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.
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.
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.
Election Claims of Economic Benefit
On 9 May my Commentary drew attention to the estimates for the budget and the economy in the next two years and suggested that these should be the starting point for assessing election proposals by the major parties. I repeat here the following table summarising the budget estimates.
Budget & Economic Plan (Sic)
How to interpret the Budget? My initial reaction was “much ado about nothing”, by which I meant that while there have been reductions in superannuation “concessions” and in tax rates for small businesses offset by increases in tobacco excise, together with a small initiative on youth employment and commitments to fund various types of infrastructure, there was little change over the next two years in estimates of total government spending and revenue relative to the total economy.
Workplace Relations Reforms, The US in Syria? Iraq, Earth Day
Malcolm Turnbull has been prepared to risk forcing a double dissolution to obtain a vote by both houses sitting together on legislation to pass the Registered Organisations bill and to re-establish the Australian Building and Construction Commission. That body was abolished under the Gillard government in May 2012 and replaced by Fair Work Building & Construction with much reduced regulatory powers. Turnbull also secured the winding up of the Roads Safety Remuneration Tribunal established under Gillard at the behest of the Transport Workers union and effectively designed to favour unions able to collude with transport companies.
Turnbull Visit to China & Stone on Split Within Liberal Party
Turnbull’s 36 hour visit to China and his meetings (and banquets) there with President Xi and Premier Le Keqiang may have enhanced his role as a PM able to get on with important leaders from other countries. Many of his reported comments also appeared to be designed to show that he is knowledgeable about Chinese history. But the question is whether anything came out of the visit.
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.