MUNGO MACCALLUM. The Government hands around the silver.

Mar 27, 2018

The Roman Catholic Church, according to Education Minister Simon Birmingham, could be bought with a few pieces of silver.What about One Nation?

So it appears that Matthias Corman, desperate to persuade the crossbenchers that corporate tax cuts, against all the available evidence, will provide a surge in investment and wage growth, has been doling out the lolly and has found at least one sucker prepared to change her vote for a hot scone.

Pauline Hanson has caved in to her latest pledge with the derisory bribe of a thousand new apprenticeships which, if they materialize, will do little if any good to the problem of stagnation. And of course the impending tax cuts (sorry, the national enterprise tax plan – we mustn’t be crude) will do nothing at all for the foreseeable future either.

But that’s not really the point. It’s all about securing a badly needed win for Turnbull before the fatal thirtieth NewsPoll, so hot scones (or indeed pieces of silver) are no object. Hanson, absurdly, says she has been convinced by the wonder and beauty of Donald Trump’s tax cuts in America, which shows that as well as the hot scone, she could also be seduced by an offer of the deeds to the Sydney Harbour Bridge.

Another waverer, Derryn Hinch, is ready to dicker over just how big a bonanza the struggling big four banks should receive. No one has seriously proposed  an argument about how trickle down economics, which have demonstrably failed in the United Kingdom, Canada and most other countries around the world, should suddenly succeed in Australia:

The Commonwealth Treasury, which has modeled the results of the plan, says that after ten long years it will return the equivalent of a statistical error – if everything goes to plan and if we’re lucky.  But Treasury backs the deal because… well, because it’s economic orthodoxy.

The corporate spruikers themselves, of course, are far more bullish: why, of course they will turn their windfall into productive investment (well, part of it, anyway) and this will – or at least should – lead to wage rises for the masses. This pious hope has become an iron-clad pledge for Turnbull and his urgers; the fact that it has not happened in the past – and certainly not in Trump’s America, where the bosses have spent most of their loot on share buy backs to enrich their shareholders and, more importantly, themselves — is simply ignored.

But the charm offensive from the big end of town has more than a tinge of panic about it. The campaign by the banks in the face of the Royal Commission is now telling us that it is not the faceless moguls in the boardrooms who run the show: Australians (presumably both ordinary and hard-working) actually own the banks.

Well, some of them, perhaps, collect a pittance in dividends, usually indirectly through their superannuation, but they have absolutely no effective power to influence the decisions by the big institutional players and are shot down in flames if they ever dare to query their authority.  Thus for the moment spin will suffice: Corman is doing a fine job corralling the dissidents and as long as the votes are forthcoming, it doesn’t really matter who gets bought off in the process.

This is what might be called the positive side of Turnbull’s strategy; the negative, of course, is the constant inveighing about what our Prime Minister splutters is Bill Shorten’s unspeakably terrible cash grab — $5.9 billion worth of refunds for tax people didn’t actually pay tax. But hang on, that’s not a cash grab – this is a cash grab. Turnbull’s corporate tax cuts are worth well over ten times Shorten’s relatively modest proposal, a massive re-ordering of national wealth and resources.

The big difference is that Shorten will have to be up front about it: there will be losers and they will know exactly who they are. Selling this message will be difficult and will require considerable tweaking before it actually reaches the voters. Turnbull continues to pretend that under his plan there will be no losers – everyone gets a prize. He can work this little white lie because he has not specified just how he will pay for the package; he and his colleagues insist that it is fully funded but they won’t tell us how.

Given that they cannot simply print the money out of the government mint – it has to come from someone, somewhere – there will inevitably be losers. They may only lose indirectly: we have no way of knowing how much health, education, welfare, infrastructure and other social benefits will be sacrificed to the fantasy of jobs and growth, but when we’re talking about a total of $65 billion, some people will have to pay, and suffer for it.

This is why Shorten is trying to make the argument that it is all about priorities; it would be nice to be able to afford corporate tax cuts, personal tax cuts, more spending on services, the kind of pie in the sky which was ladled out over the Howard years, when Australia’s unique twist on the tax imputation system was devised to soak up the rivers of gold flowing out of the mining industry. But since we are now facing what was once described as the debt and deficit emergency and which has now got worse, there will have to be choices made.

Unfortunately for Shorten, Turnbull is the one is a position to make them immediately and thus gazump Shorten’s spending spree before it can even get under way. Shorten is muttering about winding some of it down – some of the money is not allocated until well after the next election – but to do so would be clumsy and controversial. However, his own big idea has already proved to be both, and he is not walking away from it.

And the times, perhaps, will suit him: Turnbull has spent more than two years pushing his enterprise tax plan only to find that the biggest, ugliest enterprises of all – the banks – are now being arraigned and revealed as rorters, frauds and unmitigated greed heads by the Royal Commission he so strenuously resisted. Offering them huge amounts of extra money in the hope that it might enhance the public interest is  brave move indeed. And it will need a lot more than a few pieces of silver to buy off the sceptical voters.

Mungo MacCallum is Mungo MacCallum


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