Reactions to Budget
In his budget reply Shorten rightly claimed that the Turnbull government did not present a Labor budget: he said this because his presentation in fact took the Turnbull budget further down the socialist road (see Shorten’s Budget Reply). Although no estimates were given of Shorten’s Labor budget, there can be no doubt that it would mean higher spending and taxes. Those taxes would moreover be concentrated on alleged “high” income groups and would extend to emissions of CO2. In a sense, Turnbull provided Shorten with an opportunity to take a step further.
The Australian has savagely attacked Shorten’s presentation by calling it “a socialist nightmare, exacerbating the deficit, our rising debt, the risk of losing the AAA credit rating and the looming costs from an ageing population as the ratio of workers to retirees declines. Labor has taken the race to the bottom on economic policy down several notches. Its policies would make the path to fiscal responsibility, when finally undertaken by braver politicians than we have at present, far more painful” (see attached Editorial on Shorten). It also ranas a lead opinion piece an excellent article by IPA policy director Simon Breheny (see Breheny on Budget). Amongst other things,Breheny rightly draws attention to the contrast between the dominance of unions in the Labor party and the smallness of their role in the community, an important differential which the Coalition under Turnbull has failed to utilise.
The question is whether Shorten can get away with it, given the move to the left by Turnbull with the apparent heightened support of Treasurer Morrison, whose attack on banks made him resemble a delegate at a Labor party conference.Former Labor Minister Graham Richardson (who says hespent a couple of hours with the Treasurer just a couple of weeks ago) points to the importance Morrison attached to the government’s poll position and his claim that it is “definitely not irredeemable. He knew the budget he was about to bring down was make-or-break for his own career, let alone that of the government of which he is a key member”. Richardson concludes that Morrison’s budget “went well enough to get the government back in the game. Don’t worry about the next few Newspolls because the government will no doubt get a sugar hit from the budget” But, he wonders, “ The question yet to be answered is: can that boost in the polls be sustained?” (see Richardson on Liberals).
I wonder, however, if Richardson is right in thinking there will even be a “sugar hit”. We shall see next week in what could be a more than usually important poll. If the Turnbull government cannot get a favourable result from its second budget, what would it need to do to get one?
One potential source of trouble from the conservative side is the reaction by John Howard, who yesterday described “the looming energy crisis as a scandalous policy failure of the first order” and questioned why that looming energy crisis was barely mentioned in the budget”. He said that the renewable energy target should never have been lifted above the 2 per cent he set when in office and according to the attached article (see Howard on Renewables), he “reignited calls for a national overhaul of climate policy”. While one can blame Howard for not having a proper examination of climate policy when he initiated it, the so-called energy crisis certainly justifies one now and that is missing from the Turnbull government’s agenda. The renewable target of 23.5% is of course much higher than the 2% set by Howard.
This reaction follows Howard’s previous expression of “unease about the bank tax and I do not walk away from that”. In short, a highly successful former Liberal PM has sent a post-budget message to Turnbull that his earlier encouragement to Turnbull to stay in the political game may not have been correct.
As to the bank tax (which is to be accompanied by greatly increased regulatory arrangements), there are serious reservations about the proposed new banking “system”, which comes close to a return to nationalisation. As The Australian points out “ Scott Morrison pinched the idea for a banking tax coupled with more regulation from Britain, but the financial history there was quite different. During the 2008-09 banking crisis, the British government nationalised Northern Rock bank and bailed out Lloyds Banking Group and Royal Bank of Scotland. RBS was about to run out of cash for its ATMs. A winding back of executive bonuses and new controls on risky borrowings were demanded as a quid pro quo for the taxpayer-funded rescue package. Australia, by contrast, came through the global financial crisis in good shape, thanks to a government guarantee of deposits and the strength of our banking sector. If the Treasurer feels capital levels should be higher to protect taxpayers from future bailouts, that is a separate issue. As for customer complaints, any bank will generate those but there is no evidence of systematic abuses across the sector” (see Editorial on Banks). Notwithstanding apparent reservations in some quarters about the operations of the current banking system, the proposed changes seem an unwarranted “grab for cash”.
Trump’s Dismissal of FBI Head
Considerable attention is being given both here and in the US to Trump’s decision to dismiss the James Comey, the head of the FBI. It appears that such action has only been done once before by a President and most of the media commentators are questioning the rationale. Trump’s unpopularity with most of the media are leading to the widely held view that this is basically an attempt by Trump to avoid an investigation into whether he and his associates had arranged for the Russians to hack the Democratic Party emails and thereby prevent Hilary Clinton from becoming President.
This attached article by the Manhattan Institute, a think-tank in New York which I visited some time ago, suggests that “no evidence has been presented to demonstrate that any state or organization, least of all Russia, had anything to do with tricking John Podesta into revealing his email password, which is what led to the exposure of the DNC emails—the episode now considered synonymous with “hacking the election.” The article argues that Comey’s record, including his apparent critique of Clinton, “was peppered with bizarre statements and errors of judgment” and that Trump should have dismissed Comey in January.
It seems likely that, although Russian Foreign Minister Lavrov told the media that at his meeting with Trump yesterday there was no discussion of Russian meddling in the election. a Congressional committee will examine the possibility of some attempt by Russian to influence the Presidential election. While anything Labrov said must be taken with a grain of salt, it is interesting that he reported as criticising Obama for the poisoning of US- Russia ties and as speaking more favourably about Trump.