Liberal Party leadership challenger Angus Taylor was the architect of the Coalition’s worst ever election defeat that copied a politically fatal error last made under Labor’s Gough Whitlam almost 50 years ago.
As shadow treasurer, he opposed Labor’s pre-election Budget plan to trim marginal tax rates for the lowest-income earners above the tax-free threshold, on $18,200 to $45,000.
The Opposition’s position was so politically risky that Seven’s election debate moderator Mark Riley asked then Opposition leader Peter Dutton in April last year if promising to repeal tax cuts was “crazy brave”.
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“I don’t know of any leader who’s ever done that. Is that crazy brave or just crazy?”
In fact, Whitlam made the exact same “crazy” political blunder in his second incarnation as Opposition leader in 1977.
In Gough’s case, two years after the Dismissal, Labor campaigned to repeal income tax cuts so it could pay the states to get rid of payroll tax – something that seemed academic to most voters.
Liberal prime minister Malcolm Fraser won a second landslide victory, campaigning on the devastatingly effective slogan “fistful of dollars”.
Newspaper ads had featured an empty hand with the phrase: “Labor gives nothing”.
On the other side, another hand holding those original paper $5 banknotes was accompanied by the words, “Liberal gives tax cuts”.
The Liberal campaign noted that ACTU leader Bob Hawke and popular Labor premiers — Neville Wran from NSW and South Australia’s Don Dunstan — were embarrassed.
“These men must now deplore Mr Whitlam’s policy of taking money away from Australia’s workers and putting it in the pockets of large companies,” Fraser told party faithful in Melbourne.
Chris Hurford, the largely forgotten shadow treasurer behind Labor’s worst-ever Federal election defeat from Opposition, was demoted after that. He was never seriously considered as a party leader.
Yet on the Opposition side, Taylor is now the frontrunner to replace Sussan Ley as Liberal leader, despite being behind a policy that saw his side end up with less than half the seats of Labor.
That May 2025 catastrophe, against a first-term government, mirrored the scale of Whitlam’s electoral drubbing in December 1977 and destroyed the Liberal Party’s traditional political strength of being about lower taxes.
It’s true that most workers would only be getting 70 cents a day from July 2026, with Dutton’s election debate spin — talking down an extra $268 a year — hardly resonating with voters.
This would occur as the marginal rate for those on $18,200 to $45,000 was cut to 15 per cent, down from 16 per cent.
The marginal tax rate is going down to 14 per cent from July 2027.
But as the elections of 1977 and 2025 demonstrated, opposing even modest income tax relief, that will benefit low to middle-income earners, is political death.
In between, former Labor leader Kim Beazley in 2005 opposed Liberal prime minister John Howard’s income tax cuts because he wanted to propose an alternative. Kevin Rudd rolled him as Labor leader the following year and comfortably won the next election in 2007 by pledging to provide even more generous tax cuts.
As recently as 2019, Bill Shorten lost the election after opposing Liberal PM Scott Morrison’s stage three tax cuts, with those benefits mainly flowing to higher-income earners.
Chris Bowen was demoted as shadow treasurer in favour of Jim Chalmers, who had better political instincts.
Anthony Albanese learnt that lesson of defeat and in 2021 from opposition vowed to keep those stage three tax cuts.
Labor came to power the next year and was resoundingly re-elected last year, despite breaking an election promise by rejigging those tax cuts to help the battlers.
This simply highlights that when it comes to winning elections — and neutralising tax as an issue — the Prime Minister is a very formidable politician.
Labor, recognising the economy has traditionally been its weak point, has ruthlessly demoted shadow treasurers if they lost an election on tax policy.
The ALP has long regarded Whitlam as a template of how to lose elections and since then, has also rolled leaders opposing income tax cuts from Opposition.
The Liberal Party is now determined to do the exact opposite, by putting a failed shadow treasurer into the leadership role.
Taylor, who last year endorsed Gough’s controversial dismissal 50 years on, ironically emulated Whitlam’s political flaws, but without the soaring rhetoric.
The Liberal Party, by making Taylor its leader, will have demonstrated that it rewards failure like the Labor Party used to.
This would surely contradict what he had learned as a management consultant.
Taylor, a Rhodes scholar, has tried to be too clever, which often turns out to be politically stupid.
