What can we expect in the coming election?


[Saint Malcolm?]

Apart from the obvious statements, we can also tell there is an election in the air as, after six months of inactivity, the Turnbull government has engaged in a flurry of policy announcements — or in some cases what should be termed policy ‘thought bubbles’. That is not to mention the concomitant increase in television advertising for existing government programs and policies.

Until recent times, the government had made few major announcements. Early on there were funding packages for domestic violence and the purchase of army vehicles but those were obviously developed prior to Turnbull becoming prime minister. His major announcement was the innovation package on 7 December, long on rhetoric and promises but short on substantive actions and new funding. Many of its proposed actions required no direct funding whatsoever, such as legislative changes for venture capital investments, employee share schemes and changes to bankruptcy and insolvency laws. Some had a potential impact on government revenue into the future, such as the tax incentives for early stage investors that will cost $51 million in each of 2017‒18 and 2018‒19. There was some direct funding for certain aspects of the package but it seems much of this was also funding redirected or rebadged from existing related programs. Essentially the strategy focuses on innovative business start-ups, improved collaboration between business and research institutions, a small investment in STEM teaching and digital literacy in schools, and the government itself setting an example in adopting new digital technology.

In The Conversation, Tim Mazzarol, Winthrop Professor, Entrepreneurship, Innovation, Marketing and Strategy at the University of Western Australia, suggested that it was a start and was implementing some changes that had been sought since 2008. He quoted another professor, Mark Dodgson, that the money announced for the strategy did little more than ‘get us back to square one’. Mazzarol pointed out that successful start-ups were a very small percentage of businesses and many do not grow beyond ten employees. He referred to his attendance at a Business Council of Australia round-table regarding enhancing industry-research collaboration:
‘… there was also a recognition that many large firms, particularly foreign owned multinationals, do very little fundamental R&D in Australia. The pipeline for STEM graduates into industry and the willingness of many large firms to serve a “Keystone” role in local business ecosystems is currently missing.
So is the Turnbull plan missing the real issues?

On 29 February, Turnbull told Cabinet:
The challenge for us this year is to ensure we lead Australia in a way that delivers a successful transition from an economy that has been buoyed by a mining construction boom to the new economy.

That transition is the big challenge and the big opportunity for us and so in this election year we know that the choice will be who is best able to lead Australia through that transition, who is best able to deliver the innovation, the investment, the infrastructure, the jobs that are going to ensure that our children and our grandchildren have the great, high paying jobs of the 21st century.
Turnbull may be telling his Cabinet that but it is not exactly inspiring stuff for the electorate: probably the explanation for so many television advertisements now trying to sell it as important for our economy and for our children — the latter a deliberate advertising ploy.

There have been more uninspiring announcements but announcements that fit with Turnbull’s background in merchant banking. On 16 March, it was announced that, in accord with the Harper Review, Section 46 of the Competition and Consumer Act, regarding the misuse of market power, would be changed to prohibit those ‘with substantial market power from engaging in conduct that has the purpose, effect or likely effect of substantially lessening competition’. On 21 March, Morrison announced changes to support financial technology. He said:
FinTech is going to revolutionise how consumers and businesses, as the drivers of economic activity, interact. This is going to have big implications for demand in the future. We need to be part of these changes and we have got to work out the best way to engage with FinTech and prepare for the financial system and economy of the future.
And on 30 March, Morrison announced that the ASX would lose its monopoly on share clearing, ‘a move by the Federal Government to encourage competition’.

On issues that may gain more voter attention, there was an announcement to create ‘Health Care Homes’ to coordinate treatment of those with multiple chronic conditions (note, however, that this is only for multiple conditions, not a single chronic condition). And on 23 March, a $1 billion Clean Energy Innovation Fund was announced. This at last abandoned Abbott’s attempts to do away with the Clean Energy Finance Corporation (CEFC) as the fund would be administered jointly by it and the Australian Renewable Energy Agency (ARENA). However, whereas ARENA was previously able to make grants, the new arrangements will operate on a debt and equity basis.

And there was Turnbull’s promise on taxation reform where he initially said ‘everything was on the table’ but has subsequently taken the GST, negative gearing and superannuation changes off the table. They ran the idea of corporate tax cuts ‘up the flag pole’ but it remains to be seen whether they will make their way into the budget. Personal tax cuts seem to have disappeared, as too expensive, despite Morrison earlier having emphasised the need for such cuts to overcome bracket creep.

