Liberal Business

Tax reform is the clearest possible sign of the Howard Government’s determination to do what’s right rather than what’s politically popular. The GST is not the product of ideology but of necessity – which is a perfectly acceptable conservative justification. The burden of taxation had to shift from income to spending if 50 per cent marginal tax rates for modest income earners (and even higher effective rates for people caught in both the tax and welfare system) were ever to come down. Both sides of politics now accept that the GST is necessary. The difference is that the Coalition believes that the dividend of tax reform should be income tax cuts while Labor believes that tax reform justifies higher spending and a bigger (and more unionised) public sector.

Since 1996, the overall tax take has remained more or less steady as percentage of GDP despite the introduction of the New Tax System. Importantly, government spending has fallen from 25.9 per cent of GDP in 1995 to 23.3 per cent now to almost exactly balance taxes raised – and this 2.6 per cent reduction in the income gap constitutes a $15 billion turnaround in public finances.

Despite a media tendency to revel in bad news and pander to the "poor little me" syndrome, the Government seems to have fostered a greater sense of national unity and pride. The liberation of East Timor removed a quarter-century-old sense of shame and repaid a debt of honour. Australia’s military involvement was minor compared to that in two world wars – yet it was the first time Australia had assembled and led an international military force. No-one told us what to do and no-one held our hand. The UN sanctioned the operation because Australia persuaded the international community that it was necessary to stand up for the common decency of mankind.

The Government’s readiness to assert Australia’s national interests and values, is starting to dissolve the widespread feeling (particularly among more conservative people) that "nothing makes sense any more". Far from damaging our standing in other countries, the Tampa affair has demonstrated that we are sick of being a soft touch and having our decency exploited by people smugglers. The Australian people seem to understand better than "opinion formers" that it’s impossible to preserve national sovereignty with a defacto immigration policy: "if you can get here, you can stay here". As for the "blame Australia" brigade, trying to be compassionate with other people’s money and other people’s rights looks more like moral vanity than Christian charity.

In important respects, this has been a conservative government as well as a liberal one. There are good "liberal" arguments, for instance, for giving parents more choice about their children’s schooling and mothers more choice about whether they go back to work. Still, this encouragement of religious schools and recognition of stay-at-home mums is also an acknowledgment of enduring social values. The liberal argument for over-turning the Northern Territory’s euthanasia law was that human beings should never be treated as disposable commodities. But for many, the chief problem was the Territory’s cavalier disregard of our culture’s most powerful moral and ethical commitment to the sanctity of life.

This Government has been more mindful than its Coalition predecessors that we are the Australian custodians of the conservative as well as the liberal political tradition. We respect values other than our own and will do our best to accommodate interests outside our natural constituency but, as Ronald Reagan once said to the Conservative Political Action Conference: we will never forget how important it is to "dance with the one that brung ya".