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June 01st 2017 print

Ross Fitzgerald

A Vainglorious PM’s Bankrupt Budget

By capitulating as dramatically as he has, Malcolm Turnbull further highlighted the question of his character while simultaneously trashing his party’s brand. Is there any principle he stands for or would fight for, other than personal ambition, blind vanity and his current position?

turnbull blind smallerFor the past few weeks in Canberra, Prime Minister Malcolm Turnbull has been congratulating himself on how well the budget has been received. No one in the Coalition party room has yet chosen to contradict him, but that doesn’t mean he’s right.

In the wider community, the budget has been a non-event because there was nothing much in it for voters: neither wins nor losses. The handouts were all for vested interests: public schools, doctors, and the states. The new taxes were either delayed, in the case of the Medicare levy; or imposed on everyone’s favourite villain, the banks.

Among convinced Coalition supporters, though, the budget has been worse than a failure; it’s been a betrayal. Liberal Party supporters and donors at the traditional budget night fund-raisers were all shaking their heads in bewilderment at a Labor budget delivered by a Liberal government, with big new taxes, big new spending, and big new bureaucracies.

As a policy U-turn, this budget is the Australian equivalent of one-time UK Prime Minister Ted Heath’s 1972 about face. His Conservative government had been elected two years earlier promising to cut government spending, end business bailouts and deregulate the economy. Faced with unemployment hitting a million, Heath massively increased health and education funding, nationalised failing businesses and introduced price and wage control. The Turnbull government’s U-turn has not been prompted by anything as serious as a deteriorating real economy; merely by adverse polls and a recalcitrant Senate.

Still, it is a historic watershed. Once, the Liberal Party stood for lower taxes, smaller government and greater freedom because it fundamentally believed that individuals should be encouraged to take more personal responsibility for their own lives. It was the Labor Party that stood for more spending and more intrusive government because it believed that this was necessary to deliver greater social justice. Now there is a Big Government party and a Bigger Government party. Once, the two major parties wanted to move in opposite directions; now they are moving in the same direction, only at different speeds.

I think the economics of this budget will be poor. The small-business tax cuts should modestly boost jobs and growth, but this is overridden by the mixed message of the bank tax and the draconian new inquisition into bankers’ behaviour. Bankers whose every step is being watched by officious bureaucrats are less likely than ever to back entrepreneurial flair.

For all Treasurer Scott Morrison’s boast that the budget delivers the lowest spending growth in 40 years, there is $15 billion of new spending over the forward estimates. And the return to a (wafer-thin) surplus four years hence is based on very optimistic assumptions about increased tax receipts that are highly unlikely ever to be realised.

But the politics of this budget will be even worse. The government said that it was a “second-best” budget because the best one wouldn’t pass the Senate. As the fate of the 2014 budget showed, the Senate will not pass tough savings without a clear election mandate – but that doesn’t mean that it won’t change a tax-and-spend-budget as well.

Labor will furiously play the politics of the 2017 budget. Of course it’s inconsistent to propose a Medicare levy to fund the NDIS when in government but then to oppose it in opposition. But no one in Labor cares about consistency provided they make the government look confused and impotent; while the Senate crossbench can be guaranteed to support the politically easy measures but not the hard ones.

Hence I can’t see the federal Coalition getting any medium term poll boost as a result of a budget that makes it look unprincipled as well as impotent.

It could be said that the Turnbull government’s U-turn reflects the centre-right’s general abandonment of free market economics. The US Trump administration has abandoned the Trans Pacific Partnership free trade deal. The British conservative government under Theresa May has abandoned Thatcherism. There’s no doubt that voters in many western countries (including Australia) are feeling let down and abandoned.

Since the Global Financial Crisis, real wages have hardly risen and asset price inflation has made it harder for the virtuous poor to get ahead. Factories opening in China but closing in the West has been good for consumers but bad for western workers. Naturally, when times are hard, voters seek protection from government, but that still doesn’t justify government policy that makes a bad situation worse.

