When a government has to negotiate with crossbenchers there is often
an element of humiliation involved, especially if that government
suffers from a touch of “born to rule”.
Governments think of themselves as having the right to get on with
what they want to do, only to often find they need to kowtow to those
who received just a fraction of the vote.
With so much of this year’s budget up for grabs and the Senate
crossbench packed with players enjoying both profile and power, the
wheeling and dealing is a circus for the public and a high wire act for
Treasurer Joe Hockey.
How ministers must (in private) curse having to go as supplicants to
Clive Palmer. Hockey turned up for dinner with the PUP leader on
Tuesday. Education Minister Christopher Pyne had lunch on Wednesday.
Health Minister Peter Dutton will see him on Thursday.
Is progress being made? Reading the Palmer signals doesn’t get any
easier over time. He seemed to be hinting at some flexibility over the
Medicare co-payment plan on Wednesday; on other occasions he’d said the
Palmer United Party senators would not vote for it under any
Hockey – coming to the task late and figuratively speaking holding
his nose much of the time – has, in begging mode, done his rounds of the
crossbenchers, travelling the length and breadth of the country.
There’ll be more work ahead. In a few weeks, the results can be audited.
But on Wednesday the Treasurer was in trouble with a clanger as he
tried to mount an argument for the proposed restoration of the
indexation of fuel excise in equity terms.
“The people that actually pay the most are higher income people,” he
said. “Yet the Labor Party and the Greens are opposing it. They say
you’ve got to have wealthier people or middle-income people pay more.
Well, change to the fuel excise does exactly that. The poorest people
either don’t have cars or actually don’t drive very far in many cases.
But they are opposing what is meant to be, according to the Treasury, a
This was dismissive politics; an inaccurate description of the tax; and a use of numbers that doesn’t reflect the full picture.
After howls of outrage Hockey put out a note to back his argument. It
showed average weekly household expenditure on petrol in absolute terms
increasing with household income thus: lowest quintile, $16.36; second
$27.60; third $38.55; fourth $47, and highest $53.87.
“Based on census data, households in relatively disadvantaged areas
are less likely to own motor vehicles than those in relatively
advantaged areas. Where motor vehicles are owned, households in
relatively disadvantaged areas are most likely to own only one car
whereas households in relatively advantaged areas are more likely to
have two or more motor vehicles,” the note said.
But these figures don’t tell us the relative burden of petrol costs,
and Hockey was quickly challenged on Twitter by more relevant figures.
News Corp’s national economics editor Jessica Irvine tweeted
the numbers for spending on petrol as a percentage of household income,
by quintile, showing that poor households spent more of their income on
it than those better off: Q1- 4.5%; Q2-3.5%; Q3-2.9%; Q4-2.3%; Q5-1.3%.
Greg Jericho, who writes for Guardian Australia, tweeted a graph
showing the percentage of annual household expenditure spent on petrol:
it was higher for the poor than for the top income bracket. Also, and
significantly, the second lowest income quintile (that is, relatively
modest earners) had the highest percentage.
In its submission to the Senate inquiry on the legislation the
Australian Automobile Association said: “Research indicates that the
people who use their cars most frequently are in the outer metropolitan
areas and rural and regional areas where there are lower incomes, less
jobs, and little or no access to public transport.
“The AAA is concerned that individuals in these areas will bear the highest cost increases of indexation changes.”
There are sound arguments for restoring the indexation of fuel
excise, not least environmental ones, as well as the need for a source
of revenue that grows. Also, the slugs to households will be small,
although mounting up over time.
It will be unfortunate if the Senate refuses to pass the measure.
Indexation was only abolished because John Howard was politically
embattled in 2001.
For all that, there is no getting away from the fact that it is a
regressive tax, and Hockey’s blunt-edged defence was just another
misstep in a budget sales job that has been full of them.