This election may well be decided by one dichotomy: delayed vs instant gratification
The Turnbull-led Coalition is chanting the mantra of ‘jobs and growth’ and promoting a concept which can be aligned to trickle-down economics. Bill Shorten and his Labor team are building on their credentials of finding solutions to the problems in education and health today rather than putting these on hold for a better tomorrow.
A prime example is the Coalition announcement in this month’s budget to freeze the indexation of Medicare rebates until at least 2020, which doctors have warned will lead to less bulk billing, whereas the Labor Party has declared that if elected, it will spend $12 billion to unwind this freeze.
While the Labor policy is populist, it will add to the current $150 billion annual health budget. Labor believes that a large part of the funding can be sourced from shelving the budget proposal of lowering large business company tax to 25% from the current 30%.
Lowering this tax rate will allow for the so-called trickle-down effect, the term which, according to some pundits, originated with US President Reagan. In a nutshell, tax breaks at the top end (individuals and companies) can spur economic growth. Companies pay less tax and then invest the monies in productive activities, which can increase economic growth, creating jobs and opportunities.
There will be a trickle-down effect to those in lower tax brackets. One can well see the logic in this, but the concept of lowering tax has been criticised by many who believe that it drains away the revenue from the Treasury to take care of the country’s needs today.
US President Obama has been openly critical of this theory which was put in practice by Ronald Reagan to stimulate the economy. But then believers in his theory advocate that this practice actually gave people an opportunity to earn more, as there was a large increase in production and employment.
However, it takes time to filter through the economy, and the question for Election 2016 is, is the electorate patient enough to give this theory a try, or does it prefer instant gratification of daily needs?
The challenge is that with today’s lifestyle trends, we do want instant solutions to problems. Labor will no doubt build on this need as the next few weeks of campaigning progress.
According to the polls, as to which way will the vote go on 2 July, currently it looks close. The latest Newspoll has both parties neck to neck, with Labor having narrowed the gap with the Coalition. At this stage, it seems that the Coalition is keener to “sandbag” its current seats rather than go to war over those which it feels may take away its resources from the ones in hand.
An example was the Prime Minister’s day in Western Sydney recently: he raced to the Coalition-held Lindsay seat of Fiona Scott and decided to then make his way to the Reid seat of Craig Lundy. That he drove through without stopping at the two Labor-held marginal seats of Parramatta and Greenway, was a clear sign of his strategy.
Growth and jobs is the mantra; sandbagging is the game plan.