Economic reform has to be more subtle than the short-sharp shock that the 2014 budget sought to deliver, but it’s no less needed just because it’s unwelcome. The budget’s cash splash is not designed to produce better schools or better medical services; it’s simply to appease powerful lobby groups and avoid future scare campaigns.

There’s not even the pretence that the bank tax is good policy. It’s just the cash grab that’s least likely to be unpopular with voters.

Post-budget, government ministers have been attempting to rally Liberals with the observation that nothing could be worse than a Shorten government. It is indeed likely that the next Labor government will tax more and spend more. But my sense is that many Liberal voters are now looking to the next Coalition government rather than the current one. Sure, supporting the Turnbull government might keep out Labor if Shorten-Albanese leadership tensions can be fanned but it won’t bring the Liberal Party back to its economic senses. “The alternative would be worse” is hardly a rallying cry, especially if the status quo is such a disappointment.

Politics is always a contest. It’s true that successful politicians pick the issues on which to fight, so Turnbull has opted to avoid a fight on schools and hospitals. It’s just that Labor won’t let him plead me-too on social spending any more than a savvy Coalition would let Labor get away with me-too on border protection. By capitulating as dramatically as he has, Turnbull has simply deepened the question marks over his own political character and trashed his party’s brand. Is there anything at all that he really stands for or would really fight for other than his own position?

That position has to be increasingly insecure. Unwisely, Turnbull cited losing 30 Newspolls in a row and the lack of an economic narrative as justification for deposing a democratically elected first-term prime minister. So far, the Turnbull government has been behind in 13 consecutive Newspolls with no lift in sight. And the government’s economic narrative hasn’t just been obscured by political static; after years of preaching fiscal prudence, it’s been turned on its head by a tax-and-spend budget.

Well before his Newspoll losing streak hits 30 (probably early next year), Turnbull will have lost any remaining authority.

The question is whether he’s replaced by his own party before he’s replaced by the people at the next election. It’s unlikely that the Liberal Party will walk calmly to defeat. It’s not in the nature of politicians to face political death with equanimity. Even John Howard, arguably the greatest Liberal after Robert Menzies, came close to being toppled in the lead up to the 2007 election. Given the way he came to office, Turnbull will find it hard to demand loyalty from his cabinet or his backbench.

Liberal MPs are likely to wait a little longer before deciding that Turnbull is unsalvageable. But once they come to that conclusion, canvassing of alternatives will begin in earnest. Foreign Minister Julie Bishop still thinks that she has prime ministerial class, but few of her colleagues do. A deputy can survive the defeat of one leader but to outlive three smacks of putting self-interest before duty.

The same problem afflicts Scott Morrison. He ostentatiously cast his party room ballot for former Prime Minister Tony Abbott while urging his close allies to vote for Turnbull – and then emerged from the coup with the second-biggest job in government, the treasurership he had long coveted.

Then there’s Peter Dutton.

Dutton was an indifferent health minister but has been a very strong border protection minister. He’s also the government’s steadiest Question Time performer. Still, assuming the prime ministership would be a huge ask.

That leaves Tony Abbott. The longer the Turnbull government lasts, the better the Abbott government looks. At the time, the 2014 budget seemed a political albatross. Now, it shows that Abbott was not afraid to make the tough calls for our country’s sake. Abbott managed to rack-up a range of important achievements.

Stopping the boats was supposed to be impossible (it would even provoke armed conflict with Indonesia, Kevin Rudd claimed), but Abbott did it. It’s conventional wisdom that no tax is ever repealed, but Abbott scrapped both the carbon tax and the mining tax. Free trade deals with China and our others big partners had languished for a decade but Abbott got them done within 12 months of taking over. There had been a half century of procrastination over Sydney’s second airport until Abbott ended it. And he responded swiftly and surely to Australia’s changing strategic and security situation.