At the COAG on 1 April, Turnbull took another ‘thought bubble’ to the table: the idea that states could re-introduce their own income tax but it was firmly rejected by the Premiers and Chief Ministers. The idea was underpinned by the concept that states and territories would take over complete responsibility for education in government schools (and eventually hospitals), something which was also being pursued by Abbott and Hockey. I warned that this was likely in my piece ‘A smile is not enough’ early in February:
The Turnbull government is still pursuing the Abbott government policy of a transfer of powers to the states. Morrison has floated the idea that the states should receive a guaranteed share of income tax. The underlying idea is that the states become solely responsible for schools and hospitals and the commonwealth covers Medicare, the PBS and universities. Given that education and health are issues which the electorate sees Labor as better able to manage, the cynic in me suggests that this is also a political strategy to take away one of Labor’s strengths at the federal level.
State income tax was abandoned in 1942 and the idea that we could have different tax regimes between states runs counter to the concept of a national economy and would add to the complexity for businesses that operated in more than one state, whereas Turnbull and Morrison keep proclaiming the need to reduce red tape for businesses. We will now have to await the budget to see whether the Turnbull government can achieve any form of taxation reform to take to the election: the prospects do not look bright.

So far, very few of the government’s policies appear likely to inspire the voters. Perhaps Turnbull has a ‘vision’ with his innovative, agile economy but there is little substantive to talk about, little to grab the imagination of the voters.

Labor on the other hand has been releasing detailed policies for over twelve months, a strategy that has not been followed by Oppositions for twenty years. In that time, Oppositions have taken a low-profile approach and offered little in the way of major policy or have made such announcements only in the last week or so of an election campaign. The reasoning behind that approach was that the early release of policies allowed time for the government to refer them to the public service, or external consultants, to pull them apart and pick holes in them. The fact that the government has done little damage to Labor policies so far may suggest that the ‘holes’ are few and far between.

The government response to Labor’s proposed changes to negative gearing brought not an attack on the detail but a ‘fear campaign’ and it could not even get that right with contrary claims that house prices would fall and house prices would rise.

Labor is also proposing changes to the tax treatment of high income superannuation, changes to the tax concessions for capital gains, an increase in tobacco excise and a target of 50% renewable energy by 2030.

Abbott, following his classical three-word pattern (he seems to have no other) has labelled these as ‘five new taxes’: a housing tax, a seniors’ tax, a wealth tax, a workers’ tax and a carbon tax. He ignores, of course, that, for example, an increase in tobacco excise will help reduce future health costs as more people give up smoking and that the so-called ‘carbon tax’ will actually promote and invigorate the renewable energy industry in Australia, thus creating more jobs and boosting the economy.

In the absence of inspiring Turnbull policies, I would not rule out Turnbull adopting a similar approach. As a matter of principle he would not use Abbott’s phraseology but he may well attack Labor’s ‘new taxes’ — or perhaps he will give Abbott his head and allow him to run such a campaign while Turnbull himself can remain aloof from such tactics. Don’t rule out anything!

Underpinning the Turnbull approach is the report of Trade Union Royal Commission (TURC) and the legislation for the reintroduction of the Australian Building and Construction Commission (ABCC). Turnbull has recalled parliament with the aim of passing the ABCC legislation and has threatened to use it as a double dissolution trigger if it is not passed (that, of course, after having already achieved changes to Senate voting). In other words, union ‘corruption’ will be a key election issue although Turnbull is trying to cloak it as an economic necessity, claiming it will improve productivity in the construction industry (although the Productivity Commission found no significant improvement in productivity when it previously operated).

Probably more importantly, Turnbull can use the idea of union corruption and the TURC report to attack Shorten personally. Although Shorten was cleared of any wrongdoing by TURC, the Liberals earlier showed their hand by suggesting that Shorten had sold out the members of his union in sweetheart deals with businesses — despite the fact that the deals Shorten negotiated appeared to achieve successful outcomes for both his members and the projects in which they were involved. Surely the Liberals should be supporting successful business outcomes! No, not if it impedes an attack on Shorten. I think we can expect a lot more of this during the election campaign.

Unless the government pulls a rabbit out of the hat in its budget — and so far most of its rabbits appear to have been DOA — it appears to have little to take to an election. Its policies do not match those already put out by Labor, although there is some overlap as in, for example, support for STEM subjects in schools. Its grand vision may be a vision but it is not an inspiring one for the electorate as it consists mostly of words and legislative changes which will not impact most people — what interest do people have in ‘FinTech’, the removal of the ASX’s monopoly or changes to laws relating to venture capital?

Polls consistently show issues like education and health are major concerns for the electorate — they are issues which Labor is usually seen as better able to manage. Turnbull and the neo-liberals have not yet achieved their aim of transferring education and health to the states, so they will remain in play for the coming election and the government is not looking strong on them at the moment.

The economy is also ranked highly by voters as an election issue and Turnbull will claim that only he can take Australia towards the new economy of the 21st century (as he told his Cabinet) but that somewhat misses the point. When people say they are influenced by the economy, they usually mean issues like unemployment, wage rises and inflation, not some grand vision of an agile economy. At present wages growth is the slowest it has been in twenty years and that is the sort of issue voters will look at when assessing the health of the economy.

