The old Rudd is back

The prime minister's Northern Territory tax announcement showed that Rudd hasn't changed. It caught even his closest allies completely by surprise.

One single incident has shattered the confidence of Kevin Rudd’s closest supporters about his ability to be prime minister for the next three years. They would never admit it, but deep down they now want to lose this election in the national interest.

Strangely this ALP confidence-shattering incident comes as many Labor people now believe Tony Abbott has fallen for a carefully set trap. At last they can really land a big blow.

The confidence-shattering ‘incident’ arose when one of Kevin Rudd’s great ministerial supporters picked up the phone to take a call from the prime minister.

For the first time he learned of the Rudd plan to introduce a lower company tax rate in the Northern Territory. This had never been discussed by cabinet and was a complete surprise to the close Rudd ministerial supporter and most ministers. The Rudd supporter was given the task of spreading word of Rudd’s looming NT tax policy announcement to the rest of the cabinet.

This was the Kevin Rudd they had sacked in 2010. This was the Kevin Rudd that Kevin Rudd had so faithfully promised would not return. He had said his time on the backbench had taught him a lesson he would never forget. If he became prime minister again he would be a team player – not a one-man band.

If Rudd wins the 2013 election the ministers now secretly fear they will have unleashed three years of more chaotic decision-making on the Australian people, unless they can somehow bring Rudd under cabinet control. They can’t sack him again.

And yet just as the 2013 Rudd returned to his old ways, cabinet’s carefully set trap for Tony Abbott seemed to be working. Abbott has no detailed motor industry plan. The government, led by industry minister Kim Carr, cajoled the unions into agreeing to an effective pay cut and a change in working arrangements. Then the government’s proposed motor industry assistance level was lifted and buying support for Australian-made cars increased.

Abbott's response was a Rudd-like policy on the fly. He said that he would save the motor industry by leaving in place the current fringe benefit tax motor concessions. Unfortunately, that does not help Holden because for some reason the lower-paid people who use the FBT concessions do not buy Holdens. However, it would be of some help to Ford (which is closing) and Toyota.

The Australian motor industry is suffering from a series of past anti-motor industry policies including free trade agreements with Thailand and the US which are not free trade when it comes to exporting Australian cars; tariffs that are extremely low; and of course the higher dollar caused by the mining boom.

The motor industry employs about 45,000 people directly and a total of between 100,000 and 200,000 people owe their living to the industry. Abbott is in grave danger of having all of them retrenched, particularly as he is 'doing a Rudd' and making mistakes via policy on the fly. Add those potential 100,000-200,000 job losses to the public servant removals and we have big unemployment boosters coming from the Abbott camp.

In the next debate Rudd should not need notes to land a motor industry blow. That blow will not alone change the result of the election but will raise ALP morale, leaving aside the shock Northern Territory announcement.

InvestSMART FORUM: Come and meet the team

We're loading up the van and going on tour from April to June, with events on the NSW central & north coast, the QLD mid-north coast and in Perth, Adelaide, Melbourne, Sydney and Canberra. Come and meet the team and take home simple strategies that you can use to build an investment portfolio to weather any storm. Book your spot here.

Want access to our latest research and new buy ideas?

Start a free 15 day trial and gain access to our research, recommendations and market-beating model portfolios.

Sign up for free

Related Articles