9
Dec
2018

An Early Election?

An Early Election?

In Thursday’s Commentary I referred to the view of  The Australian’s political editor (Dennis Shanahan) that Morrison still has a “last chance” of winning the election. In Weekend Australian Shanahan acknowledges that “the Liberal Party is in a mess” but also points out that “Labor finished the last week of parliament for the year on the back foot over national security and border protection, giving Morrison a reprieve from the dismal Liberal outlook. The Prime Minister was able to declare there would be a budget surplus next year, he changed Liberal leadership rules, intervened to stop a preselection brawl, asserted his authority over Turnbull and avoided an embarrassing defeat on the floor of parliament” (see Shanahan Says Morrison Has a Reprieve).

It is pertinent that Shorten has a three day national conference starting on 16 December for which he has already conceded a chink in border protection policy by supporting watered-down immigration rules that would hand doctors the power to relocate “medically-needy” (sic) refugees to Australia (see Benson on Labor’s Softening of Border Policy). He may be under pressure at that conference to make some further softening from the left in Labor.

Given that Morrison played a leading role in “stopping the boats” when working as a minister under the Abbott government, any such softenings provide Morrison with an opportunity to further attack Shorten and, more generally, to emphasise the risk of a Labor government. Interestingly, the Italian government has announced that Italy will not sign the UN’s Global Compact on Migration (the Morrison government has also refused to sign) and the Italian Parliament has approved (396 to 99) what is described as a tough new immigration and security law that will make it easier to deport migrants who commit crimes and strip those convicted of terrorism of their Italian citizenship. Morrison has already seen the “attack Shorten opportunity” in an article  published in Friday’s OZ in which he accuses Shorten of “incrementally dismantling the government’s successful border protection policies”.

Also pertinent is Labor’s climate change policy of a 45% reduction in emissions and 50% increase in renewable by 2030. This provides a basis for Morrison to attack its much higher economic cost (including higher electricity prices) than the Coalition’s policy adopted under Turnbull, which provides for a 26-28% reduction in emissions by 2030 and a 23.5% increase in renewable by 2020.The Coalition has also dropped the (unworkable) NEG “formula” approved under Turnbull and which Labor has now indicated that it may use.

Further, now that Turnbull seems to have lost his position as a self-appointed adviser, there should be scope to reduce Coalition targets on the basis, first, that Labor has energy policies which are highly damaging economically and will cause higher electricity prices, second, that it has reviewed policies made while Turnbull was PM and will make adjustments which bring Australia’s policies more in line with those being pursued by other countries and, third, that the emissions targets set in Paris in 2015 do not seem to be being followed. In fact the estimate for 2018 shows an increase of 2.7% in world emissions and initial reports from the current IPCC conference being held in Poland suggest that China and India are seeking to exempt themselves from making reports on what their emissions actually are.

In his article in Weekend Australian Chris Kenny points out that the protesters openly calling for action to reduce emissions fail to recognise the extent of action which has actually been taken by Australia  and “which has elevated our energy costs and contributed to job losses and economic dislocation, and ­delivered no environmental benefit because global emissions continue to rise substantially”. He rightly points out that “when students call for ­‘action’ they mean they want additional action: on top of the Kyoto targets, Paris commitments, the renewable energy ­target, solar subsidies, battery subsidies, light globe laws, ­renewable energy grants, Snowy Hydro 2.0 and direction action projects. When they protest in the streets their teachers, parents and many politicians cheer them rather than inform them”.

The publication by the Morrison government of an assessment showing that Australia has already taken much more action than almost all other countries would help justify adjustments to existing policies and at the same time put the Coalition in a position where it could point out that Labor’s policy would further widen the economic cost compared with other countries and would significantly reduce Australia’s international competitiveness. Kenny notes that, ”in interviews this week, I asked a protester’s parent and Richard Denniss of green-left think tank the Australia ­Institute if they could name a country that was doing more on climate action at greater economic cost than Australia. Neither gave me an answer”.

Apart from the foregoing differences with Labor, Morrison also has scope to point to the improvement in the federal government’s budgetary position which will be published in the normal Mid-Year Economic and Fiscal Outlook sometime this month and which Treasurer Frydenberg has already indicated will (at last) show a surplus, possibly this financial year. It will also doubtless include a (justifiable) claim that Australia is performing better economically than other OECD countries. Labor will find it difficult to counter these claims, particularly as it has already indicated that if elected it will increase taxes by lifting the marginal tax rate from 47 to 49 per cent, ceasing negative gearing provisions and not reducing taxes on “big businesses”.

The foregoing has led Terry McCrann to suggest that an earlier election than May would be justified. An election in March would “lock in” the favourable budgetary and economic forecasts in the MYEFO publication and prevent any significant change in the Pre-Election Economic and Fiscal Outlook (PEFO) which would be made by Treasury before the election (see McCrann Suggests Early Election). By contrast, a May election could suffer from any slow-down in the economic/budgetary outlook, which many forecasters are predicting following the “weak” economic figures just published for the September quarter.

An early election would run the risk that the Morrison government would be portrayed as a “cut and run” attempt at winning and avoiding outstanding issues. But it would have the potential of bringing the Liberal party closer together as well as taking advantage of the issues mentioned above on which Morrison seems to be ahead of Shorten, including of course the absence or near absence of Turnbull as a policy maker. If Morrison can perform as well as he did in the last week of Parliament, an early election could prove a last chance winner.

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