ANY DOUBTS that Kevin Rudd and Labor have lost the plot completely when it comes to economic management will be dispelled once and for all today, as the government announces a plan to raid bank deposits; the measure is unnecessary, unfair, and will hit everything from salary payments to savings.
It’s one of the most despicable pieces of public policy ever devised, in my view, although — just like the rise in tobacco tax announced earlier this week, justified by fictitious figures on health costs — it shows just how poor the ALP is at managing the federal budget.
And if the perhaps terminal assault launched on the car industry recently didn’t convince people just how poisonous and incompetent any government led by Kevin Rudd would be, this “initiative” should dispel any doubt once and for all.
In a truly appalling move, deposits held in retail and commercial banks will be subjected to a government levy of 0.05%; this is being presented as an “insurance levy” to safeguard the banking system against another crisis in the world financial system.
Let’s call a spade a spade: it’s a raid on people’s money to plug the hole Labor has blown in the Commonwealth budget.
In a sign Rudd and Treasurer Chris Bowen know they’re on shaky ground with this, the levy isn’t due to kick in until January 2016.
But it also suggests that like Julia Gillard before them, they expect to lose the imminent federal election, and that this reprehensible cash grab is timed to start just as a first-term Abbott government is readying itself for re-election.
Like the hike in tobacco excise and the ill-conceived attempt to gouge $1.9 billion out of the car industry, there is no justification for this measure that corresponds with the excuses offered up by Rudd and Bowen to try to justify it.
But based on Labor’s record, anyone who thinks that the 0.05% levy is the end of the matter would be well advised to think again.
Like any taxation measure introduced by the ALP, the 0.05% rate will be used as a key tool to “sell” the measure to voters, with the tenuous argument that such a low figure amounts to diddlysquat.
But — and this is an old story, when it comes to Labor and its version of economic management — 0.05% will become 0.1%, then 0.25%, then 0.5%…and it will still represent, in the eyes of those running ALP, “diddlysquat.”
Which, of course, is cold comfort for everyone else.
If there were a legitimate need to institute recurrent sources of additional revenue to support the budget, the government would be better off making the case for a rise in the GST rate to 12.5%: something which (despite ALP propaganda and point scoring) is broadly based, comparatively equitable, and a growing revenue stream moving forward.
Labor, however, is not into making sales cases for its policies; especially not when it comes to unpopular initiatives, and certainly not when it comes to Kevin “policy on the fly” Rudd.
Instead, the government introduces a hotchpotch of inefficient money grabs that seek to patch holes in its numbers, but which create a raft of secondary problems as a result.
If the government wanted to use the banks to redress the budget, it could make the case for a windfall profits tax of the kind we have discussed in the past, taking perhaps 25% of bank profits above an annual threshold of, say, $3 billion per annum per banking group.
Such a measure would come with the likely benefit of driving down fees and charges for consumers and businesses.
But such a tax would take time to design, properly prepare and sell, and as is often the case with the Labor Party, preparation isn’t a consideration: they want the money yesterday.
And I make the point that there are tens of billions of dollars worth of recurrent spending measures that the Rudd-Gillard government has introduced, and which it will not touch: spending designed to buy off key interest groups or to assuage the likes of the Greens, and which should never have been implemented in the first place.
The Liberal Party will abolish them; Labor will instead shove its hands ever deeper into the pockets of everyday folk to pay for them.
It also raises the question of how the country can afford $8 billion per annum of additional spending on education, when this is the sort of thing required to pay for it.
In the end, every time people receive a salary payment, or put a little money aside; every time a business receives payment on an invoice or diverts money into an account to cover employee entitlements, the hand of Kevin Rudd will be there. Waiting. And snatching.
For those voters dumb enough (and yes, it really is unbridled stupidity we’re dealing with) to think Kevin Rudd is worth voting for because he’s so cool and hip, this disgraceful policy must surely shake them to their senses.
I think this frightful initiative should be the electoral death knock the ALP deserves, returning its support to somewhere near that recorded by Julia Gillard.
Then again, however, Rudd hoodwinked voters in 2006-07, and there is evidence he has done so again in the early days of his resurrection as Prime Minister in June.
Are people really stupid enough to vote for this man? And if they are, how much does it have to hurt them personally — and unnecessarily — for them to see the light?