What would Tony Abbott have done on GST reform?

The conventional wisdom is that leaders in strong positions can take on risky reforms, but big issues can also help those in tight corners.

Almost 20 years ago the Howard government decided to introduce the GST even though during the 1996 election campaign John Howard promised that he would "never ever" revisit the question.

Now Malcolm Turnbull appears to have quashed the likelihood that his government will entertain the prospect of either raising the rate or extending the coverage of Howard's 10 per cent GST.

There may be some good political reasons for Turnbull's decision given the furore likely to erupt in an election year if he did announce GST reforms. After all not only the Labor opposition but other powerful figures like Paul Keating and Peter Costello oppose the move.

There may also be some good intellectual reasons for opposing a rise in a regressive tax like the GST. Turnbull does have some economic advice on his side.

But beyond these reasons the future of any GST reform raises interesting questions about the broader dynamics of the politics of reform. On the face of it the Turnbull government is well-placed to introduce potentially risky reforms because it has a big lead in the polls and most commentators believe that it is a near certainty to win the next federal election due this year.

You would think that it is just this sort of electoral situation which would free a government to think big and to be especially bold regardless of the consequences. But think again.


The long history of the GST in Australian politics suggests the opposite. Keating was unable to persuade the Hawke government to introduce a GST in the 1980s despite the government's relatively strong political position. Keating, campaigning superbly, later won the apparently unwinnable 1993 federal election against John Hewson by turning that election into a referendum on a GST. That explains Howard's 1996 election promise not to go near a GST ever again.

Howard had a smashing electoral victory on that occasion. But he did not subsequently introduce a GST from a position of strength but of weakness.

It is easy to forget just how great Howard's fall from grace was during his first term. He very nearly lost office and was not far away from becoming a one-term prime minister.

The point is often lost. Howard introduced the GST not because he was in a strong enough position to do so or because he was guaranteed re-election even if it cost him some votes and some seats. The reverse was true. Howard was in a weak position. He introduced the GST because he was facing defeat unless he did something noteworthy. He needed a big idea to capture the imagination of the people, an idea which would show Australians that he was fearless and brave.

It is often said that Howard is the only prime minister who has won an election on taxation reform. In this version of history he won despite introducing a new tax. In fact he won the 1998 election because he introduced taxation reform. It was the big policy innovation that saved him, despite losing the popular vote and suffering a big swing against his government.

History now records that Howard never looked back. He eclipsed Bob Hawke's record and became the second longest-serving prime minister after Robert Menzies. But it could have been so different.

The story of the introduction of the GST provides important context for the current debate. It even raises the counter-intuitive possibility that Tony Abbott may have been more likely to raise or extend the GST than the new Turnbull government. We will never know, of course, but the possibility is intriguing.

Like Howard the Abbott government was in big trouble. His crisis came about for many reasons and was probably more terminal than Howard's situation. Nevertheless there were some similarities and Abbott may have been attracted to having one big, idea-based campaign to dig himself out of the hole he had dug for himself. He experienced the original GST debate as a junior parliamentarian and parliamentary secretary and was personally close to Howard, one of his mentors.

This counter-intuitive possibility may be dismissed as just idle speculation and/or for those opposed to an enlarged GST as just another reason that the nation is lucky that Turnbull replaced Abbott.

But for observers of political leadership it is thought-provoking. There is a conventional wisdom that big reforms are the product of governments and leaders in a strong position.

This wisdom is expressed in different ways. Sometimes advocates for particular reforms excuse political leaders for inaction because they are on an electoral knife-edge. They hope that once the leader is in a stronger position they will act. Sometimes this is called the second-term agenda as if doing something big during the first term is dangerous.

Perhaps this gets things the wrong way around and neglects the alternative possibility that the way off an electoral knife-edge is to take hold of leadership of big and controversial issues. Howard acted during his government's first term after all.

There are many ways of looking at the "bigger GST" question. Any political leader must first believe in it to be willing to make it their issue. It is a potentially dangerous issue, too, and Bill Shorten is happy to make opposition to it the centrepiece of his Labor election campaign.

But like all big issues it combines danger with opportunity. Howard thought the opportunity outweighed the danger and in his parlous circumstances his judgment turned out to be right. It is this element of opportunity that should be part of any evaluation of the present political situation.

John Warhurst is an emeritus professor of political science at the Australian National University