MUNGO MACCALLUM. Government baking pie in the sky.

May 8, 2018

Well, we made it to budget day –  that’s the easy bit. Selling the bastard budget  will be more problematic. But the Business Council of Australia is at hand.!

Sure, there is plenty for the serious rent-seekers to celebrate, from aspiring space agents to brewers of craft beer and even school chaplains. And, as the nationals’ chief pork-barreller Michael McCormack keep assuring us, almost undreamt amount of infrastructure for deserving hard-working electorates.

Best of all, we can pretend that much of it, like the NBN, Snowy 2.0 and the inland railway does not appear in expenditure in the budget, under the fantasy that someone, sometime, will be willing to stump up some rainbow gold.

But that’s the good news. When you get down to the stuff the punters are really worried about, it gets tricky. The economic nitty-gritty of tax, wages, housing, health, education, welfare, power bills, and the  whole cost of living imbroglio is to be addressed, but hardly settled.

Tax, for instance: an immediate sugar hit for the low earners, but not all that much sweetness even there, and after that it is just more pie in the sky – more to come, but not for a few years yet. Given the record of backdowns, flip-flops and simple broken promises from previous governments and indeed from this one, wary and sceptical voters may be forgiven for holding their breath.

They may be too young to recall then Treasurer John Howard’s fistfull of dollars election promise of 1977, unceremoniously snatched back immediately after the election, But more recently Paul Keating’s L-A-W 1993 tax cuts ceased to be L-A-W almost as quickly. Unless and until it is firmly in your kick, it is not the time to go further into debt.

And even the relatively modest schedule Scott Morrison is proposing is regarded as economically risky by many hard headed economists, who want budget repair to be the priority, rather than pre-election hand-outs. So there may not be too much gratitude to be gleaned from either side.

Wages are simply intractable: they may start rising eventually, but not in foreseeable (meaning pre-election) future. Housing has been largely pre-empted by Bill Shorten’s policy to tone down negative gearing. And  health and education remain Labor strongholds; the best the coalition can hope is to neutralise them as far as possible.

Welfare is just too hard, and the long-standing commitment to making it harder has not been a success: even Deloitte’s Chris Richardson, no bleeding heart, regards the derisory Newstart allowance as unnecessarily cruel, a criticism which led one absurd Liberal backbencher, Julia Banks, to declare that she could live on it. And no doubt she could, for a day or so, not that she is inclined to do so.

And power bills show no sign of falling and will probably rise again before they do. So the cost of living, which has been an albatross over both the policies and politics of the government since its inception, remains stuck, and a token tax cut will do no more than ameliorate the relentless ratcheting of bracket creep.

So how do Malcolm Turnbull, Scott Morrison, Matthias Corman, Kelly O’Dwyer and the rest of their dauntless team market their dubious product? Why, they call in their good and wealthy friends, the Business Council of Australia. The problem there is that the BCA may be supportive, but is hardly an unquestioning ally. Even last week, its head honcho, Jennifer Westacott, joined Chris Richardson to push for an increase to the Newstart allowance. And some of its members including some of the biggest, have declined to join the campaign at all.

This is at least part a matter of history. When he founded the BCA as a business lobby group, Geoff Allen (a former Liberal staffer but by no means an ideologue) insisted that the organisation should not be politically partisan. It would, of course, push for pro-business policies, which meant that it would normally be aligned with the coalition (or at least the Liberal part of it) but it would not and must not be joined at the hip.

So ostensibly the BCA campaign, although run by a die-hard Liberal apparatchik named Andrew Bragg, is not really about re-electing Malcolm Turnbull – it is all about policy, the Common Interest Campaign as Bragg has improbably christened it. When business thrives, so does Australia. What’s good for General Motors is good for the USA.

But let’s face it, the BCA is not about to spend its tax-deductible millions on self-interested waffle.  There is real self-interest to be served, and that means the delivery of the corporate tax cuts for which it lusts. Which figures; after all. There is some $35 billion of self interest to be secured.

But when the national interest is concerned, it relies entirely on assertion, not evidence.. When asked directly to name a single country is which corporate tax cuts had translated into wage rises for the workers, Westacott couldn’t, mainly because there isn’t one. And indeed, of the cuts already given to businesses worth $50 million or less, just 2 per cent went to wage rises. With big businesses overseas, the overwhelming majority of tax cuts were taken up by share buy backs.

Persuading the masses that it would somehow be  different in Australia may need more than BCA spin. But apparently that is all that is available and the government faces the somewhat daunting prospect that this is probably the last budget before the voters march vengefully towards the polling booths.

Probably, but not certainly; it would technically be possible to postpone the electoral reckoning until August 2019. It would require even more jiggery pokery than was needed to bring the budget forward as  in 2016, and that was not exactly a rousing success, but if necessary it could be done. And if the polls remain stubborn over the next few months, it might become the last, indeed the only, option.

Of course it doesn’t have to work out like this. It could be that the budget will be an unalloyed triumph, the previously reluctant voters will be totally convinced and say, weeping with gratitude, that all is forgiven. The polls will surge, Turnbull will call an election later this year and pick up all the seats he lost in 2016 and everyone will live happily ever after.

Well, it could happen, but let’s face it, the coalition has not enjoyed that sort of success very often since 2013. Making it through this year’s budget will be enough for the moment.











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