Yes, all the hysterics who barracked for him to fail would still be there; except, of course, for the internal stalker. Yes, Abbott made mistakes. As he himself has admitted, he antagonised colleagues by scrapping first-class overseas travel and banning the employment of spouses and children in MPs’ offices. He was too quick to retreat on amending Section 18C of the Racial Discrimination Act. He never anticipated the furore over knighting Prince Philip. But none of these mistakes would have been so politically dangerous had there not been an implacable rival.

Journalists love leadership stories but the big question is less who leads the Liberal Party than what a Coalition government might do to win the next election. Abbott has clearly been using his sabbatical on the backbench to ponder this question. He’s called for an end to subsidies for renewable energy to take the pressure off power prices and a big slowdown in immigration to take the pressure off housing prices. There can be no new spending, he’s said, other than on economic infrastructure or national security, if budget repair is to continue. His most interesting proposal has been to run a referendum on turning the Senate from a house of rejection to one of review at the same time as the next election.

All of these proposals would set up fights with the Labor Party in areas where voters are likely to break the Coalition’s way. It’s conventional wisdom that referendums nearly always fail, especially when there’s no bipartisanship. But after a decade when governments have struggled to implement their agenda, why wouldn’t the public warm to a proposal that ends the gridlock?

Even with the barest of majorities, a big-spending union campaign against it, and the loss of most of their seasoned backroom campaigners, the next election is potentially still winnable for the Coalition with a leader who knows how to fight.

Abbott wouldn’t waste time settling scores inside the party although, presumably, both Turnbull and Bishop would go. With good candidates, their seats would be winnable even at by-elections. Abbott would refresh the team, get legislation quickly into the parliament to set up a contest, reassure voters that no existing beneficiary and no existing employee would be worse off under the Coalition, and campaign relentlessly on Labor’s major weakness: Bill Shorten’s inability to stand up either to the unions or to the Greens.

Someone has to provide leadership to a country that’s drifting. At present, both big parties are promising to spend money we don’t have on measures that would do little good. As the differences between the Liberal Party and the Labor Party lessen, the rhetorical volume increases. The more Turnbull shouts at Shorten across the dispatch box, the less convincing he looks. Replacing Abbott had massive transactional costs. Replacing Turnbull would have far less, especially if it were to restore the person who should never have been removed.

Ross Fitzgerald is Emeritus Professor of History and Politics at Griffith University and the author of 39 books, including the sexual/political satire Going Out Backwards: A Grafton Everest Adventure, which was shortlisted for the 2017 Russell Prize for Humour Writing

Comments [26]

  1. Peter OBrien says:

    Are you deluded, Ross? Haven’t you been reading Niki Savva?

    • pgang says:

      Ha ha, indeed. Poor NikiJody.

      • Jody says:

        I don’t think Turnbull has been ‘celebrating’ this budget at all; he strikes me as a very worried man and he has a reason to be, as does the Coalition which is doomed to defeat. They will spend time in the political wilderness during which they need to work out how they can now offer an alternative to a now-socialist Australia. Whether an alternative is even POSSIBLE given the peoples’ addiction to entitlement and welfare. Nobody generally cares about debt; it’s all about ‘what’s in it for me’? I don’t think the Coalition can do anything about this; it’s not going to win them votes trying to take candy from a baby.

        We have a social problem now which will grow the national debt; there are more media outlets now from the Left and they’re all singing from the same songsheet; give the people more/demand more tax from ‘the rich’. Meantime, the ‘rich’ bar grows progressively lower and less and less people are paying taxation. This problem started under Howard and has gathered apace since then. Conservative values of smaller government, less tax and personal responsibility are now viewed as an anachronism.

        I dislike Turnbull intensely but I don’t think you can blame him for the mentality of the people of Australia. I fear for the future.

        • pgang says:

          Actually I think it started under Fraser. All of these problems can be sheeted home to the looney ’60′s era which ended up in the big win for Marxism under Whitlam. I agree that Howard was the best lib PM since Menzies, but that’s saying very little, as all he did was increase welfare and taxes (the GST, dear god…) at a time when it could be buried in the economics. And the wars in Iraq and gan-stan were deplorable decisions, made against the will of Australians who clearly demonstrated more sense.

