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?
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.
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
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 Loses Coalition Lead in Newspoll
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.