Newspoll & Policy Deficiences; Budget Outlook; Melbourne Killer

Explaining Turnbull’s Failure to Increase Coalition Polling

Following my Commentary of 10 December my computer became unusable for over a week and I missed the opportunity of commenting on the final Newspoll for 2017 on 18 December. Despite inclinations in some media that the Coalition might improve, its TPP remained at 47/53 and, although the “Better PM” indicator lifted Turnbull’s to a poor 41 (from 39), Shorten’s also rose  to 34 (from 33). Both leaders’ performances were left at a miserable 32 “Satisfied”. Various events/decisions by the Leaders seem to have cancelled each other out and the swing of 5% against the Liberals in the 16 December Bennelong election can be regarded as “normal” for a by-election . But the deficiencies in Coalition policy stances remained extant and the Coalition needed a much better than normal outcome.

Various policy deficiencies were outlined in The Australian. Judith Sloan drew attention to four –excessive immigration and university enrolments, the continued commitment to the Paris climate accord, and the low interest rate policy pursued by the Reserve Bank.Emeritus Prof Ross Fitzgerald argued in an article that, on the standard that Turnbull himself set his government, “it is still headed for a catastrophic defeat”. Indeed, the Turnbull government’s losing sequence in polling is now “longer in time than that of his predecessor, Tony Abbott” and, while there is no consensus as to who should be the next leader, there is “substantial agreement that they need a better one they have today”. Political editor in The Australian, Simon Benson, noted that “the fundamental issues facing the government haven’t materially changed”. Writing on the same sex marriage issue, John Stone suggested that, while Turnbull portrayed the favourable vote as a triumph for Australia and himself,  the resultant amendment to the Marriage Act to allow any two people to qualify may not be as well received in the electorate as it appeared to be in Parliament. Turnbull’s failure to postpone protective legislation for public critics has been regarded as part of his failure as leader.

Mid-Year Budget Report

Leaks to the media prior to Treasurer Scott Morrison’s mid-year Budget report on 18 December suggested a substantial improvement in the budget outlook compared with the May 2017 Budget. And the media has given the Coalition credit for the improvement. However, the new estimates for 2017-18 are for a reduction in the deficit of only $5.8bn, or 0.3% of GDP and only about $1bn of the improvement is due to policy decisions on expenditure and revenue levels of around $450 billion each. The remaining nearly $5bn deficit saving mainly reflects revised estimates of receipts and spending but with no change in existing policies.

% of
% of
% of
Original Budget 2017-18 433.5 23.8 459.7 25.2 -29.4 -1.6
Mid-Year Update 2017-18 437.1 24.0 457.6 25.2 -23.6 -1.3
Budget 2020-21 (projected) 525.6 25.4 515.4 24.9 +10.2 +0.5

Note: Results includes Net earnings from Future Fund

Looking ahead to 2020-21 (the last two years of which are classified as “projections” not “estimates”), over the three years after 2017-18 Receipts are projected to increase further to 25.4% of GDP and Spending would still be increasing in real terms each year but dropping slightly to 24.9% of GDP by 2020-21. On this basis, a surplus of $10.2 bn or 0.5% of GDP would be achieved in 2020-21. If achieved, that would be the first surplus since 2007-08, which was the last “year” of the Howard government (the Rudd government did not take office until December 2007). But the surplus would mainly be achieved through an increase in taxation receipts, which would mainly reflect bracket creep. Tax receipts would increase from 22.5% of GDP in 2017-18 to 23.8% in 2020-21, the highest since the Howard government in 2007-08.  A justification for being re-elected?

In assessing these estimates/projections the following should be noted

  • A continuation of a Turnbull government would be highly likely to exceed the spending levels projected for 2020-21 and this would wipe out the surplus. There is no indication that the Coalition would sell itself as a “small” government. The projected spending for 2021 of $515.4bn has been reached by lowering spending by only $2.3bn from policy decisions and this would be reversed by promises made in the next election. The election of a Labor government would also be highly likely to increase the relative size of the federal government.
  • The revenue estimates/projections are based on a forecast increase in real GDP growth of 3.0% in each of the three next financial years, up from 2.5% growth this year. While this is possible if overseas demand increases as a result (in particular) of increases in US GDP growth, it is a higher rate of growth for Australia than in recent years. Note also that a Turnbull government may seek to reduce taxation to at least modify bracket creep, which would also reduce the projected surplus for 2020-21 ( a reduction in taxation of about 2% would wipe out the surplus and would be ineffective politically).
  • On the basis of its existing “philosophy” (sic), the Turnbull government appears to have very limited scope for announcing election promises which add to spending and/or reduce taxes. One of Australia’s best judges of government policies, Terry McCrann, says that “The key plus in the Budget update is the way it enables the government to craft a credible tax and economic narrative that doesn’t set good policy at war with desperately needed voter-appealing politics” but adds the proviso that the government must “keep a lid on spending” and tax revenues must continue to grow, including through bracket creep (see attached McCrann on Mid-Year Budget).

Terrorism in Melbourne

The mowing down in Melbourne of civilians (and the killing of some) with a car (the second such occurrence here but obviously a copy of the same overseas by terrorists) by a drug-ridden Afghan refugee raises questions about relevant federal and state policies. His apparent “explanation” is that he was concerned at the perceived mistreatment of Muslims around the world and the role of ASIO.

He came to Australia in 2004 and became a citizen in 2007. Turnbull and Dutton described this attack as an “isolated incident” but this dodges the Muslim connection and our immigration policy. The Victorian Acting Police Chief claimed that the Afghan  was not expressing any support for terrorist groups “or anything like that” and a committee comprising various police/intelligence officials decided not to charge him with terrorist offences but with attempted murder. Yet at the same time it is revealed that by February a new unit is being established in Victoria to identify persons in three groups viz those who are “fixated” between criminality and mental illness,  those who would be radicalised or violent extremists, and those who are lone-actor attackers (see Problems with Fixated Persons).

While this division recognises Muslim extremism, it fails to acknowledge that there are likely to be  Muslim extremists in all three groups and that the major threat is from that source. Our immigration policy has been tightened but it is unclear as to the extent to which Muslims are checked. In the US, the so-called chain program allows entry if family connection can be established and a Bangladeshi  used that to access the US and then attempted to detonate a suicide-bomb (see US Immigration). Trump has called for this “system” to be abolished. More generally, there remains a need for senior ministers, including the PM, to acknowledge that there are in Australia Muslim groups who support terrorism and which “educate” young Muslims in why terrorist activity against others is justifiable.  As Chris Kenny points out “How can the public feel safe if the authorities and politicians won’t even confront the very real enemy of Islamist extremism terrorism. This is the evil whose name they dare not speak — they are in jihad denialism” (see Kenny on Melbourne Attacker).

Christmas Greetings

At this time, we all extend Christmas greetings and best wishes to each other, as do I to you. But don’t forget to also wish for a happy New Year.

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