JESS WILSON & THE ART OF NOT TAKING THE BAIT

I made a mistake yesterday when I managed to wedge myself over Victorian politics.

I was very quick off the mark in criticising Labor over its abortion funding announcement. So when Victorian Liberal Leader Jess Wilson responded by matching Labor’s commitment, I felt obliged to criticise her in the same vein.

And therein lay my problem.

I hadn’t examined the detail of either announcement.

Inadvertently, my comments prompted some pretty nasty responses attacking Wilson, along with the usual tiresome Uniparty garbage.

So rather than exacerbate the situation, I deleted both posts & went back to the drawing board. Which is precisely what I should have done in the first place.

A little more examination & a little less haste would have served me considerably better.

I don’t live in Victoria, but I support Jess Wilson because I believe Victoria desperately needs a change of government after years of Labor’s economic mismanagement, mounting debt & some very questionable decisions.

And that brings me to the question I should have been asking yesterday.

What is Wilson actually trying to achieve, & why?

Because having examined her announcement more carefully, I think there’s considerably more political strategy involved than many of her critics are prepared to acknowledge.

Labor’s announcement was not simply about providing funding for abortion services. It also provided an obvious opportunity to turn reproductive rights into an election issue & portray the Coalition as a potential threat to women’s healthcare.

Particularly given the prospect of a minority government & the possibility of One Nation holding some influence.

Wilson responded quickly by matching Labor’s commitment to provide up to $30 million over four years to eliminate out-of-pocket expenses for abortion care up to 16 weeks.

And in doing so, she substantially blunted Labor’s immediate political attack.

That’s the first strategic consideration. Neutralising the political wedge.

Had Wilson opposed the funding, Labor could have spent weeks, if not months, campaigning on the suggestion that women’s reproductive rights were under threat from a Coalition government.

Instead, Wilson made it considerably harder for Labor to sustain that particular argument.

But there’s a much bigger consideration.

Victoria faces enormous economic challenges. Its debt, public services, infrastructure commitments, housing pressures & the broader consequences of years of Labor government should be central to the coming election.

The last thing the Coalition needs is to spend the election campaign defending itself against allegations about social policies rather than prosecuting its case against Labor’s record.

And that’s the second strategic consideration.

Keeping the election focused on the issues that may ultimately determine Victoria’s future.

Then there’s One Nation.

Whether people like it or not, the possibility of a hung parliament raises legitimate questions about the influence minor parties might exercise over a future government.

By making an explicit commitment to maintain Victoria’s existing abortion laws & supporting the funding announcement, Wilson is establishing her own position rather than allowing Labor or One Nation to define it for her.

That doesn’t eliminate every question about future parliamentary negotiations, but it does make her position considerably clearer.

And that brings me to another distinction that seems to have been lost in much of the commentary.

Wilson is not changing Victoria’s abortion laws.

Abortion was decriminalised in Victoria in 2008.

The funding commitment addresses the out-of-pocket costs associated with accessing an existing legal healthcare service. It does not change the legal framework or remove the existing requirements governing later-term abortions.

That distinction matters.

Of course, some people have genuine moral objections to abortion or to taxpayer funding of abortion services. They are entitled to those views, & I don’t dismiss them.

But abortion is legal in Victoria, which raises a separate question. To what extent should an individual’s moral objections determine whether another person can obtain financial assistance for a lawful medical service?

That’s a legitimate debate in its own right. But first, we should at least be discussing what has actually been announced rather than what some people imagine has been announced.

Which brings me to the inevitable cries of Uniparty.

Oh, please.

Political parties can agree on individual policies without being interchangeable.

Supporting one Labor funding commitment does not mean Wilson has adopted Labor’s economic agenda, its approach to governance, its management of public finances or its broader political philosophy.

Nor does it mean she has surrendered the Liberal Party’s identity.

If we reach the point where an opposition must automatically reject every government proposal simply because the government proposed it, we’ve abandoned political judgement in favour of tribal loyalty.

And I would have thought we’d had more than enough of that.

There is also the question of leadership.

Wilson has undoubtedly exposed herself to criticism from some within her own political constituency.

But leadership isn’t simply about satisfying every faction or reinforcing every existing belief among your supporters.

Sometimes it requires recognising that the wider electorate has different priorities, that not every political battle needs to be fought & that winning government requires persuading people who don’t already vote for you.

That doesn’t mean abandoning principles.

It means exercising judgement about which battles matter, which compromises are reasonable & what is ultimately necessary to achieve the larger objective.

Because the Liberal Party cannot change the direction of Victoria from the opposition benches.

Now, none of that means Wilson’s decision should escape scrutiny.

