In last night’s debate Kevin Rudd had the chance to land a major blow on Tony Abbott by exposing a significant Abbott weakness. But the prime minister blew it, perhaps because he does not fully understand how franking credits work.
Kevin Rudd, having missed a golden opportunity to score a winning blow, had to be satisfied with a result where everyone was claiming victory. Let me tell the story as I saw it.
When the debate came to the Coalition's paid parental leave scheme, Kevin Rudd came out of the blocks firing, correctly pointing out that retirees and those saving for retirement would meet a big part of the cost.
Tony Abbott came back with a very confused explanation about how the tax and levy would work.
At that point, Abbott was on the ropes ready to be punched. All Rudd had to say was: “Mr Abbott, you exchanged a levy for a tax which does not raise extra money from large corporate profits but will take about $1.5 billion out of the pockets of savers – it’s a raid on the older generation."
That was the truth and Abbott would have been forced to admit it, perhaps saying that it was fair to tax struggling retirees in the interests of the next generation. Not good politics.
Instead, Rudd lost the plot and took a new path claiming that the combination of the abandonment of existing measures and the new levy did not cover the cost. That was simply wrong. The sums do add up as long as you include the slug to savers via lower franking credits.
A relieved Abbott correctly pointed out that the sums did add up and told Rudd to “shut up” – to make sure the prime minister did not get back on track.
The fact is that when the Coalition announced the detail of its paid parental scheme neither the media (or at least the vast majority of commentators) nor the government picked up the fact that the bulk of the new money being raised was coming from retirees and those saving to retire.
I found myself in the amazing position of being the only person unveiling what shadow treasurer Joe Hockey had really done. (Retirees will pay for the Paid Parental Leave scheme, August 19).
That commentary was the most visited commentary I have ever written during the six years of Business Spectator. People were stunned by the truth.
After she read the commentary, finance minister Penny Wong jumped on the band wagon but the prime minister missed the opportunity to kick a goal in the debate. It was a close shave for Tony Abbott. By the time the third debate comes, it will be declared an issue that has already been debated.