I was surprised yesterday to see a report on a speech made by the RBA’s Dep Gov, Guy Debelle, on climate change and the possible implications for the economy and monetary policy. I judged that, with just a few weeks until the election, it would be wrong to publish an analysis on how to treat changes in climate when that subject is probably the most controversial between the political parties. Statements by government bodies which can influence attitudes, add to the controversy and possibly favour one party, should not be made at this time. This generally accepted rule applies to the Reserve Bank notwithstanding its claim to be “independent” and the more so as Debelle claims climate change influences monetary policy.
The Turnbull government has succeeded in obtaining a welcome reduction in personal income taxes. But the estimated reduction in total tax levels is less than might be imagined from the media exchanges. This is important because, as stated in Budget Paper No.1 for 2018-19, “it is important that the personal income tax system does not act as a disincentive for those taking on additional work or seeking advancement”. Also that the “cap on the overall tax burden… “is consistent with the long term average of 23.9 per cent of GDP” which the government has set.
The Newspoll published yesterday showed a return of the Coalition to the rating of 47/53 after the upward blip to 48/52 in mid March. Turnbull’s net satisfaction rate continued to slide, now to the worst since becoming PM, while Shorten’s rose to be a fraction above Turnbull’s (the graph below tells a story in itself). The only poll now favouring Turnbull is the Better PM one but even there his rating fell while Shorten’s improved to 32/41. As The Australian’s Political Editor has pointed out, “The message is that voters are in no mood to reward Turnbull for making progress on his old agenda. Why should they, if they think he is heading in the wrong direction? For any other prime minister, the solution would be a bold new direction on a social or economic issue, but this is fraught with danger for Turnbull … The alarms are sounding for the entire Coalition, not just the Prime Minister. Turnbull cannot win from making incremental progress alone. He will have to do something far more dramatic”.