Kevin 'Mini-Me' Rudd is no John Howard

Kevin Rudd copies key Coalition policies, but cannot avoid the fact that he leads an unrepentantly socialist Party with an ideology that will destroy the Australian economy built by the Coalition.

In recent weeks we’ve seen the emergence of the real Kevin Rudd as he does the rounds on radio stations and makes announcement after announcement. In the process, it’s become obvious that Kevin Rudd’s true political inspiration is … John Howard.

As Rudd has revealed key policies for the next election campaign, many of them appear identical to the Coalition’s - leading some commentators to suggest that Rudd is nothing more than “an echo of John Howard”. The Liberal Party itself now frequently accuses Rudd of aspiring to be a Liberal Prime Minister.

Consider the following Coalition policies that Rudd supports.

In the context of the Haneef saga, we saw Rudd’s Labor Party support the Coalition’s Anti-Terror Laws. Rudd even supported the government’s stance on the cancellation of Haneef’s visa and his detention under the new laws.

The Coalition’s position is also aped in Labor’s Federal-State relations policy. In its policy paper entitled “A Framework to Guide the Future Development of Specific Purpose Payments (SPPs): A discussion paper by the ALP Advisory Group of Federal-State Reform”, the ALP set out their plan to tie education funding to schools’ outcomes, such as improved literacy levels. As Matt Price commented, this is not radical stuff, except for the Labor Party.

Much to the dismay, nay, fury, of Greens’ leader Bob Brown, Rudd also spent time in Tasmania promoting his pro-timber policy.

It doesn’t stop there. Rudd supports Howard and the Coalition on its Indigenous reform initiative for the Northern Territory.

Likewise, Rudd supports the Coalition’s Murray-Darling water plan, contrary to the Labor Party in Victoria.

Rudd has abandoned Labor’s opposition to the privatisation of Telstra.

Rudd has even stated that he supports parent choice in the private school funding debate.

So that’s terrorism, state-federal relations, the environment, Indigenous policies, primary resources, privatisation, education. And there’s more!

Paul Kelly’s recent article in The Australian (“Winning ways of Kevin Rudd”, July 28, 2007) also pointed to a number of other policies where Rudd has adopted the Coalition Government’s line. Rudd is a self-declared fiscal conservative who “upholds an independent Reserve Bank of Australia, gave endorsement to the entire Costello May budget, supports Howard's migration levels and, like Howard, loves the Australian flag”.

No wonder Labor voters are getting excited; Rudd’s finally adopting the policies that made them vote for Howard.

Putting aside the unhappy plight of those voters who value an actual choice at the ballot box, if Kevin Rudd is just a copy cat version of John Howard, why not vote Rudd? Why not have the change of government that some voters feel is in the air? Why not give the new kid on the block a go?

In pointing out the similarities between Rudd’s policy agenda and the Coalition Government, the media has overlooked some key differences that put Rudd and Howard - Labor and Liberal - poles apart.

This is true both on specific policy grounds, and on the basic qualities that define the men and the parties. Let’s look at each in turn - specifics first.

Rudd has opposed a number of major Coalition policies and will shelve various Coalition reforms - most particularly in economic and tax matters.

Labor is eager to shelve industrial relations reforms implemented by the Howard Government. It will remove WorkChoices or radically scale back the reforms the legislation introduced.

No doubt, Rudd will also fail to continue the Coalition’s trade liberalisation. Comments made by Labor Party representatives and trade union officials after Ford Australia announced the closure of its Geelong factory confirm this. The Australian Manufacturers Workers’ Union demanded intervention by the PM to save jobs. Rudd responded with protectionist rhetoric, saying "I don't want to be prime minister of a country where we don't make things any more. And making things means still having a viable automobile industry in Australia."

The only way to do this would be to protect the economy, stop free trade and expose Australian consumers to higher costs of an inefficient home market or the burden of heavily taxed imports. You cannot claim to be in support of free trade and then expect government intervention to save jobs when faced with the inevitable costs of comparative advantage. But, true to his real ideology, Rudd’s first reaction was “intervene” and protect.

Rudd will no doubt raise taxes on the rich or even on corporations - he has to raise extra revenue in light of the spending pledges he is making. Australia already struggles to be competitive in terms of global comparative tax rates. Australians are among the most highly taxed people in the world. The Coalition Government does not get off “scot-free” on this issue. It has had more than a decade to implement tax reform that would bring this competitiveness. But it has done do some things well and is more likely than the ALP to take action in the future to produce a more competitive environment.

The Coalition has broadened the tax base and simplified taxes. By minimising the number of taxes, and lowering tax rates in general, the Coalition ensured that all Australians share a fairer burden in paying their share of tax.

By eliminating one of the tax brackets the Coalition was able to remove some of the disincentives to earn created by “bracket creep”. With a higher salary, individuals can enter a higher tax bracket which nullifies the financial benefit of the promotion. Why take on more responsibilities, if your remuneration is whittled away by being pushed into a higher tax bracket?

Having fewer tax brackets and a flatter system provides incentives for individuals to aspire to higher paid work, put in additional hours of overtime and seek promotion.

The Coalition also “broadened” the tax base by introducing the GST. A sales tax does not act as a disincentive on the productive capacity of individuals: it does not make it less attractive for people to earn more money.

