Waffle’s Short Shelf Life

The alarm bells rang when I heard Malcolm Turnbull say, “Fairness is in the eye of the beholder.”  It struck me immediately as a re-hash of the ABC’s favoured defence when accused of partiality or worse, “Bias is in the eye of the beholder.” It’s one of those meaningless, disarming responses designed to neutralise specifics and imply the complainant is the real problem. I reminded myself that our latest prime Minister also had embraced the same phrase as Communications Minister.

So it was entirely in character that Turnbull would turn the phrase around in an ABC interview – perhaps a Freudian slip — to introduce it as a litmus test for the appropriateness of taxation reform. It sounded more appropriate on the lips of an elitist than the more workaday “pub test”, but as a lawyer he knew all too well that “fairness” is as slippery a fish in economics as “reasonableness” is at the law.

The Prime Minister’s strange speech at the Economic and Social Outlook Conference in Melbourne – a pedagogic mish-mash of jockeys, technology, sailing techniques, the blame game and hope – put “fairness” at the centre of any tax-reform package. But while prolonging speculation about what shape those initiatives might actually take, the speech itself said nothing.

Tax reform made easy (if not coherent):

“Across the board, we must acquire not just the skills but the culture of agility that enables us to make volatility our friend, bearing fresh opportunities, not simply a foe brandishing threats. So reform, since that is the topic of your conference, should not be seen as a once in a decade or two convulsion, accompanied by a hyperbolic scare campaign. Rather it should be seen as a change of political culture that sees us like the sailor, surrounded by the uncertainty of the sea and the wind, who knows only two things for sure – where she needs to go and that she has the skill to get there. Sometimes the sailor reaches the mark with rapid ease, her sails big bellied in a following wind; sometimes with slow and deliberate tenacity, sails close hauled, tacking into the teeth of a gale. But her vision is as clear as her destination is certain. How to get there and how quickly is the measure of her skill.”

— Prime Minister and helmsman Malcolm Turnbull

Turnbull is relishing his new-found power to lecture the country. Announcing his intention to challenge Tony Abbott eight weeks ago, he promised a new style of leadership that would explain the challenges and how to seize opportunities. What we have seen instead are  self-indulgent and slightly condescending references to the need for agility in an age of disruption; the importance of volatility as our friend. So far, nothing about the ‘how’.

It has become increasingly obvious that the Turnbull government depends heavily on Scott Morrison. The Treasurer has shown an ability to grasp the essentials of his office and the sense not to be stampeded into precipitate action.  He did not repeat his early comment that the country has an expenditure problem, not a revenue problem, but that sentiment has not been not forgotten. He is our only hope as the nation stampedes towards a regime of higher taxes disguised as reform.

Much has been made of Turnbull’s wealth as a marker of his business acumen, and his government by extension as a businessman’s government.  What is forgotten is that Turnbull is a lawyer, not an economist, has never run a real business, made his money on the coat-tails of friends and clients, the bulk of it from investments.

Despite Tony Abbott’s too-generous accolade as “having invented the internet in Australia”, Turnbull did nothing of the sort. There is no evidence that Turnbull had, or has, more than an ordinarily interested person’s understanding of the technology. Apart from his ability to talk impressively, he had no better qualifications for the role of Communications Minister than anyone else in the party room. In terms of that much-vaunted but so-far-unseen talent for fostering “reform”, it proved a disaster that such an indulgent master should have been awarded responsibility for the ABC.

Turnbull’s smarts derive from his recognition that the Abbott government complacently relied on logic and rational need to sell its 2014 budget. He appears to have determined that, in order to implement unpalatable-but-necessary measures, he must appear consultative, persuasive and understanding. Hence the plethora of weasel words and phrases — “everything is on the table”; “tax reform is for a more productive system, not raising more”; “agility”; “innovation”; “fairness”; “conversation”; “contributions”. All this with  no mention of debt and deficit! As one commentator noted, Turnbull wraps everything in optimism.

While all this has all been hugely entertaining, at some point the music has to stop and the parcel must land back in his lap. Concern is mounting, even among his most earnest supporters. The normally obsequious and cringingly worshipful Leigh Sales on 7.30 was obviously troubled by her obligation to ask when all this nice talk was going to end and Turnbull would actually announce something of substance.

The problem that Turnbull has created for himself is that every state, lobby group and self-serving rent-seeker has been invited to a tea party where the cake has not yet been mixed, let alone baked.  Peter Costello believes he should have made clear what his government’s objectives are, and critically, that taxes would not rise. Instead, as Costello observes, it’s now a tax free-for-all.

The Prime Minister’s advice last Friday that the election will be held next September or October, and Bill Shorten’s declared opposition to increased GST, means the next election will be fought principally on taxation. The timing also poses a serious problem of how to frame a May budget without having the tax-reform issue resolved. Given Australia’s declining growth, rising unemployment, poor productivity, collapsed export prices and ebbing tax revenue, how effective can Turnbull’s optimistic words be, and for how long?

‘Political capital’ is Canberra-speak for plausibility.  Does Turnbull have enough to sustain him through the next twelve months of bitter competition by vested interest groups for tax windfalls?  Will he be revealed as having just tried to finesse with pretty phrases the same budgetary issues that Abbott and Hockey tried to tackle head-on?  Is this a magician who can find a bunny in the hat – or is it all smoke and mirrors?

Geoffrey Luck was an ABC Journalist from 1950 until 1976