          The Coalition can do something about it, by making plans and actually talking about the core issues, by getting on song instead of coming across as a bunch of wombats every time they open their mouths.

          I think Abbott could win another election as PM,if he’s given enough time. I think he also has the potential to surpass Howard’s credentials.

  2. Peter OBrien says:

    What’s so magic about the number 30 as it applies to consecutive bad Newspolls? There seems to a general feeling among the commentariat that Turnbull is safe from bad polling as long as he doesn’t get to 30, that being the number he used to justify knifing his leader.
    Turnbull barely won his election, bequeathed us an equally dysfunctional Senate and has now abandoned any pretence of responsible fiscal management. He has failed abysmally to do what he claimed he would do in justifying his coup.
    Why should Turnbull be accorded the luxury of as many as 30 bad polls? After all, Tony Abbott returned the Coalition to government, after only two terms in the wilderness, with a massive majority. He deserved to take the government to the next election.
    By any measure Turnbull’s tenure has been an unmitigated disaster. He should have resigned immediately after his disastrous election.

  3. Keith Kennelly says:

    There are a few times Turnbull should have resigned, and he won’t. The article is mostly spot on. But when it says the transactional cost will be less in now replacing Turnbull is wrong.

    There would be a transactional profit in now replacing Turnbull with Abbott. More and more people are starting to realise this. It’s only the bedwetters have not, just yet. But they have proven to be inept and slow numbskulls in the past.

    • Jody says:

      Abbott is finished; get that through your head. The people have rejected his 1950s style English-loyalist conservatism and lack of people skills.

      • pgang says:

        And yet he won a landslide election. You’re not learning from history Jody.

        • Jody says:

          It’s futile to look to the past. Abbott just chanted the same slogans over and over and over and failed to do what he’s now advocating. People see through that. He’s an ideas man and that’s where he will remain. I don’t want either Abbott or Turnbull and I don’t care if the government is sacked come the next election. When the bailiff comes around looking for his money the Australian people had better be ready to strip down to their pyjamas. The cult of welfare is unstoppable and no modern politician can stop it. And there’s also corporate welfare. When you infantilize the people you get the mentality we now have.

          I was watching a U-Tube lecture from Jordan Peterson today and he talked about how wages hadn’t grown in the USA and Canada for decades. But he made a valid point; now men and women are both in the workforce and the price of labour has found its reality. He argued that when only one member of a household worked to maintain that home wages were higher but now that both sexes are in the job and the workforce has effectively doubled the price of labour has dropped. The old supply and demand equation.

          It’s as obvious as the nose on our faces.

          • ianl says:

            > “The cult of welfare is unstoppable and no modern politician can stop it”

            Agreed – I’ve made that comment since the advent of Rudderless (it was the nauseating self-indulgence of the Rudd/Gillard cat fighting that gave Abbott his landslide). I suggest that not merely are modern politicians and their media/bureaucratic minders unable to stop the growth of this cult, they don’t want to … it has the same air of dissolute decay that gave rise to ancient Romans auctioning the Emperorship off to the highest bidder in public.

    • Eeyore says:

      I am with you Keith providing the Abbott who replaces Turnbull is not the same one who was unseated.

      It will need a sharp shift from earlier Abbott policies, a political hail mary incorporating those issues played safe during the first incarnation, can he swing support from a increasingly fractured conservative polity into a unified front?

      .

  4. Keith Kennelly says:

    Who said

    Trump won’t win the nomination,
    Trump won’t win the election,
    Trumps finished … any day now?

    Are you aiming at the quadrella now Jody?

    • Jody says:

      I stand by the ‘Trump is finished’ statement. When a senior Republican comes out to Australia and tells the people that Donald Trump is dangerous you know it’s curtains.