At the moment, I believe the policy issues are mostly in favour of the Labor party so don’t expect policy to be the major battle ground in the coming election. It may play a part but Turnbull is more likely to focus on union corruption. Expect a dirt campaign aligning Shorten and Labor with the ‘corrupt’ unions. Expect personal attacks on Shorten regarding his time as a union leader. Expect some suggestions that it is the unions that are holding us back from the golden age of an agile, innovative economy. Expect attacks on Labor as the party of high taxes and high spending (although that is traditional Liberal fare).

And, of course, expect Turnbull to present himself as the saviour, the only one capable of leading our country into the new golden age.

What do you think?
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DooodlePoodle

17/04/2016I am always disappointed that most of the general public are not politically savvy. They are only interested in the bread & butter issues and what's in it for them. Most voters can see the value in a good education and health system. Most will remember that Gonski was a Labor initiative and know that years 5 and 6 are not going to be funded by LNP. Labors policies are easy to understand and will benefit most people. Labors Front Benchers are experienced and come across well. Unlike "the foot in mouth" rabble of the other side. Few expected the election result in Qld and it was achieved in similar fashion. I agree it will be a dirty campaign but the public will hopefully switch off.

Ken

17/04/2016DoodlePoodle Although bread and butter issues may influence a significant portion of voters that is also working against the government at the moment. This comes down to 'cost of living' issues and with rising power bills and low wages growth, people are feeling the pinch and Turnbull and the Liberals are offering nothing to counter it. Labor is also not addressing it directly but by offering more in education and health policy, they can effectively keep a positive focus elsewhere. And hopefully they have done their sums properly and can counter the obvious Liberal attacks on its taxing and spending. They should make more of Moody's assessment that revenue needs to be raised to overcome the budget deficit (not just spending cuts) and so they can claim their approach is supported by credit rating agencies. Perhaps it will deserve an ad' or two during the campaign. The other thing that I know Labor and the unions are focused on for the coming campaign (also used in Queensland) are door-knock campaigns in key seats, adressing people face-to-face and discussing the issues with them. It worked for Cathy Magowan, it worked in Queensland, and hopefully it will work in the federal election.

DoodlePoodle

18/04/2016http://www.canberratimes.com.au/federal-politics/political-opinion/fairfax-ipsos-poll-malcolm-turnbull-a-cautious-pm-and-voters-are-punishing-him-for-it-20160417-go8hju.html The voters are marking Turnbull down for his do nothing approach.

Ad astra

18/04/2016Doodle Poodle A very interesting article about the polls! Thank you. Malcolm is steadily loosing his grip on power. Who knows what the next three weeks will bring.

2353NM

19/04/2016I love the talk already about 'the narrowing' coming from a Coalition that when the DD strategy was obviously workshopped thought that they would romp it in. It's a bit hard to narrow what is apparently already split down the middle! The trend is a better indicator of intent anyway. And the trends for quite a while have been the Coalition is falling, the ALP is rising and don't write off the Greens just yet.

Ken

19/04/2016Agree the polls have become 'very interesting'. As you say, 2353NM, it is the trend that is important. Every pollster is showing a very marked shift to Labor (or perhaps more correctly away from Turnbull and the Liberals). When that is consistent across every poll, it can't be ignored or dismissed as 'rogue' polls.

TalkTurkey

19/04/2016Greetings Comrades Well we're into it eh, and the timing suits Labor pretty well after all. Turdball is really quite on the nose with many who by reason of naivety thought that he would be a genuine new broom, well he's now seen by many as a limp ragged old feather duster. I must say I am impressed with the totality of his ineffectiveness though. Who'd'a' thunk he would be so paralysed by his mad RW. It looks to the politically aware people - I particularly refer to us on SM - as though he should be far further down in his personal ratings than the polls suggest, but why this is, I would guess, is that more than 80% of Australians hardly ever take note of matters political, and they of course are very hard to shift. Nearly all the movement happens in that aware 20%. That said, literally millions of people have changed voting intention since Turdball came to power, from anti-Abbort to pro-Turdball and now there is palpable momentum both away from Turdball and positively towards Bill Shorten who seems to be peaking at the right time. I think he's actually relishing the fight, he has his policies in place - and they are getting a pretty good reception at that - and we of th Left who had nothng much to say good of him until recently are starting to appreciate him for his substance and the fact that he has not put a foot wrong since his election. If Labor can hit 52% on any poll now, can you imagine the panic in the LNP! I fear the bloody Greens though. DiNatale, ptui! Bastards, targeting Albo?! I blame them for costing us the last election, and they look quite prepared to do it again for their treacherous self-righteous self-defeating ends. Turdball isn't much of a fighter, he goes to water and ums and ahs motherhood statements under challenge and he's going to get plenty of that in the next few weeks. 'Course he'll pork-barrel everywhere in the next few weeks, suddenly finding billions in fancy schemes, so Labor must get on top of every announcement instantly instead o letting them bask in the pork-fat, but I can see there is an appetite for fight in the candidates and the grassroots campaigners, and there's only one thing to yell now Comrades and that's VENCEREMOS!
How many umbrellas are there if I start with two and take 2 away?