There is a legitimate question about whether committing $30 million over four years is justified when Victoria faces such considerable fiscal pressure.

And that question deserves an answer.

But it must also be weighed against the evidence of genuine financial barriers to accessing healthcare, particularly for women living in regional Victoria.

It’s very easy to focus on budgets, expenditure & the cost of government programs when we’re not personally affected by the health issue involved.

Perhaps sometimes we’re a little too quick to do so.

That doesn’t mean abandoning fiscal responsibility. It means recognising that responsible government also involves making judgements about the consequences of not providing a service.

The question isn’t simply whether Victoria can afford to spend the money.

It’s whether the expenditure is justified, whether it will deliver the intended outcomes & how it compares with other demands on the public purse.

Those are reasonable questions to ask of both Labor & the Coalition.

And then there’s the question of whether Wilson has actually neutralised Labor’s strategy.

Not entirely.

Labor can still campaign on reproductive rights, the possibility of minority government & divisions within the Coalition.

But Wilson has made it considerably harder to portray her as opposing this particular healthcare funding commitment.

And this is where I think Liberal supporters who have been attacking her need to look a little harder at what she’s trying to achieve.

Yesterday’s announcement was tactical.

In the overall scheme of what Wilson is seeking to change in Victoria, it’s a relatively modest financial commitment in the context of the state’s overall budget, although that doesn’t automatically make it justified or remove the obligation to scrutinise it.

It’s a decision designed to remove a potential political distraction & return the election debate to Labor’s record in government.

Whether it succeeds remains to be seen.

But for the time being, Wilson has blunted Labor’s wedge, even if she hasn’t eliminated it.

I just hope that in doing so she isn’t subjected to the sort of kneejerk reaction I was guilty of yesterday.

Because there is a real danger that supporters, in their determination to defend every ideological position, end up damaging the very leader they need to win government.

Political leadership isn’t about fighting every battle your opponent invites you to fight.

It’s about knowing which battles matter, which can be set aside & which must be won.

I made the mistake yesterday of reacting before thinking.

Having now examined the detail, I think Jess Wilson may have demonstrated considerably more political judgement than I initially gave her credit for.

And I’m quite prepared to say so.

But I wonder how many of those attacking her have actually examined the detail, considered the political strategy or stopped to think about the consequences of their reaction.

Because if voters punish Wilson on the basis of a headline rather than an informed assessment, & that contributes to another Labor victory, what exactly will they have achieved?

𝐓𝐇𝐄 𝐖𝐇𝐀𝐂𝐊-𝐀-𝐌𝐎𝐋𝐄 𝐏𝐑𝐈𝐂𝐄 𝐄𝐒𝐂𝐀𝐋𝐀𝐓𝐈𝐎𝐍

I’m usually a defender of the Reserve Bank of Australia, particularly when it comes to decisions about the cash rate.

 

But I cannot defend its decision to remove the ability of businesses to apply a surcharge to transactions made using credit or debit cards.

 

And the more I examine the downstream consequences, the more convinced I become that this is another example of a policy designed to deliver an attractive headline without sufficient consideration of what happens next.

 

It’s a classic game of economic Whack-A-Mole. Suppress a cost in one place & watch it pop up somewhere else.

 

The RBA knew electronic payment processing wasn’t free. It also knew that banks, card networks & payment processors couldn’t simply be expected to provide their services without recovering the costs involved. After all, it was the RBA that allowed surcharging in the first place, partly to improve transparency & encourage consumers to consider the cost of their chosen payment method.

 

So, it attempted a middle ground.

 

It reduced the domestic consumer credit card interchange fee cap from 0.8% to 0.3%, alongside reductions to debit card interchange fees.

 

But here’s the problem.

 

Interchange fees are only one component of the merchant service fees businesses pay to accept card transactions.

 

The total fee also includes card network charges, payment processing, fraud prevention, transaction authorisation, settlement infrastructure & the costs associated with maintaining the electronic payments system.

 

And the proportion attributable to interchange varies depending on the card, merchant & payment arrangement.

 

Those other costs haven’t magically disappeared because the RBA reduced interchange fees.

 

Nor has the RBA abolished merchant service fees.

 

It has simply removed the ability of businesses to separately recover those fees from customers choosing to pay by card.

 

And while reducing interchange fees may provide some relief to merchants, it doesn’t necessarily compensate them for losing the ability to recover their remaining costs through surcharges.

 

Which brings me to what I consider one of the more troubling consequences of this decision.

 

Who actually ends up paying?

 

Previously, where a business applied a surcharge, customers choosing to use a credit card could see an added charge, often somewhere between 1% & 2%, depending on the merchant and payment arrangement.

 

The customer could decide whether the convenience, credit facility or rewards associated with using that card justified the added cost.

