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.
The Budget Outlook after the PEFO
As expected, today’s publication by Treasury and Finance of updated fiscal and economic estimates and projections – the so called PEFO published under the Charter Of Budget Honesty - do not show any significant change since the Budget of 3 May. I have include the most important sections of PEFO here.
Shanahan on threat to Turnbull, Stone on Turnbull’s Views
In the election now under way the Turnbull government has so far been selling its re-election on the theme of “jobs and growth”. In my last two Commentaries I have given reasons why this poses problems, based as it is on a budget presented as an economic plan which has very limited substance in terms of either its aggregates or its components. As The Australian’s Economic Editor Uren put it, “taken together, the initiatives in the budget will not shift the dial on national growth one way or another to a measurable extent”. This is already reflected in dissatisfaction amongst Coalition members, with no lift in polling following the budget (in Newspoll the Coalition’s TPP remained fractionally below Labor’s), a majority of voters judging that the budget left them worse off but with Turnbull still well ahead as the better PM. There has also been questioning of the components by media and other commentators. Further, in the first public debate in front of a supposedly undecided audience, Shorten easily won the head count. On the ABC’s Insiders today there was agreement from the four participants (all with the left inclinations that the ABC normally gives preference to) that Turnbull has so far shown less ability than Shorten to get his message across.
Turnbull Visit to China
Rowan Callick, who is now China correspondent for The Australian, has written two interesting articles relevant to Australia/China relations. He seems to have good contacts with both Chinese themselves and with outside experts on the Chinese political situation. The shorter one is of particular interest as it assesses the influence of Xi and argues that he operates as in a sense a “benevolent” despot, but with the benevolence not extending to corrupt senior officials (see Callick on Xi). Xi, who is said by Callick to have drawn all power to himself, is said to be favourably disposed to Australia.
Turnbull Decides Early Election & Budget
No sooner had the latest Newspoll been published (details are attached) with a 51/49 TPP in favour of the Coalition, but with the first negative net satisfaction ratio for Turnbull personally, than he announced an early return of Parliament to (again) consider two pieces of legislation on workplace relations and a double dissolution election on 2 July if the legislation is not passed this time by the Senate (of the two pieces of legislation, one has already been rejected twice and this rejection could be used to call a DD). This would be a considerably earlier election than the September/October months which Turnbull himself had previously foreshadowed.
Treasurer Morrison on Government’s Economic Policies
It is not often that one accepts most assertions and back up used by 7.30’s Leigh Sales when interviewing a minister from the Coalition Government. But her interview of Scott Morrison after he gave a 9 page address to the National Press Club (text attached with 5 pages of Q&A) go to the heart of the problem with the performance of the government led by Turnbull since he became PM. The text of her interview with SM is set out below and attached are comments on the address by her, another ABC interviewer and Shadow Treasurer Bowen. Following are the main points arising from SM’s presentation and his interview with Sales.
End of the Honeymoon?
This morning’s Bolt Report started with a declaration that the Turnbull honeymoon is over. Not surprising. But what was a bit off key was that the ABC Insiders seemed to reach a similar conclusion, although without saying so specifically. Has Scott told the ABC’s Cassidy that Turnbull has ceased to be minister of communications and is now in danger of applying his fairness policy to the ABC as PM? We even experienced an interview with a Shorten who argued that Turnbull should bring down a budget in May.
Islamism Problem Recognised – CC Target Puzzle
Today’s news suggests that the US has made an important change in the handling of the Syrian/Iraq war. The US Defense Secretary, Ash Carter, is reported as stating that the US will “deploy a specialized expeditionary targeting force to Iraq to launch unilateral raids” and "put even more pressure" on ISIS. U.S. special operation forces will conduct operations in Iraq "at the invitation of the Iraqi government" and be in position "to conduct unilateral operations into Syria," Carter said. "We're at war. We're using the might of the finest fighting force the world has ever known," Carter told the House Armed Services Committee. "Tens of thousands of U.S. personnel are operating in the broader Middle East region, and more are on the way. " (see the attached “US Policy Change on Syria/Iraq?”).
Turnbull, 7.30 Interview and Related Developments
On Tuesday I circulated a strong critique of Turnbull’s National Security statement. This is on my Institute for Private Enterprise web site. By contrast, almost all commentators praised it, although in both Wednesday’s and yesterday’s The Australian political editor Dennis Shanahan expressed some reservations, including in regard to Turnbull’s dismissal of the idea of attacking ISIL by sending troops –or, as it is commonly called, “putting troops on the ground”. Shanahan also suggested that having “a prime minister use a security address to parliament as an instrument to respond to a backbencher — albeit one who was prime minister only two months ago — devalues his own message and simultaneously emboldens and enrages Abbott” (see “Turnbull v Abbott –Shanahan” and “Interpretation of Turnbull’s Security Statement”).