STEPHEN Smith is happy. The Labor frontbencher with more portfolios than a modelling agency was expressing unbridled joy at Labor's response to Peter Costello's budget.
Usually reticent when speaking to the media, Smith finished his defence of Labor's decision to block $22 billion in tax cuts yesterday with five declarations that he was happy.
"I'm quite happy for the Australian community to be focusing on whether it is right for the long-term interests of the Australian economy to put such an injection into the Australian economy," he said.
"I'm quite happy for the Australian community to be focusing on whether a $6 a week tax cut for low and middle-income Australians, for seven million Australian workers, for eight out of 10 taxpayers, is a sensible thing to do at the same time as giving a small number of taxpayers, less than 10 per cent of the taxpayers, nearly 50per cent of the tax cut.
"I'm quite happy for the Australian community to be thinking about all the warnings of the Reserve Bank about skills crisis and infrastructure crisis and investments that needed to be made in those areas for the long-term productive nature of the Australian economy.
"I'm quite happy for the Australian people to be contemplating whether a Government that does nothing about skills and nothing about infrastructure is a good economic manager and in the long-term interests of the Australian people.
"And I'm also quite happy to make the point: the easiest thing politically for Labor to have done would have been to simply sit on our hands and not make those points," he finished.
When asked what his backbench colleagues thought, Smith dropped the happy line and simply said people had their own views. They certainly do and several Labor MPs were decidedly unhappy with the prospect of voting against tax cuts for even those on the lowest incomes. There is also bitter criticism within the parliamentary party of Labor's tactics and Kim Beazley's attempt to appear tough.
Just a week after the most frazzled budget in the history of the Howard Government was finalised and bitter relations between John Howard and Costello were destined to overshadow the budget, Labor's strategy to block the tax cuts had moved centre stage. Last night, only 24 hours after ruling out providing a detailed response to the budget, Beazley released a new set of tax scales and an infrastructure fund.
Beazley declared that he'd block the cuts because they were unfair and threatened an interest rate rise. Beazley wants bigger cuts for lower income earners and a lower threshold -- $100,000 compared with the Government's $125,000 -- for when people are considered high-income earners and pay the highest rate.
"If the Labor Party just supinely rolled over on this blatantly unfair tax package, a) they [the electorate] wouldn't get to know what it is they really confront, and b) it wouldn't be much of a Labor Party," Beazley told The Australian.
Beazley was determined to take tough decisions, make harsh judgments and regain economic credibility. Labor's response was about redefining Beazley and trying to claw back the Coalition's overwhelming lead in public opinion on economic management. It also harked back to the last election campaign and rests squarely on the prospect of a further interest rate rise.
Beazley wants people to think he's a different Leader of the Opposition from what he once was, simply agreeing with Howard on matters of principle and inconsistent on detail. Despite there being little evidence to the contrary, Beazley wants to project a tougher image with ticker.
On the economic side Beazley believes the budget's $22 billion tax cuts being injected into the economy will push up rates. But shovelling the same amount of money and an extra $2 billion into different pockets six months later hardly allays that risk. The Government had already phased in its tax cuts to ease the pressure on rates and drip feed a slowing economy.
For many Labor MPs who are not as happy as Smith -- indeed many of them are downright unhappy with Smith and his fellow rooster Wayne Swan for their role in devising the strategy and Beazley for taking their advice -- there was a clear political alternative: to attack the equity of the package without blocking the cuts. It is a long-term strategy with a doubtful outcome that involves certain short-term pain and that cannot change the Government's plan.
One thing it has undoubtedly done is take the focus off the Howard-Costello tensions. Two weeks ago in Athens Howard sparked off a leadership challenge process that is still under way by saying he could be beat Beazley.
As part of the process, inevitable polls were published showing Howard more popular than both Beazley and Costello. Polls also showed Beazley more popular than Costello, so that it could be argued that Liberal backbenchers would be more nervous about shifting into the Costello camp.
But this week has shown Howard has no intention of going soft on Beazley to prop him up, a tactic adopted during the leadership of Simon Crean.
Howard, like Costello, is going for Beazley's jugular. Howard and Costello may not be the best of friends but their professional relationship is sharply focused on staying in government, neither intends becoming the leader of the opposition. Just as they joined forces in developing the budget, they papered over differences to take advantage of Beazley's strategy.
Howard and Costello are almost contemptuous of Labor's response, convinced that Labor strategists are continuing their old, bad habits of talking to each other, not the public, and fighting previous lost campaigns. The Beazley faithful will be buoyed because he's showing ticker, while the critics fear years more in Opposition.
