There’s lush high country that all political parties seek to occupy. It’s called the ‘land of economic credibility’. If you live there the people trust you with the economic management of the country or the state. It has a high peak that no party has ever climbed. But to occupy even the lower slopes is regarded as a politically powerful place to be. At the edge there’s a cliff. Below it is a steep slope on which it is hard to maintain safe footing. Below that the terrain falls away steeply and the surface become so slippery that once on that greasy slope, the slide accelerates right to the swiftly flowing torrent far below. Even if the fall is survived, return to the high country becomes almost impossible; it takes a long, arduous walk around the mountain. [more]
John Howard, Peter Costello and their Coalition Government were seen by the electorate as having economic credibility. Not by everyone, but by enough to entrust them with managing what was in the latter years a buoyant economy fuelled by the resources boom. Some would say that it didn’t need genius to run an economy that was rolling in unprecedented resources revenue. Nevertheless the Coalition remained well ahead of Labor in ‘handling the economy’ stakes, even when Labor was eclipsing the Coalition in other attributes. In fact it is only relatively recently that Labor has drawn level, as demonstrated in the August 17 Essential Research Report. In the same report, when the proposition was who was best, Kevin Rudd or John Howard, at ‘handling the economy in the interests of working people’, 50% said Rudd, 25% said Howard. On August 18, Possum wrote in Pollytics in a piece Essential Report – The Fickleness of Political Mythology “One of the great pieces of political mythology over the last decade was the towering strength of Howard on the Economy and Defence and Security as issues. There was absolutely no doubt he rated relatively highly at the time, but as is always the case with these things, we shouldn’t underestimate the power of incumbency in boosting such ratings.”
Whatever the argument about Rudd versus Howard on economic credibility, the situation has not improved for the Coalition since Malcolm Turnbull took over, despite his experience in business and banking.
A July 27 2009 Essential Research Report showed the Government ahead of the Coalition on most economic parameters: ‘protecting your wages and conditions’ 28% ahead; ‘dealing with the global financial crisis’ 19% ahead; ‘protecting jobs’ 18%; ‘handling the economy in the interests of working people’ 16%. There were several others that were more even, but with labor still ahead: ‘making taxes fairer’, ‘regulating banks’ ‘keeping interest rates down’, ‘keeping unemployment down’, ‘handling the economy’, ‘planning the economy long term’, and ‘handling inflation’. In fact the only item on which the Coalition was well ahead, by 14%, was ‘’managing Australia’s debt’.
Newspoll runs questions on the economy intermittently – there should be another soon – but as far back as October 2008 Dennis Shanahan ran a piece in The Australian, Rudd overtakes Turnbull on economics that began: “Kevin Rudd has emerged from the days of the financial crisis as popular as he ever was and has overtaken Malcolm Turnbull on economic management. The Government's $10.4 billion emergency economic boost and the guarantee for all bank deposits have been enthusiastically endorsed." Further on he writes: "Vitally, Rudd has also broken away from the Leader of the Opposition on economic management. Only a few weeks ago Turnbull's merchant banking background had his nose in front of Rudd, but that has reversed."
Effectively Turnbull has ceded economic credibility to Rudd, and to date shows no sign of reversing that. The Government now occupies the high country, not the Coalition. How has this happened?
There are many reasons, but a resolute intent to oppose everything, which no doubt he believes is what he’s supposed to do as Opposition leader, seems to be at the core. Take the stimulus package. After briefly saying the stimulus was about right, he then said it was too much and poorly targeted, then after passing the first package he opposed the next. He and his colleagues have hardly acknowledged that a GFC ever existed, and now although almost all commentators agree that a looming catastrophe has been averted by the stimulus, he refuses to acknowledge that it has had any beneficial effect and is saying that the stimulus wasn’t necessary, that the Government panicked, spent too much and racked up massive debt, with deficit budgeting for years to come, and now he says the Government must rapidly withdraw the stimulus. Asked what he would have done, he concedes he would have used a stimulus, but about half that of the Government, he would have targeted it better, and would have consulted more widely before starting the schools program. He seems not to have grasped that speed was of the essence.
His ever changing position must be hard for even his rusted-on supporters to endorse; for the rest of the electorate he must seem to be confused about what to do. Credibility is steadily eroded by such uncertainty. The polls reflect this.
