Sex, money and politics: how a taboo subject could trip up the left

There’s an old saying about British politics: Tory scandals are about sex, Labour scandals are about money. The taboo around rumpy pumpy created a conservative class notoriously dedicated to lewdicious kink. The true believers’ suspicion of the filthy lucre pushed social democrats to accumulate funds covertly.

British Chancellor of the Exchequer Rachel Reeves is a shining example of the British Labour tradition. But there’s no wiggle room left in the UK for budgetary subtlety. In 2024, she introduced the largest tax rises since 1993. Her second budget, which has just landed, is a stealth wannabe. Income tax brackets have been frozen, and salary sacrificing into individual pension savings will be capped at £2000 ($4050) a year, measures not immediately visible to the broader population. But £26 billion in tax rises is difficult to hide. Britain’s workers are being bled to fund the burgeoning welfare state. In a soundbite bound to haunt UK Labour at the next election, Reeves made bad worse by saying she’s just asking “ordinary people to pay a little bit more”.

Reeves sat awkward and flushed next to her prime minister after the budget was read, her body language suggesting Conservative leader Kemi Badenoch’s savage reply had found a target. The budget is “for benefit street, paid for by working people”, Badenoch claimed, and a “humiliation” for the chancellor.

The Office for Budget Responsibility warned that the financial situation leaves Britain vulnerable to unforeseen events, such as the global financial crisis or another pandemic. Rising welfare payments and the cost of servicing the national debt are combining with the increasing public sector borrowing forecasts to paint a diabolical picture of the state of our Anglophone ancestor.

We are fortunate that our bucolic antipodean island nation lags years behind the catastrophes unfolding in the old world. But no one needs to give Jim Chalmers a crystal ball for Christmas with a real-life example of the consequences of overspend playing out in a language we share. Nor does our treasurer need a study tour to Old Blighty. Should he care for a caravanning holiday this summer, Chalmers could head down to Victoria, where Reeves’ doppelganger Down Under finds herself in a similar plight.

After more than a decade of overspending, Venezuela on the Yarra is broke. Victoria’s net debt is set to grow to $194 billion by 2028-29. That’s a hefty interest bill Victorians are servicing, with no plan to pay down the capital. Premier Jacinta Allan and her treasurer, Jaclyn Symes, want to go on promising infrastructure projects. But the cupboard is bare.

Desperate times call for desperate measures. The premier has ruled out cutting costs ahead of the November 2026 election – austerity is a dirty word. But apparently over-taxation isn’t. Victorian landowners say their land is being dramatically overvalued, resulting in hefty land tax increases to bolster government coffers.

Allan also rather fancies the federal treasurer’s pet plan to tap superannuation accounts to pay for the things governments can no longer afford. The Victorian premier is clamouring to alter the financial performance test that obliges superannuation funds to maximise returns to account holders. Instead of investing in projects with a good prospective return that will increase individual retirement savings, she wants the compulsory accounts “unlocked” to build hospitals and schools because they “support workers”.

In theory, workers in Victoria are already paying for that infrastructure through various taxes – but with public sector growth at record levels, the Victorian government spends more tax paying for many workers than it receives in return. It’s an inelegant ouroboros of a state trying to live off its own byproduct – completely unsustainable without the outsized slice of GST that Victoria secures to compensate it for its inability to live within its means.

Chalmers, who this year won the opinion poll prize of “better economic manager” that he has long coveted, can see from Queensland to Victoria an economic cycle or two in his future. The warning lights are flashing.

The cost of running the federal public service has grown to $111 billion a year – up 38 per cent since Labor came to power. As the year draws to a close, the treasurer and his finance minister, Katy Gallagher, are hoping the public service might be so kind as to give itself a haircut and stop the Australian Labor government from having Reeves-haunted nightmares.

Now, mind their language, these are not cuts to the public service. The idea of cuts didn’t go so well for the Coalition at the recent election. Instead, Chalmers and Gallagher are hoping that government departments will find 5 per cent of their spend that can be euphemistically “re-prioritised” to higher value output. Good luck with that. It won’t come as any surprise when self-assessing departments discover there isn’t an ounce of fat to trim.

The challenge that these Labor and Labour governments face is built into the fabric of their philosophy. Their core mission is to make voters feel like they receive more from the government than they put in. Eventually, however, it’s “ordinary people” who “pay a little bit more”.

Rachel Reeves may just have lost UK Labour the next election, which must be called by August 2029, but she’s left behind an unexploded ordnance for her successor. The salary sacrifice measures that workers use to avoid being swept off a tax bracket cliff won’t kick in until April of that year. Whoever wins that election will walk into a booby trap of anti-worker incentives and wear the consequences, without inheriting a boosted bottom line.

Chalmers can’t just walk away, or at least he hopes so. Labor, it’s said, will be in power for years and years to come. One of these days, perhaps it’ll even be a Chalmers-led government. To be accused of austerity or raising tax is politically unpalatable.

No wonder the compulsory superannuation honeypot is looking so very sweet. Remember, whether Labour or Labor, the scandal is always next to the loot.

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