Turnbull & G20, Iran Threat, Andrews Poll Down; Obama’s Dr on Hilary
While Turnbull himself could not be blamed for the absence of three ministers and other Coalition MPs at the end of Thursday’s Reps session, he must have failed to emphasise to the whips and others the importance of attending the first session after an election result which he had publicised as providing a majority. The absence of 10 Coalition MPs allowed Labor (which had obviously planned to take advantage of any absences) to indicate that this is another example of Turnbull of mis-management. And this theme has been taken up in the media too, including one suggestion that Turnbull lacks a “wingman” to support him in Parliament. Perhaps the failure to sack the Chief Whip, Pyne, illustrates the problem.
Morrison, Turnbull, Abbott & Me on Government Spending
Realising that it risks being attacked in the new Parliament for lacking specifics to justify its “jobs and growth” policy, there are signs that the Turnbull government has, at almost the last minute, produced some commentary on why government spending and deficits must be reduced.
Budget Savings, Protecting Voluntary Agencies, Clinton’s Health, Syrian War
With the imminent resumption of Parliament some warming-up is occurring. In The AustralianFinance Minister Cormann is reported as making new claims that the Coalition has already made large budget savings ($221bn over 10 years locked in) and that more could be made with Labor support. It appears Cormann refers to possible savings additional to those proposed by Turnbull to implement a miniscule $6.5 billion in budget savings said to have been agreed by Labor. But why hasn’t the Coalition detailed some possible additional savings?
GST Shares, Budget Strategy, NT Royal Cn
In my Commentary on Tuesday I suggested that Turnbull’s announcement at the WA Liberal Party’s conference held last weekend that each State would now be guaranteed a minimum share of GST revenue was, once again, lacking in any serious analysis or any checking first even with senior ministers, let alone other states. It has subsequently emerged that the new arrangements, the calculation of which has not been stated, are first to be discussed with other states and that it is unclear when they might start (although WA Premier Barnett who has an election next March says he thought it would be this calendar year). The Australian also published an analysis on the assumption that the minimum share would likely be 75% and that WA (now receiving only 30%) might not receive any future benefit from any such arrangement. My letter to the Australian on the issue was published yesterday with four others (see GST Shares).
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.
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.
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?
What’s Missing from Turnbull
While the Morgan Poll (see attachment on Morgan Poll) is not generally regarded as being the most accurate, its latest result gives Labor a potential winning lead with a TPP of 52.5 to 47.5% and Queensland being the only State where the LNP is leading. This is the largest lead since Turnbull was elected leader of the Coalition and it also has a 30.5% vote for minority parties. While it is too early to be definitive, this suggests that the electorate is not attracted by either major party and that neither will have control over the Senate.