Flat White

Budget 2017: politically clever, but…

10 May 2017

7:38 AM

10 May 2017

7:38 AM

I’ve been lamenting that for too long we’ve had no sensible centre in Australian politics, effectively ceding the political debate to the fringe Right and loony Left.  Labor under Bill Shorten has skipped merrily down the populist path, and the Coalition post-Tony Abbott has lost its mojo, direction and value compass.

With this budget it’s possible to say that signs of centrist life have at last been detected.  The problem is that it’s life of the centre-left, not centre-right.  Labor is off with the populist pixies, but Malcolm Turnbull and Scott Morrison are keeping their seat warm till they come back, increasingly more likely at the next election.

Look at it.  It’s a Labor budget, dammit.  Gonski 2.0.  Big nation-building infrastructure projects, to be hidden on the books by new crown corporations like that highly-successful creation, NBN Co.  Lavish top-up spending on NDIS, paid for by another hike to the Medicare levy.  Thawing Labor’s 2013 Medicare rebate indexation freeze, but failing to even try and make cuts, savings and efficiency gains to pay for them. And so on.

And as for the transaction levy being imposed on banks – a version of the so-called Tobin Tax beloved of Left economic crackpots – there it is in all its budget glory.  Wonder what former Labor premier Anna Bligh’s new bosses at the Australian Banking Association think of her lobbying nous?

To give credit, the government has shown considerable political cleverness in framing this budget, and is at least confronting its political errors since 2013.  It has probably done enough to stay on the right side of the Commonwealth’s AAA credit rating – just, and despite Morrison last night raising the debt ceiling to a whopping $600 billion.  It keeps HMAS Coalition afloat electorally for at least a while longer. 

And as for the stroppy and self-important Senate crossbench, let alone Labor and the Greens, they won’t readily want to be accused of blocking most of the key measures: it’s not a case of killing Bambi, it’d be killing a whole herd of Bambis, plus Thumper for good measure.  Therefore it appears, politically, that the Turnbull government has gone some way to repair the damage of 2014, but especially of its policy and political derelictions of 2016.  Certainly, if Shorten plays his now-usual populist game with this budget, he will be wedged as a fiscal wrecker on Labor’s home turf of health and education.

But the government’s clever politics mostly are being achieved by tax and spend, backed by optimistic growth and revenue forecasts: as Graham Richardson said last night on Sky News, all governments promise to crack down on tax avoidance and welfare cheating to put revenue numbers in the balance sheet.  Achieving these and wider revenue forecasts, especially when our economy is sensitive to global economic shocks and the China’s fickle appetite for our resources, is always aspirational rather than realistic. 

What’s more, saving to spend is now a foreign concept it seems – the unwanted political legacy of 2014.  The politics and economics of this budget may win back some lost and wavering supporters of the centre-left, but will alienate many in the Liberal base who believe a Liberal government is always, first and foremost, a low-taxing small, prudent government.  A government that is comfortable to run its spending higher than 25 per cent of GDP – let alone 20 – for several years to come does not fit that description.

Charles Pier argues forcefully that this Labor-like budget simply will encourage people to go all the way and vote Labor if they want future Labor budgets, but last night may do just enough to keep centrist voters who detest Shorten and still like Turnbull in the tent when the next election comes around, most likely later next year.  Might.

That it is likely it will pass the Senate with (for this day and age) surprisingly little crossbench mutilation, also buys time and potentially Newspoll competitiveness for a beleaguered Coalition.  Passing the Senate is what matters, not making a stand on what the government’s economic DNA believes is right.

While, however, it’s easy to criticise the Coalition, let’s not forget that Shorten’s eager abandonment of fiscal responsibility in return for cheap political advantage has utterly undermined good government and good economic management since Labor lost office almost four years ago. 

Shorten Labor has disgraced the fine reformist legacy of Hawke and Keating and their outstanding, talented governments of the 1980s, and we are all playing the fiscal price of the outrageous and unnecessary profligacy of the Rudd and Gillard years.  Labor has yet to apologise and take responsibility for its budget vandalism in government, yet the Coalition hasn’t made them wear their disgrace like a Crown of Thorns.  That Shorten Labor’s apparently now coasting to government, unreformed, unrepentant and unchecked, and that Abbott and now Turnbull are paying the political price for trying to clean up the mess they inherited, is bloody hard for grassroots Liberals to swallow.

Unfortunately, last night nevertheless is another slap in the eye for the Liberal base, not all of whom can be presumed by Turnbull supporters as being in the thrall of that nasty Mr Abbott but are simply fiscal conservatives and small government true believers. 

As voters desert both major parties to flirt with the fringes, after last night Liberal pollster Mark Textor’s post-Turnbull coup assertion that the Liberal base will go nowhere because there’s no place to go looks hollower and more complacent than ever.

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