Ship of State MT Vessel, sets Sail, Delivering Nothing, Self Indulgent Pleasure trip for those Onboard


What is the point of Malcolm Turnbull ask voters?

Prime Minister Malcolm Turnbull has described the Business Council of Australia's advocacy of a GST increase to fund ...
Prime Minister Malcolm Turnbull has described the Business Council of Australia’s advocacy of a GST increase to fund company tax cuts to colleagues as the “go into the study, get out your service revolver and blow your brains out” option in political terms. Andrew Meares

 

There are literally thousands of people in Parliament House when federal Parliament is sitting – not that it always feels like it.

Sure, question time in the House of Representatives creates a great sense of drama and noise. Walk around the building at the moment and you will find plenty of agitated MPs with their excitement dials already turned up a few notches – from the normal “easily excitable at best of times” – because we are in an election year. After all, we are getting into the business end of arguing about election dates and options.

But the funny thing about the building is that, away from the chambers and the public areas, there are vast empty corridors and a lot of quiet.

It is a fitting metaphor for the noise and isolation of politics and for the need for calm when others are losing their heads.

Nowhere is the slightly cocooned, slightly hushed sense more apparent than around the Prime Minister’s office.

From Bob Hawke – the first occupant of the “new” building in 1988 – onwards, the PM’s office throws visitors into a little cocoon of superficial calm, even without Peta Credlin’s scented candles.

Staff in the PMO – whoever the PM is – work to ensure that more earthly pressures are kept off their boss so that they can deal with the onslaught of issues they must manage.

The PM’s office itself – whether furnished with the original bespoke orange armchairs, John Howard’s chesterfield or Malcolm Turnbull’s work table – is a quiet and contemplative space, no matter how many times a day the door opens with the next set of visitors.

What’s the point?

Turnbull’s backbench is agitated about where tax policy is going and, for that matter, where the government is going. The government’s conservative wing launches into frolics about social issues.

This week’s Newspoll has, with rather a jolt, shown the major parties at level pegging, suggesting voters are also asking “Wherefore art thou, Malcolm?”

It’s coming up to six months since Turnbull became prime minister, amid a wave of relief that the perceived ideologically driven and chaotic Abbott era was over and expectation that Turnbull could fix things and, what’s more, get the place moving again.

“It is clear enough that the government is not successful in providing the economic leadership that we need,” he said on September 14.

“It is not the fault of individual ministers. Ultimately the Prime Minister has not been capable of providing the economic leadership our nation needs; he has not been capable of providing the economic confidence that business needs.”

The business confidence surveys showed that his ascension has indeed given business a boost. But there were also huge expectations that he’d whip out the “reform” magic wand – that stuff would start to immediately happen.

Turnbull met, for example, with business groups who had attended the reform summit organised in the middle of last year by The Australian Financial Review and The Australian, creating hope among lobbyists whose efforts had been summarily executed by Tony Abbott.

But then it seemed, well, nothing, other than an innovation statement.

As a result, whatever might be going on behind the scenes, the questions that occupants of Parliament House get asked wherever they go is “What is he doing?” “Is he doing anything?” “What’s happened?”

Then there has been the spectre of the last few weeks’ implosion on tax.

Big fix on tax

Now, tax reform has become something of a rite of passage for governments in Australia, perhaps even more so than achieving budget balance, now that both sides have quietly had to concede that that isn’t going to happen any time soon if our current low growth, low inflation circumstances prevail.

So hopes all settled on the big fix on tax. And, after all, the Abbott team had set hopes flying with their talk of a tax white paper and big reform for the next election.

Treasurer Scott Morrison hit the hustings early in January: nudge, nudge, wink, wink, say no more. A 15 per cent GST suddenly seemed not just on the table but possibly about to be announced any day. Then there was the great clanking of gears, or given the ongoing focus on submarines in Canberra, the great “dive, dive” alarm was sounded.

The GST was off the table. Labor announced a policy on negative gearing and housing affordability. The government was on the back foot.

So what is going on?

It has been pretty clear for some weeks that the Prime Minister was most alarmed that his Treasurer had led the government too enthusiastically down the GST path.

