The outcome of the imminent last two weeks of Parliament will set the scene for the Christmas- New Year period during which changes in our political leaders may be foreshadowed or possibly even occur. The most prominent change in Australia in this period was probably the overthrow of Bob Hawke as leader and PM by Paul Keating on 19 December 1991. This occurred after a long period of rivalry between the two Labor leaders. The election of Trump as President and the raising of expectation of changes in government policies around the western worldhas also set the scene for possible leadership changes around the world.
I have no doubt that Terry McCrann does not want to be labelled a spokesman for Donald T. But after his conclusion yesterday that, in the wake of what he described as “the Trump-quake”, Turnbull now has a last chance to pull his socks up, Terry has again pursued one of Trump’s favourite targets viz international institutions. On this occasion it is the International Monetary Fund and the report by its “mission” to Australia to report on the Australian economy and the economic policy being pursued by the Turnbull government.
The black out in South Australia (which still exists in parts of the state) has produced disputes about whether this is simply “the weather” or something more substantial. The Premier of South Australia is reported as attributing it to extreme weather causing towers to collapse but neither he nor his Energy Minister have made any justifying news releases so far. By contrast, the Herald Sun’s business editor, Terry McCrann, has made it clear that the weather was not extreme and that the blame lies with the structure of the electricity net work including the extensive reliance on renewable energy to meet demand (40%) (see attached McCrann on SA Blackout).
Whether the Coalition will have enough seats to form government remains unclear and it is by no means certain that it will be able to remain in government. But one or two certainties are clear. Most importantly, the governing of Australia will be much more difficult, perhaps as difficult as it was under Whitlam when the initial budget was put together by Whitlam and his Deputy on their own. The Turnbull government has already introduced a budget but that has still be considered by Parliament. Labor will doubtless argue that Turnbull’s bad election result means that this budget needs to be revised. As Terry McCrann points out below, any budget now needs to alsotake account of the likely reduction in Australia’s AAA credit rating.
David Cameron has been British PM since May 2010 and won a second term in May 2015 with an all Conservative government (his first government was a Coalition with the Liberal Democrats). That second term was won with a much larger majority (331-232) than predicted by polls, probably because the polls under-estimated the (then) unpopular proposals by Labour Leader Millibrand (now replaced by the extremist Corbyn!). An independent inquiry into the polling suggested that the polling methods resulted in conservative voters being under-represented. The 72.7% who voted on the EU referendum exceeded the proportion in the May 2015 election (66.4%) and the 1975 European referendum’s 64.62%. Reports indicate that those who voted to leave appear to have comprised a high proportion of lower-middle income groups.
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.
The latest Newspoll showing a negative TTP of 49/51 for the Coalition (see below) has sent the Turnbull government, and the Liberal Party itself, a clear message to fix the role being played by the current leadership. The poll includes a section indicating only 19% favoured allowing the States to impose an income tax. This does not necessarily rule out such a development in the future. But it confirms that the handling of the issue by Turnbull has been so bad that, as suggested in yesterday’s Commentary, it requires a major change in the role being played by him as PM.