 

Or they could choose another payment method.

 

Now businesses must either absorb their remaining merchant fees, negotiate lower rates or recover those costs elsewhere.

 

And for businesses already running on tight margins, increasing their general prices may be the most practical option.

 

Consider what that means.

 

A customer paying cash may now contribute towards the cost of accepting premium credit cards.

 

A pensioner using a basic debit card may contribute towards the costs associated with a payment system that also supports frequent flyer points, cash back rewards & other benefits enjoyed by higher-spending credit card customers.

 

In effect, consumers using cheaper payment methods may end up subsidising those using more expensive ones.

 

Of course, not every merchant will increase prices. And reductions in interchange fees may also lead banks to reassess the generosity of their credit card rewards programs.

 

But the potential for cross-subsidisation is very real.

 

We’ve removed the visible surcharge without necessarily removing the underlying cost.

 

And in doing so, we’ve potentially removed something else.

 

Transparency.

 

At least when a surcharge appeared separately on the bill, customers could identify what they were being charged for their chosen method of payment.

 

Once those costs are incorporated into general prices, that distinction disappears.

 

Now I’ve seen many people arguing that the solution is simply to prohibit banks & card issuers from charging merchant fees altogether.

 

But have they considered the consequences?

 

Banks aren’t charities. Nor are card networks & payment processors.

 

If regulators forced them to absorb the entire cost of providing electronic payment services without any means of recovering those costs, they would inevitably reassess the commercial viability of their products.

 

That could mean higher annual card fees, reduced rewards, tighter eligibility criteria, lower credit limits or fewer credit products available to consumers. Albeit fewer credit products might not be a good thing.

 

It could also place pressure on investment in payment infrastructure, fraud prevention & security.

 

And let’s not forget that electronic payment systems require substantial ongoing investment to remain secure, reliable & capable of processing millions of transactions.

 

With increasingly sophisticated cybercrime & financial fraud, that security is more important than ever.

 

You cannot legislate away the cost of providing a service. You can only change who pays for it, how they pay for it, or whether the service remains commercially viable.

 

The RBA argues that its reforms will reduce payment costs, improve competition & make pricing simpler.

 

It estimates the changes will save businesses approximately $910 million annually.

 

But estimated savings across the entire payment system tell us little about how those savings will be distributed, particularly among smaller businesses that previously recovered their processing costs through surcharges.

 

And whether the reforms achieve their stated objectives for consumers & businesses is another question entirely.

 

I’ll acknowledge that there was a legitimate problem with some businesses applying excessive surcharges or charging the same surcharge regardless of whether a customer used a low-cost debit card or a more expensive credit card.

 

But Australia already had rules requiring surcharges to reflect the reasonable cost of accepting the payment.

 

So why wasn’t the answer better enforcement of those rules rather than prohibiting surcharges altogether?

 

Because simpler pricing isn’t necessarily cheaper pricing.

 

And I’d argue it isn’t necessarily simpler either, if consumers can no longer distinguish between the cost of a product & the cost of their chosen method of paying for it.

 

A cost that becomes less visible doesn’t cease to exist.

 

And now we have the ATO debacle.

 

The ATO proposed stopping credit card payments rather than absorbing processing costs estimated at approximately $200 million annually.

 

But following considerable backlash from small businesses, Treasurer Jim Chalmers has intervened, providing funding to allow the ATO to continue accepting credit card payments until the end of June 2027 while further consultation takes place.

 

Think about the absurdity of that.

 

When the costs become a problem for a federal agency, the govt finds a way to provide temporary relief & further consultation. And guess what the other way is = all tax payers are funding it. 

 

Yet thousands of small businesses must deal with the consequences of the same surcharge reforms.

 

If the ATO considers those costs too significant to absorb, why should we assume small businesses can do so without consequences?

 

And if taxpayers ultimately fund the ATO’s card processing costs, why should those who don’t use credit cards to pay their tax liabilities subsidise those who do?

 

The question isn’t whether consumers should be protected from excessive or unjustified surcharges.

 

They absolutely should.

 

The question is whether prohibiting legitimate cost recovery was the most sensible way to achieve that objective.

 

Because when regulators interfere with the way businesses recover their costs, those costs don’t simply vanish.

 

They move.

 

Sometimes into higher prices. Sometimes into reduced services. Sometimes into fewer payment options.

 

And sometimes onto the shoulders of consumers who weren’t responsible for incurring them in the first place.

 

That’s the problem with economic Whack-A-Mole.

 

You might succeed in knocking down the surcharge.

 

But you haven’t necessarily reduced the cost of doing business.

 

You’ve just made it harder to see who’s paying for it.