A few subtle taps on the brakes didn’t seem to stop the momentum. So the handbrake was put on with the release of Treasury modelling showing there would be few efficiency gains from a tax mix switch between the GST and personal income tax.

The modelling gave a scientific feel to what was in fact a multifaceted decision about the GST.

Changes to government payments since 1998 (thanks a lot John Howard) made a compensation bill astronomical, limiting the revenue gains and increasing the churn of government money.

The modelling did in fact suggest the economic advantages might not be what they were cracked up to be.

As for the politics. Well the states were not going to come on board on a GST increase, despite conditional support from NSW Premier Mike Baird and South Australian Premier Jay Weatherill.

The 2014 budget had backfired as a blackmailing tool. The backbench was alarmed. Labor was primed to attack.

The response from the reform lobby was apoplectic.

Why not model a company tax switch, since that is where you get the big bang?

The answer is pretty clear, and pragmatically damning of the bind that business has created both for itself and the government by the widespread nature of corporate tax minimisation.

‘Blow your brains out’

Turnbull has described the Business Council of Australia’s advocacy of a GST increase to fund company tax cuts to colleagues as the “go into the study, get out your service revolver and blow your brains out” option in political terms.

He remains incredulous that the business community seriously thinks this was ever a possibility.

That is, a tax mix change which would hit poor people to fund a tax cut for a bunch of rich people who make it a point of pride not to pay tax.

The focus at the top of government switched to funding a personal income tax cut to offset the effects of bracket creep, and to clean up other bits of the tax system.

Superannuation is central to this. Negative gearing – but a different model from the Labor one – is also in the government’s sights. The Prime Minister believes there are genuine problems in Labor’s proposals that would administer a shock to the property market, but also actually create inequities that would benefit wealthy people who earn a lot of investment income compared to wage earners.

The political organising principle is equity: the issue on which Turnbull can help build, or even rebuild, the centrist credentials that offer the possibility of winning votes from Labor, and a greater authority over his own party on the back of an election victory.

With the momentum appearing to build towards a July election rather than a later election, and with the government appearing disorganised and agenda-less on tax, the week closed with the Prime Minister leaning towards a pre-budget tax statement.

But Turnbull’s even larger challenge is to remind people of the other side of his promise, and to also switch the whole conversation – the whole idea of reform – into other areas.

The other side of Turnbull’s September promise was to break the impasse that seemed to have developed around every aspect of government in 2015.

And his government has indeed managed to get some significant breakthroughs on issues that have been bogged down for an age.

Remember how a few months ago people would comment that “you can’t have a double dissolution election because the proposed changes to Senate voting are going nowhere”? Well this week a deal was formalised that not only cleans up the question of micro parties, but clears the way for a double dissolution which could transform the way Parliament works after the looming election.

The government also announced a well-received Defence white paper – which had been delayed for more than two years – which bore the Turnbull stamp in its focus on innovation and a more dynamic industry involvement, but which also had a strategic coherence that sources say was badly lacking in the drafts left in the filing cabinet when Abbott departed. At that point, sources say, there was not even a mention of terrorism in the paper.

There is progress

A deal on media ownership laws, which have beaten several governments, is also close.

Turnbull has run out of time to overhaul the mess of Federation – and the poisoned chalice of the $80 billion cuts to education and health from the 2014 budget – so is quietly striking an interim deal to get through the election.

He is focused on infrastructure and on cities as areas that will shape what “reform” means to him, not just the budget.

So the answer to the question “Where is Malcolm Turnbull?”: he’s sitting in his office trying to work out how best to proceed with a calm plan for winning an election.

He and his Treasurer have allowed the tax debate to jump off the nail and go careering around the yard like one of those old catherine wheel fireworks on cracker night. In turn, this has encouraged every nutter in his government to go off on frolics of their own on policy.

He now has just over two months to get the tax discussion on a track that gives the government a credible platform for an election campaign, to transform the direction of what dominates our political debate, and for his Treasurer to land his administration’s first budget.

It all suggests a need for haste as well as calm and purpose

 

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