GST shifts more of the tax burden on to the rich. It taxes the rich more because they spend more. While it is true that the GST raises the marginal propensity of low income earners to pay tax, in absolute terms the GST results in the wealthy paying more tax in absolute dollars because they spend more money.

Sales taxes like the GST are tax “best practice”. That’s why most economies in the world have one, usually taxing more than the 10 per cent charged in Australia (for example, the comparable tax in the United Kingdom - VAT - is charged at 17.5 per cent).

The Labor Party remained adamantly opposed to its introduction because of its alleged impact on low-income earners, even though income tax concessions resulted in a net benefit to low income taxpayers.

It must be admitted immediately that the introduction of the GST could have been better. It would have been a much simpler system, with less red tape, if it was introduced as the Coalition had intended it: a flat rate on all goods and services, no exceptions. But in order to get the Bill through the Senate, the Coalition was required to make a concession: it had to acquiesce to the Democrat Party’s demands for no GST on fresh food and vegetables. This adds significantly to the cost of businesses trying to work out the applicability of GST to certain goods, nullifying some of the benefit that tax simplification should have brought.  Nevertheless, the introduction of the GST was an important step forward in tax terms.

Moreover, with the introduction of the GST, the Coalition was able to give teeth to the States’ Grants Power under the Constitution. By having more money to throw to the states, the federal government could finally demand changes to the way things were being done (poorly) by the states. One big push was the scrapping of a host of duties and levies in individual states. Stamp Duty is still around, but - thanks to the Howard Government - we now no longer have silly taxes like debits tax, taxes on cheques, accommodation tax, or financial institution duty.

A host of other taxes are due to be phased out in line with the Commonwealth Heads of Government Agreement, despite frequent opposition at a state level by ALP representatives.

Stamp Duty and the legal issues it generates complicates transactions and deals undertaken by companies and individuals. Money that should be spent on generating economic activity, building, investing in new assets and creating more jobs is spent on tax and legal advice as companies spend time and money investigating the duty consequences of transactions. This is a waste. These taxes are not just a loss of money for those businesses; they are a loss of wasted business energy and time that slows down the real engines that drive our national and state economies.

Admittedly, this duty remains in place. But once, the negative effects of such taxes were much higher - because there were many more of them. Peter Costello pushed the timetable for phasing out state indirect taxes. He saw the benefit of simplifying and abolishing indirect taxes. The state Labor governments did not. They simply took credit for the reforms Costello pushed. Like Rudd now, state Labor governments have taken credit for the Coalition government’s architecture.

None of these reforms would have been pursued by a Labor government, even under Rudd. Even though he creates policy reflective of Coalition ideology, “when it comes to” important issues such as tax reform, federal-state funding issues and red tape, Rudd’s Labor Party comrades will always ensure that the party reverts to socialist principles.

Liberal Party attacks on Rudd as an “old-fashioned socialist” have had little media resonance (and sit oddly with the later accusation that he wishes to be (or wishes to be seen as) a Liberal, as pointed out above). Certainly, such accusations do not really reflect the current Rudd policy platform.

Rudd himself has both explicitly stated that he is and is not a socialist (he told the Australian Financial Review in 2003 that he's "an old-fashioned Christian socialist", and he told The Age in December 2006 that he has never "been a socialist and - never will be"). The flip-flop on something that one might think fundamental has attracted a little media attention.

Whether or not he is a socialist himself, due to the machine that put him where he is and nurtures his ambitions for power, Rudd possesses loyalties and obligations that mean that, at heart, he remains diametrically opposed to the Coalition and its values. As long as Rudd is the Leader of the Labor Party (with its left and right factions) and, ipso facto, representative of Union interests and all that is of the left, he will have to stay true to what is essentially a socialist agenda. Although in policy terms Rudd currently offers little to differentiate himself from Howard, in his fundamental outlook he remains completely different.

In a piece in the Australian Financial Review on November 16, 2001, while he was still a backbencher, he famously called on his party to “repeal the socialist objective” and adopt a Blair-esque new approach, a “Third Way”.

Significantly, the apex of this approach was Rudd’s attempt to remove socialism from the ALP’s constitution - an attempt that floundered in the face of resistance of his party and was ultimately abandoned.

A number of lessons can be drawn from this rejection of Rudd’s reform.

At its core, the Labor Party’s ideology is dominated by a fear of progress, coupled with skepticism of the importance of the individual in creating his or her own wealth that results in an interventionist, bloated government. It may not be obvious from seeing the clean-cut Rudd on TV, but by being the Leader of the Labor Party he is still beholden to the socialist interests of the vast majority of Labor Party members.

A Labor government’s central aim would be the redistribution of wealth, rather than the stimulation of growth. Those purposes necessarily conflict, and when the emphasis is on redistribution, economic growth is destined to suffer. This is ideology that, contrary to an overwhelming wealth of economic studies that prove free market economies grow at higher rates for longer and sustained periods of time, fears market forces. Its first instinct is to intervene. Its second instinct is to resist reform.

What’s the moral of the story? You cannot have your Liberal Party Policy cake and be a Labor Party comrade too. A socialist can never be trusted to deliver the real reforms needed to deliver continual growth to the Australian economy. And, despite his best impression, Kevin Rudd is no John Howard.