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Some Important Implications of Brexit, Failures in Interpreting Muslim Religion

David Cameron has been British PM since May 2010 and won a second term in May 2015 with an all Conservative government (his first government was a Coalition with the Liberal Democrats). That second term was won with a much larger majority (331-232) than predicted by polls, probably because the polls under-estimated the (then) unpopular proposals by Labour Leader Millibrand (now replaced by the extremist Corbyn!). An independent inquiry into the polling suggested that the polling methods resulted in conservative voters being under-represented. The 72.7% who voted on the EU referendum exceeded the proportion in the May 2015 election (66.4%) and the 1975 European referendum’s 64.62%. Reports indicate that those who voted to leave appear to have comprised a high proportion of lower-middle income groups.

Voters Want Neither Turnbull nor Shorten

The longer this election campaign continues the more it becomes apparent that voters are becoming increasingly sick to death of both leaders. The analysis below of voter satisfaction shows that “last weekend, net satisfaction — the difference between satisfaction and dissatisfaction — for the Prime Minister was minus 16, the Opposition Leader’s was minus 15 and both had 51 per cent of people dissatisfied with their ­performance. While Turnbull is favoured over Shorten as preferred prime minister 46 per cent to 31 per cent, there’s never been as low a collective vote nor as high an undecided factor at election time”

Unfavourable Polling for Coalition & Some Reactions to Turnbull Dinner

The reactions to Turnbull’s dinner at Kirribilli House with “dozens” of Muslims vary but will likely have only limited electoral influence in a context where the latest Fairfax –Ipsos poll shows for the second time that Labor is ahead at 51/49 on a TPP basis. While the Newspoll of marginal seats suggests this may not be sufficient to win (because the support for Labor is not fully reflected in marginal seats), the Fairfax poll seems to confirm that there has been a slight swing against Turnbull since the election started. In one sense this is surprising given the greater extent of promised additional unjustified expenditures announced by Labor, the fact that it has acknowledged that it would have higher Budget deficits than the Coalition over the next four years, and numerous policy announcements that provided the opportunity for extensive criticism, including the claim that Turnbull would privatise Medicare (Turnbull favours government interventions and the claim just gave him justification to confirm that without upsetting colleagues). But Turnbull has so far failed to exploit Shorten’s poor budget policy partly because the Coalition itself has already budgeted for high deficits and this makes it more difficult to distinguish between the two major parties. In addition, Turnbull has continued to announce expenditures which while claimed as already provided for in the Coalition budget estimates (The Australian’s SPEND-O-METER shows $5bn announced by Turnbull cf $16.2bn for Labor during the election campaign) give the impression that both sides are adding to deficits and that the differences between the two are small.

Turnbull’s Islamic Policy

Due to the time needed to complete the sale of the house Felicity and I owned at Malua Bay, I have not been able to send a Commentary since 29 May. With the house sale completed today, it is opportune to comment briefly on an attempt by Turnbull to portray a close relationship with Australia’s Muslim community while at the same time acknowledging that “in this age of terrorism –overwhelmingly inspired by radical Islamist ideology –our security agencies must have the trust of Isalmic communities in order to succeed”. Attached are reports from today’s Australian, which gave front page treatment to Turnbull’s dinner invitation “dozens” of Muslims.

Election Proposals Omit Structural Reforms Too

My Commentary sent out late Sunday (thanks to those who sent compliments) drew particular attention to the article by Judith Sloan on the Federal budget and her conclusion that “Labor is completely out of control fiscally; the Coalition is slightly better but no cigar”. This followed other strong critiques, including by John Stone. Meantime we have Turnbull and Shorten buying votes as they go from electorate to electorate and adding up to $100mn a day to budget spending. What does the odd million matter?

Sloan on Budget Outlook

Recipients of my recent Commentaries will be well aware of my expressions of concern about the budget outlook in the last couple of weeks. Friday’s Commentary expressed additional concerns after the publication by the heads of Treasury and Finance in PEFO of their concerns, albeit expressed diplomatically (at the same time it was reported that Treasury head Fraser would resign after the election: he will be a serious loss and his successor under either party will find him difficult to follow). I also drew attention to the Spectator Article by John Stone, which not only savaged the Coalition’s budget but pointed out that neither Labor nor “independent” journalist commentators have (with one or two exceptions) drawn attention to the seriousness of the economic problem Australia now faces. I concluded by suggesting that the Coalition should acknowledge the problem and indicate that after the election it will start a program of reducing spending by at least 2% of GDP over the next three years.

Will there be Real Budget Tests Available Publicly before the Election?

Today’s Financial Review has published my letter (see below) drawing attention to the importance of providing analysts with an accurate picture of the effects on the budget of policy announcements by both major parties. Separately, the AFR has reported (also shown below) that the Treasury will actually publish its assessment of the budgetary effects on Friday. But one question is whether sufficient detail will be provided to allow a meaningful analysis of for example the extent to which Federal government expenditures are drawing on national resources and further adding to the higher tax burden which the 2016-17 budget already proposes. Similarly, will we be provided with revised estimates of the deficit and (the likely) higher debt levels?