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Labor is Struggling for Relevance

The budget was a political statement designed to secure the middle ground and wedge Labor.

Coalition eyes will be firmly focused on Newspoll.

They will be despondent at the absence of a bounce since they were desperately hoping for a boost.

At the same time Labor will continue its brutal assault on the budget with the aim of contaminating it with the same “unfairness” as the 2014 budget.

The main weapon in the opposition’s armoury is the rejection of the increased Medicare levy.

Labor and the Greens have claimed they will vote down the proposal for a levy on all tax payers earning more than $22,000 for a single taxpayer however the legislation is not due to be tabled in Parliament until 2019 which is after the next election.

The issue of how the crossbenchers will vote on the levy is academic: most of them won’t be there after the next election.

Although the media has rushed to say that the levy is in trouble, sentiment is likely to change as the prospect comes closer that the NDIS will not be funded.

Labor hasn’t helped its cause by using spurious statistics to back its case.

On Friday Bill Shorten claimed that a single income family, comprising two adults and two children, with an income of $62,000 would face a cut of $1700.

Since the levy is 0.5% of total income it’s difficult to see how this computes: 0.5% of $62,000 is $310.

No doubt the $1700 represents something but the Opposition Leader has not said precisely what this is.

In the end this disingenuous use of numbers will find him out.

Similarly Mr Shorten has claimed that Labor will construct 50,000 dwellings but has given no details how this will be achieved or where the funds, and indeed the land, will come from.

He has also claimed that Labor will create 25,000 jobs in the private dwelling industry but has given no particulars on how this will be achieved.

More importantly Labor appears to have no overall economic plan.

As George Megologanis pointed out on ABC’s ‘Insiders’ programme over the weekend, the opposition could have declared victory over the government as policies it had pioneered were adopted by the Coalition.

It could then have moved on to show that it was a more prudent economic manager than the government, focused on economic security and growth.

Instead it has doubled down on its big spending policies and completely ignored the implications for debt and deficit.

In a strategy that gives the lie to its emphasis on fairness, Labor is relying on bracket creep to fund its promises.

This may result in a self-constructed trap if growth is in line with forecasts since the government could offer income tax cuts to offset bracket creep before the next election.

Labor would have to abandon its $22 billion in additional funds for education and its plan to end the Medicare rebate freeze immediately if it wanted to match the cuts.

Either that or it would have to be prepared to let gross debt go beyond the $1 trillion mark with no real prospect of it being reduced and with interest accumulating every year.

Labor badly needs a reboot away from focus group driven policies.

Its economic leadership team needs to develop an economic narrative that resonates with the electorate but also recognises that 80% of the jobs in a growing economy are generated in the private sector where only 10% of workers are union members.

Since the start of the Rudd – Gillard governments all net job growth has been in the public sector.

This is an unsustainable situation but Bill Shorten seems to think it is the norm.

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