Today in Question Time, Craig Emerson, Minister for Small Business, in search of public support for the Opposition leader’s ‘withdraw the stimulus’ call, cited thirteen sources that insisted that the stimulus be continued, from international bodies and officials such as the IMF, OECD, World Bank, G20 finance ministers and central bank governors, the US Treasury Secretary, and at home the Australian Chamber of Commerce and Industry, all the bank economists, Treasury, and many independent economists. All expressed caution about precipitous withdrawal of the stimulus.
The only international body expressing a different view was the Bank of International Settlements that warned in June ‘that fiscal policy was at serious risk of overshooting’. Some local commentators, all of which believed the stimulus was unnecessary or too large in the first place, such as Warwick McKibbin, Henry Ergas, and economics writer for The Australian, Michael Stutchbury, are among the few who support stimulus withdrawal. Stutchbury writes about this today in Unwind the stimulus.
So Turnbull and the Coalition are virtually isolated. The Greens have proposed a Senate enquiry into the stimulus, which the Government has supported, which will involve Ken Henry and possibly Glenn Stevens. It would be surprising if they did not also endorse the government’s position.
With each foray into economic matters Turnbull and his finance colleagues slide further downhill. They now seem to have slipped over the cliff.
In today’s Question Time, Opposition members, starting with Turnbull, asked the weakest of questions about the stimulus, to be greeted with a full frontal assault from Rudd and his ministers. Attempts to put down Julia Gillard by Christopher Pyne and Julie Bishop over the schools program failed, and in answer to a Dorothy Dixer, Anthony Albanese dismembered the Coalition accusation that the Government’s infrastructure spending was overt pork-barreling. Turnbull asked only two questions in the first hour, and looked dispirited as well he might have been following polls over the last week.
Morgan on Friday with a TTP of 61/39, the same in Essential Research Report yesterday, and Newspoll today steady on 55/45, gave little cause for optimism. The only tiny bonus in Newspoll was that Turnbull’s satisfaction rating had climbed one percentage point, his dissatisfaction had fallen four points, giving him a net rating of negative 21 points, an improvement on his negative 31 points in early August. At the same time Rudd’s approval has gone up three points, dissatisfaction down three points, giving a net positive rating of 38 points, his best for six months. And in the Preferred PM stakes Rudd has gone up a point to 67 while Turnbull remains on 19. As an aside, Glenn Milne’s ‘honeymoon over’ prediction and his other ‘feelings’ about Coalition revival are clearly wrong – once again!
The other aspect of this saga, scarcely mentioned except by Government members, is that withdrawal of the stimulus is built into the entire package. The cash bonuses had an early effect, and even when that money was initially saved it flowed later into the retail sector that can attest its good effect, but has now largely run its course; the schools program then boosted jobs in the building sector while improving schools infrastructure, but will phase out as the buildings are completed; and will be replaced by larger infrastructure projects – roads, rail, ports and broadband – that have taken longer to initiate and will go on for years. So far from the ‘reckless spending’ that the Opposition likes to paint as never ending, phased withdrawal of stimulus is inbuilt and progressing.
With the strength of world and local opinion against abrupt withdrawal and with withdrawal already occurring as part of the program, why does Turnbull and the Opposition continue to attack the Government and insist that the stimulus must be reined in now to stem the spending, as if the loss of jobs and the failure of small business that the Government insists would follow, would be inconsequential? In the equation ‘save jobs and businesses now and pay later, or sacrifice jobs and businesses now to avoid debts later’, the Opposition chooses the latter. Those who would lose their jobs and businesses might have a word for the Opposition.
The impression one gets from doorstops and in QT is that Opposition members are less than enthusiastic about following Turnbull’s lead. Even he appears to lack enthusiasm. So is he just going through the motions because he doesn’t know what else to do? Or does he, in his inimitable self-confident style, really believe this is a winning strategy? Do his Coalition members believe in his strategy? Can they not see that the public is not behind them, that the electorate is not listening, not believing, as demonstrated by this week's Essential Research Report that showed that 57% agreed that the stimulus had prevented a serious recession while only 30% disagreed? Or are they just behaving like lemmings ready to follow him over the cliff to a sad fate?
The lemming metaphor is fitting for people who go along unquestioningly with unsupported opinion, with potentially dangerous or fatal consequences. By all accounts Turnbull’s opinion on the stimulus is virtually unsupported. By following lemming-like in his path, the Opposition runs the risk of the fate that lemmings often suffer.
Why won’t they stop and seriously question in the party room whether Turnbull's strategy has the capacity to gain them the traction they need to stop them sliding over the edge where their leader and his close colleagues have already gone? If they did, and tried a more positive strategy, some might survive to rebuild the economic credibility they so desperately need.
What do you think?