By David Alexander, a former senior adviser in the John Howard Government in Australia and former economics editor of the Canberra Times, now resident in the United Kingdom.
The VAT bomb that the Liberal Democrats warned about has arrived, but are they prepared for the collateral damage coming their way?
This movie has been played before, recently in Australia, where the sister party to the Liberal Democrats went from being the third party in Australian politics ten years ago to having zero Parliamentary representation today, courtesy of supporting a VAT.
Ten years ago the Australian Democrats were a highly influential centre-left party, passionate about civil liberties, foreign aid and the ABC, and exercising their considerable influence through holding the balance of power in the Senate.
But in 2000 when the leadership of the Democrats gave their critical support to the centre-right government of John Howard to introduce a VAT, the recriminations were like a slow-release poison that ultimately killed the party.
The fact that the Democrat leadership had reasonable and detailed arguments for supporting the controversial new VAT was brushed aside by the rank and file members of the party who simply could not stomach doing a deal with the arch enemy to bring in a regressive tax.
Poles of opposition emerged, furious arguments broke out amongst party members, and the party had difficulty articulating a clear message about what it stood for.
The political toll mounted quickly: by 2007 there were no Democrats left in the Australian Parliament, and by 2009 there was not a single Democrat in any state or territory parliament in Australia.
This extraordinary political death can only be understood when one realises the centrality to Democrat supporters of feeling morally superior. Once that sense was gone, or at least called into question by the VAT support, the Democrats were no longer worth supporting. The Labor Party and Greens were relentless in needling their fellow left-wingers on this feeling of moral compromise, just as Labour here will follow.
Of course there are important differences between the two situations: the Liberal Democrats are a much stronger party than their southern sister, and the Liberal Democrats are in government here, rather than just hitched to a specific piece of legislation.
But a significant number of Lib Dem voters are going to drift away as a result of this decision, more than will go its way, and the hit to its vote will cause second round recriminations.
Will this northern sequel have the same ending? Who knows, we’ve only just started the movie.
