NATIONAL AFFAIRS by Peter WestmoreNews Weekly
Mining tax repeal puts government back on track
, September 13, 2014
After weeks of patient negotiations during the winter recess, the Abbott government has secured a major breakthrough with most of the minor party senators voting to repeal the mining tax, one of the signature promises of the Prime Minister in the run-up to the 2013 election.
At that time Mr Abbott promised that, if elected, he would repeal the carbon tax, repeal the mining tax, stop the influx of illegal boat arrivals and, over the course of his parliamentary term, balance the budget.
Three of the four commitments have now been fulfilled, and if the Senate is co-operative, we can expect gradual improvement in the government’s budgetary situation over the next two years.
The breakthrough with the minor parties followed a major rethink by the Coalition over the winter recess. When the new senators took their places on July 1, the attitude of the Treasurer, Joe Hockey, was that because the Coalition was elected last September, the senators had to support his Budget.
The Senate has brought him back to reality.
The newly-elected senators, who include six cross-benchers — three members of the Palmer United Party (PUP), Senator Bob Day from Family First, Senator Ricky Muir of the Motoring Enthusiasts, and Senator David Leyonhjelm of the Liberal Democrats — have made clear that every vote will be negotiated.
The cross-benchers are not united, thus making the task of getting legislation through both difficult and unpredictable.
To secure the repeal of the mining tax, the cross-benchers demanded that the government abandon some of its revenue-raising plans in the budget.
These include its plan to scrap the low-income superannuation contribution and the income support bonus. Under the deal, the low-income super contribution will remain until June 30, 2017, and the income-support bonus will stay until December 31, 2016.
The government also wanted to abolish the School Kids Bonus, a Labor payment which was funded from mining-tax revenue.
Under the deal, the School Kids Bonus will now be means-tested, so that only families earning up to $100,000 will qualify, and it will remain until December 31, 2016.
The government also secured agreement from the cross-bench not to increase the employers’ compulsory super contribution from its current level until July 1, 2021, when it will rise to 10 per cent of employees’ wages. It will then increase annually until it reaches 12 per cent four years later.
All these measures have blunted some of the more unpopular features of the Hockey budget, and will be generally welcomed by the electorate.
Other unpopular features of the Hockey budget remain, including the introduction of the $7 Medicare co-payment and the deregulation of tertiary fees; but the main budget measures have now been implemented.
There is no certainty that the unresolved budget proposals will be adopted in their present form; but the Senate has shown flexibility when the government has shown a willingness to negotiate.
The budget compromise was bitterly attacked by both Labor and the Greens who have been made virtually irrelevant by the government’s willingness to compromise.
The deal is also good for the embattled founder of the Palmer United Party, Clive Palmer, who has been widely criticised for his parliamentary performance, while his business interests are under threat through legal action in the courts.
Mr Palmer, a self-styled billionaire, emerged from the negotiations as the deal-maker, and the man who protected working-class Australians.
The significance of the agreement between the government and the cross-benchers ends a period of political and economic instability, as it appeared that the government might face endless obstruction in the Senate, with no realistic prospect of ending it before the next election.
Although a government facing a roadblock in the Senate is entitled to call a new election, the numbers men on both sides consider that neither the government nor opposition has any realistic change of winning control of the Senate in the foreseeable future, so the stalemate will remain.
In these circumstances, there is no likelihood of an early election.
The agreement between the government and the cross-benchers on the mining tax indicates that there is no need for an early election, and that the differences between the government and a majority of senators can be settled through negotiation.