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Disrupting the dominant narrative

By Corin McCarthy - posted Monday, 3 April 2006

As John Howard reflects on his 10 years of policy domination he can name the cause: low interest rates. At no time in living memory has a government dominated the centre ground of economics, commanded such devotion from the middle and upper-class suburbs, and become the embodiment of national prosperity like the Liberals under Howard. This is the commanding narrative on the News Limited press, the television stations, and even among many Labor supporters. So what can Labor do to disrupt the dominant narrative?

It can hope for more AWB scandals (which help), Iraq war disasters (which help - so long as ANZUS is not compromised by threats of troop withdrawal), even an overstepping of the reform agenda on industrial relations by the government (which helps no-end!), but most of all it must create an economic policy ensuring future Australian prosperity.

The Labor shadow treasurer Wayne Swan needs to claim the legacy of low interest rates. Labor can disrupt the dominant narrative if Swan champions the decisions taken in the 1980s, confirming Labor as the party that delivered the nations low interest rates and competitive advantages over the past 16 years. Swan also needs to position Labor as a party of fiscal and economic competence with an ability to make more hard decisions to ensure future prosperity.


Without this Labor has linked itself explicitly to the high interest rates of the 1980s, and the recession of the early 1990s, without receiving any reward for the tough decisions taken at the time. Because of this, Labor cannot find the trust from - or an economic message for - Australia.

As Peter Costello and Wayne Swan consider the May 2006 Budget, both genuine tax reform and genuine tax tactics will be considered. Swan must make a narrative in the next few weeks that Costello is merely a political tactician on tax. Namely, that "Costello is a weak treasurer biding his time in office, not the man creating future prosperity through genuine reform". This is a most damaging line for Costello who has consistently championed himself as the government's chief asset for keeping interest rates low and expanding Australian prosperity since 1996. This is the narrative that must be challenged head on.

Importantly News Limited is yet to be convinced by Costello. He may be written off as a man who is wasting his chance if he does not act. Indeed, when Howard is discussed in glowing terms, Costello is often compared to Menzies by The Australian editorial staff - as sitting on a "prosperity gift" and not creating the next round of productivity lifting reform.

With Labor arguably the architect of the modern Australian economy, with the deregulation of the finance sector, reductions in tariffs, promotion of educational access through HECS, this is a tough but appealing mix of competence and courage that can equate and be sold as the real improvements in Australian economic life. The public need to be convinced that Labor is responsible for delivering Australia's new wealth and current low interest rates. They need to be encouraged and relieved that a change of government will bring renewal and assist Australia in meeting the challenges of the 21st century.

Labor's narrative on tax is difficult though. The 1998 election has confirmed the dominant Howard narrative for many. Howard and Costello made a tough decision on tax, and the economy has prospered in spite of the problems with the initial introduction of the GST. Beazley for his part is scarred by the image of his failure to deliver a genuine tax reform package. This moment confirmed his weakness for the public and his lack of judgment over economic policy.

Whilst GST politics was delicately balanced in 1998, viewed from 2006, Beazley was clearly wrong to advocate for the minimalist position taken at that election. If he had instead claimed a credible, better, and fairer broad-based tax reform position, it would have been the superior long-term agenda.


Flowing from an eight-year policy failure, Mark Latham's signing of a big "cheque" guaranteeing that interest rates would remain low only promoted Labor's lack of substance in economic policy in 2004. Amazingly, the Reserve Bank Governor who could have provided a forthright view did not, and the Liberals ran the most effective scare campaign in Australian history. Latham needed to allay the fears of indebted Australians with a stronger message of credibility based in substance. And yet he did not have credibility for this position to argue for trust in him alone.

As Labor considers the May Budget it must consider whether it can afford mere tax tactics like 1998 or 2004. It must advocate similar prescriptions to Craig Emerson calling for genuine structural reform of the tax system to ensure that rates do not adversely affect the welfare to work transition and also reward upper middle Australia on the 42 per cent tax rate. This is the rate that is conclusively unfair and rewards the transition from employment to consultancies via tax trusts and limited companies paying lower taxation rates.

As the May Budget approaches, can Labor break the dominant narrative stretching back to 1998? The current view is that Labor is weak on making tough economic decisions for long-term stability and prosperity. Can Wayne Swan establish his credentials for a new round of tax reform and help Beazley overturn the dominant narrative? Can Swan deliver and become the next favoured leader? Is he up to the job?

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About the Author

Corin McCarthy was an adviser in opposition and government to Craig Emerson MP. He also advised Labor’s 2007 election campaign on small business issues. He has written widely on these issues in The Australian and On Line Opinion. He currently works as a lawyer in London advising on major infrastructure projects. These views are his own.

Other articles by this Author

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Related Links
Election 2004
Federal Budget
Peter Costello Homepage

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