13 September 2017

The people who quote Hawke and Keating at the modern ALP are the same voices who tried to frustrate them at the time.

If you go into the local pet shop, chances are the resident galah is talking about the Hawke-Keating legacy.

These days invoking the Hawke-Keating legacy is often invoked to criticise Labor for having lost its way. "The Labor Party should get back to Hawke-Keating" opine people who don't like Labor's current agenda.

Let me be clear. I am enormously proud, Labor is enormously proud of what Bob and Paul achieved for Australia. And the Hawke-Keating model does provide a gold class standard in changing the economy, bringing people with you and winning continued mandates for more change.

I just wish more people who invoke the Hawke-Keating legacy understood what it is. The fact of the matter is that many of the allegations made against Labor now were also levelled at Hawke and Keating. In many instances, the same organisations that are critical of Labor for not keeping to the Hawke-Keating agenda were critical of Hawke and Keating back in the day.

Hawke and Keating opened up the economy. They knocked down economic barriers and set up a quarter of a century of economic growth.

They also set up new social standards and important institutions like Medicare and superannuation against the vituperative opposition of the Liberal Party.

As Keating has described the mission, it was: "Labor's national ambition for Australia was a world-competitive economy underpinning an egalitarian and inclusive society."

These days, it's fashionable to invoke Keating's economic management to rail against Labor's plans to make the tax system fairer and oppose the government's corporate tax cuts. When Labor is these days accused of being "anti-business" it is common to hark back to the good old days of good relations between business and Keating. This is to fundamentally misunderstand and misrepresent what Keating was about.

Keating has made clear inThe Australian Financial Reviewwhat he thinks of the Turnbull government's unfunded corporate tax cut. He's not impressed. When Keating cut corporate tax he paid for it by closing down loopholes, something this government is singularly incapable of doing.

And Labor's plans on negative gearing, capital gains, family trusts and managing tax affairs are all entirely in keeping with a Keating approach to tax. In fact, they are a continuation of his legacy.

When Keating saw a tax break that was unfair and only available to some not all, his instinct was to eradicate it. And the political fights that followed were ferocious. In many senses this is what a continuation of Keating style approach is about: not shirking difficult tax reforms in the national interest, as much as vested interests may protest.

When Keating decided it was wrong that executives could claim long lunches and boozy afternoons as a tax deduction, he eradicated the deduction. The nation's restaurants weren't impressed. They quite enjoyed the taxpayer subsidy. There were dire warnings of the end of the restaurant business. "Don't let Keating stop you eating," said signs that went up on restaurant windows across the country. He persevered and prevailed.

Fringe benefits tax and capital gains tax was another example. Naysayers warned that these taxes were anti-business and would kill growth.

A perusal of the newspaper editorials of the time is instructive. A few quick examples will suffice. "Tax package bias against business" railed an editorial inThe Australianin September 1985 arguing that the Fringe Benefits Tax and Capital Gains Tax were reflections of a "class-based opposition to private enterprise from the Australian Labor Party has not been able to free itself". Sound familiar?

Similarly, when you hear the Business Council call for a return to Keating style reform, it pays to remember what they said at the time. Bob White, then head of the BCA argued that FBT and CGT would increase business costs and reduce investment.

Alan Wood, a senior businessman of the time argued that Keating's approach to tax reform"is widely regarded in the business community as anti-business".

Hawke and Keating did big and important things. Such things are always controversial. Those who like things the way they are will always evoke all sorts of arguments in support of their case.

But next time you hear someone invoke the Hawke-Keating legacy, look closely at what they are saying. There's a fair chance they or their predecessors railed against the very people they invoke now.

I will always defend Paul Keating as the most significant economic reformer in our modern history. The 26 years of uninterrupted economic growth we have experienced are in no small part due to hard decisions made by Hawke and Keating. But I won't stand by and watch their legacy be redefined by vested interests.

This piece was first published in The Australian Financial Review On Wednesday, 13 September 2017.