      • Warty says:

        Jody, somehow nobody has told you as yet, but John McCain may be a senior Republican in name, just as Malcolm Turnbull is an equally senior Liberal in name, but he is what is commonly known as a cuck Conservative, a RINO, just as Malcolm is a LINO.
        Any comment McCain has to make with regards to his arch enemy, needs to be divided by three and then sent its merry way down the length of the hypotenuse, otherwise know as the slippery slope to oblivion. He and Lindsay Graham simply make much ado about nothing, the only problem being that Malcolm Turnbull somehow thinks McCain has some sort of standing. In truth, Turnbull finds Trump as objectionable as you do, and simply hasn’t picked up on the Deplorable sentiment on the issue.
        The only dangerous thing is McCain blowing smoke rings out his nether regions, not his thought bubbles on Trump’s future.

        • Jody says:

          There are plenty of people in the world who listen to McCain. He has more credibility than the unstable Trump and a great deal more intelligence. Heck; even Trump’s wife dislikes him now. Oh, but who’d have thought.

          • Jimbob says:

            Jody I sense quite a bit of malice directed towards Messrs Abbott and Trump in your posts.

            I’d really like to know what attributes you think a good, conservative leader should have and if in your opinion, any current politician fits the bill. As far as I am concerned, Abbott and Trump along with Vlad (please don’t yell at me) are probably the most trustworthy leaders I can think of. That is not because I agree with all of their politics or think that are particularly “nice” chaps. Quite the opposite, there are matters of deep disagreement with all of them and one of them may not be a particularly nice chap either, but what I like about them is the fact that what you see is what you get! Here are men (sorry, no conservative women in Aussie politics as far as I can see hence the slight gender bias)that have stripped away all decoration to leave themselves exposed “warts and all”.

            No bankers’ “urbanity” here, no “trendy” painless and condescending “greeny compassion”, no sleek and slimy union marketing…just men with a whole lots of faults and infirmities (if I may use that term in a more ancient way) who are willing to bear much hatred, malice and ridicule in order to try and stem the tide of the growing new totalitarianism. This totalitarianism is the chief tool of the socialists (all colours, hues and shades included) who seek to dominate both the outer economic and the inner intellectual/spiritual life of mankind.

            In your post you challenge the credibility of Trump but I think he of all recent Presidents is the one who has bent over backwards to keep the promises he made. It makes me cry (quite literally) that even very intelligent people have suffered moral inversion. Have we become so used to politicians “lying”, “breaking promises”, “going with the wind” in order to hold on to power that when one comes along that tries to do what he promised to do, we then think that he is mad or as you put it “unstable”? It would seem that the incongruity between what we have and what we expect is so great that we just lash out with no rational reason. Black has become white in this new morality.

            So, apart from being lower in intelligence than that other man (an establishment republican who can’t cope either, maybe?) we have already noted that the POTUS is supposedly “unstable” and that his wife dislikes him (according to the MSM that hates him anyway). All rather wild assertions with no evidence such an IQ test, a diagnosis or even some clear statements from his missus. But hey – this is “war” and anything goes for the new totalitarians…a new truth has to be invented to counter the “unthinkable” i.e. a Trump presidency

            Now with regards to Mr Abbott.

            Over the years I have written to quite a few politicians (hope springs eternal in the human breast, wot) and I can safely say that of the one or two who bothered to answer, I was happy enough to get a typed and signed letter. Apart from the signature (generally a electronic copy) the letters were pretty much stock standard…”thank you and blah blah blah blah blah…Yours truly…CtrlC#Sig”. A few times I also wrote to Mr Abbott. A response letter came but what shocked me more than anything else was at the bottom of the formal letter, in that unmistakeable medical script style of his was a personal acknowledgment and thank you and some very kind words about the topics that the letters addressed. I am nobody in particular but this man, with all the putrid rubbish thrown at him whilst trying to serve the nation according to his lights, found time to read what I had to say and even respond in his own hand. This man is a true leader in my eyes because rather than stand aloof he reached out and down to my level.

