawke government in 1985.
5. I will not claim all the credit for the change. Dr Paul Twomey, an adviser to Alston, was a tremendous lobbyist and once I had converted him from being an IT rent seeker, was instrumental in lobbying through the change. His reports that he kindly asked me to read and vet were excellent. On the other hand I must confess there is something very good about a country allows grass roots individuals the ability to argue and push through major structural economic reform.
For the record in 2006–07, CGT raised $17.3 billion a significant increase on the $4.6 billion in CGT raised in 1998–99, the year before the reforms. In addition even though the dot.com crash occurred in March 2000 there has been a significant rise in entrepreneurial activity in Australia, although of course there has now been a recent and significant decline in business confidence.
The second story involves a professor of Health Economics who is part of an independent group who are charged with the final recommendation to the Minister for Health of the percentage of benefits to be paid by the Federal Government for new drugs and medical procedures. As you can expect the industrial lobbying in this area is intense. This person has now had personal interactions with a dozen Federal Ministers for Health including Tony Abbott, Minster for Health 2003-2007. This person is a very committed Labor supporter but the comments about Abbott were revealing:
"He always read his brief, he always asked intelligent questions and listened, but most mercifully he always made decisions. It sticks in my throat to say it but I have to admit Tony was the best Minister for Health I have worked with."
Winter in his article quotes the golden rule of psychology performance psychology; the best predictor of future performance is past performance. My view of politics is that you campaign in poetry and govern in prose. Kevin Rudd's performance as Prime Minister has been publicly described by his ministerial colleagues as woeful and indeed that was the reason given by Gillard for his removal.
Abbott on the other hand served as minister in the Howard Government for 11 years so at least as some idea of how you run a competent government. And he appears to have performed competently.
Also could I please clear up one mistake yet again repeated in the Forum comments? There is no question that Abbott defeated Turnbull by only one vote to become party leader in 2009. However post every election the Liberal leadership must be put to the vote. Post the 2010 election, Abbot was elected unanimously, something neither Rudd nor Gillard is able to claim.
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