A Class Divide That’s Too Wide

A Class Divide That’s Too Wide

Sometimes political parties create their own narratives, and sometimes those narratives are created for them. Right at the moment Bill Shorten’s Labor Party is doing a good job at creating the Coalition government’s narrative.

This week’s announcement by the Labor Party that if it wins government the reductions in the corporate tax rate for companies with a turnover of more than $10 million will be repealed, hands to Malcolm Turnbull not just one powerful narrative, but two.

The first narrative is of course that Labor is attacking “aspiration”. That’s true and it’s a line the Prime Minister and his ministers are using.

Big business has few friends these days on either side of politics. In any case big business doesn’t do much to help itself. The fact that big business accounts for 65 per cent of jobs growth in the private sector since 2010 isn’t often talked about. So Labor’s opposition to tax cuts for large companies is misconceived, but at least the politics Labor’s playing is understandable. The effects of corporate tax cuts are contested and they don’t have the immediate impact on individuals of cuts to personal tax rates. Indeed in economic and political terms there’s a good argument that the Coalition should have made personal income tax reductions, not cuts to corporate tax, the centrepiece of the government’s economic strategy.

Opposing tax cuts for small and medium-size businesses is an altogether different proposition. Not many Australians can in all honestly see themselves running and owning a big business. But unless they want to be a public servant, many Australians can see themselves as one day owning a small business.

A survey of 1000 Australians between the ages of 16 and 25 commissioned by the IPA in 2016 found that 60 per cent of young Australians were interested in starting their own business, 23 were not interested, and 17 per cent didn’t know.

Symbolism counts

Most voters would be hard-pressed to say what is the current tax rate on small and medium-sized businesses and what the Turnbull government has cut it to. But unless the Coalition is completely inept, it can be assumed that by the time of the federal election most voters will at least have an inkling that Labor will increase taxes on small business.

What counts is the symbolism of Labor “going after” small business and everyone who has ever aspired to a small business of their own.

Potentially even more powerful for the Coalition is the second narrative Labor has given birth to – namely the narrative of division. By saying it will increase taxes on businesses in the way it has, Labor is going one step beyond the traditional “class war” rhetoric. Class wars are traditionally between the rich and powerful and the poor and downtrodden, with Labor usually claiming to be on the side of the latter. On the scale of poor and downtrodden of popular perception in Australia, small business ranks just behind farmers.

The ALP isn’t only dividing up Australia between big business and small business, it’s dividing the people of the country up into two groups – those who work in a business (either big or small) and those who don’t. The aspirant for Shorten’s job, Anthony Albanese isn’t a fool. Albanese knew exactly what he was doing when in a speech a week ago he said Australians should reject community “discord” and “division”.

The irony of Labor’s position is that it says it wants to spend the money it will get from increases taxes on business on health and education. And opinion polls show the public want more money spent on health and education. But part of the reason the public like health and education spending is because such spending is perceived at its core as building a stronger community and sense of social cohesion, which puts Labor at risk of trying to communicate two messages that contradict each other.

The ideal of “mateship”, however it’s precisely defined, is part of the national psyche. If mateship is anything it’s about sticking together and sharing some common values. Labor’s current rhetoric of division and difference strikes at the core of the notion of Australian mateship.

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