            The nation probably needs him more than it knows at the present time. I think he has learnt some lessons and he is wise and humble enough to know that he doesn’t need to do anything more than take a stand. That is the kind of leader that the sophisticates and elites hate with a vengeance. That kind of leader is far more powerful than they are. Those kinds of leaders are able to change the course of a nations history when their enemies will be well and truly forgotten. If his last go was too early, maybe his time has actually come.

  5. Keith Kennelly says:

    Jody

    And just so as you are clear.

    Abbott never got to be rejected by the people.

    He was knifed in the back by the left winger Turnbull and his bedwettering mates who almost lost the election and who can’t prosecute a liberal economic policy.

    Are you and Nikki Savva sisters?

  6. Keith Kennelly says:

    What you reckon the warmonger McCain isn’t dangerous? The same McCain who was resoundly beaten by the Feckless Wonder.

  7. Keith Kennelly says:

    What you reckon the warmonger McCain isn’t dangerous? The same McCain who was resoundly beaten by the Feckless Wonder.

    Your ‘finished’ comment included ‘any day now’. Are you backsliding Jody or crab

  8. Keith Kennelly says:

    Thank you Jody. That is always my intent … just for you.

  9. Jody says:

    @Jimbob. Well, with Hitler it was certainly a case of ‘what you see is what you get’. So, I don’t see how that’s a plus for Trump. And anybody with a heartbeat can look at the images of Melania Trump with her husband to see what’s in her heart; not just rejecting his hand more than once in front of the world’s media – no, not just that (devastating and all as that was). She thinks he’s an oaf. So do I.

    Christian Porter has the qualities of an ideal conservative for me; tough-talking, smart on his feet, intelligent, a bit stylish and prepared to say what has to be said regarding welfare. And he’s a supporter of big and small business and, I’m guessing, he’d like to see taxes and spending both reduced. Voila!!

    Abbott is a klutz. Awkward, a shockingly hesitant interviewee, a man who has probably had more breakfast times than breakfasts and – at the end of the day – weak. He cling to 3 word slogans in the end because he didn’t have the guts to take on the media which hated him.

    • Jimbob says:

      Hi Jody

      this is getting a bit dated now but I hear TA on the radio whilst driving to work this morning and yes, his “style” may bot have he polish of a seasoned lawyer cum banker but he is on strong minded individual. Everything he said about Islamism was true and his solutions were very simple (and potent).

      “Lawfully kill them and/or Lawfully lock them up and/or stop them from getting in in the first place”

      Each is quite doable. War has been declared on us. We should declare war on them and use wartime powers. And it is “war” – a new kind of war but an almost inevitable development in war tactics moving the battlefield to the very urban heart of the “enemy”.

      I agree with Keith’s post below. The man has talent and his track record proves it. It wasn’t the people who got rid of him. Indeed the people were denied any say or judgement on his performance by his predecessor and the far less talented who now make up this sorry government (I would prefer 3 immediate years of hell than 5 – two more with this crowd and three with Labor).

      Now, as for Christian Porter, I must admit until I read your post I had no idea who he was. So I googled him and to my dismay….another lawyer in parliament. As for “leadership” potential, it would be good of he actually said something publically so we the ignorant got an inkling of what he was on about….maybe I haven’t been paying attention and have missed his public statements but surely….prospective shepherds must make some sort of noise if they want the sheep to follow?

      • Jimbob says:

        obviously too cold this morning for my fingers to work properly….sorry

        “I hear” should be “I heard”; “bot have he polish” (as MedEng as it sounds) should be “not have the polish”….you get the idea

  10. Keith Kennelly says:

    Jody

    Abbott won an election in a landslide,when he was criticised by all the hatefulled media and all the haters in the new media.

    He took on the media, won but was undermined by the haters accomplice.

    He delivered on his three word slogans.

    If you can’t get history right and CLING to your hatefulness then you’ll never get the future right.

    And that is now self evident.