Morrison government’s surplus baggage
Back in June, then prime minister Malcolm Turnbull hatched a cunning plan – he would end the year on a high by flagging a surplus in the budget update, and at the same time Labor would be beset by internal brawling at its national conference.
Turnbull timed the Super Saturday byelections for July 28, the precise time the ALP was to hold its three-yearly conference. A mad scramble to reschedule followed, as Labor stood to forfeit $100,000 outlaid for the Adelaide Convention Centre if the gathering wasn’t held this year. On Sunday, the postponed conference begins and its agenda has plenty of contentious issues that Bill Shorten, if he had his druthers, would have preferred not come up on the eve of an election year. Indeed, Labor suspects the election could be just over three months away.
The other arm of the Turnbull plan will play out on Monday, when treasurer Josh Frydenberg unveils the Mid-Year Economic and Fiscal Outlook (MYEFO). It will be vying with day two of the Labor conference, which suggests the current Liberals are not as confident of Labor falling apart on the banks of the River Torrens as the dumped prime minister was. One Liberal says John Howard, if he were still leader, would have left the media space to Labor anyhow because, even without bloodletting, the more people who know about its scary policies the better.
Scott Morrison says the MYEFO will demonstrate that his government is a responsible economic manager: “We promised to bring the budget back into surplus and that’s exactly what we’re doing.” He proudly claims it will be the first such surplus in 12 years. Except it is in the same category as former Labor treasurer Wayne Swan’s projected budget surpluses. Like desert mirages, they kept disappearing. The accuracy of Morrison’s boast won’t be tested until the final budget outcome in September next year – well after the election that must be held by May at the latest.
Analysis by economist Stephen Koukoulas says the surplus “is no certainty”. It is based on hard data for the first four months of the 2018-19 financial year. Treasury will be factoring in ongoing economic growth, no increase in unemployment and buoyant iron ore and coal prices over the rest of the financial year. “These numbers do look strong … and if the trends on revenue and spending continue, the budget will probably be in surplus,” says Koukoulas. However, the latest national accounts show the economy slowing, wages stagnating and consumers keeping their wallets shut.
Koukoulas, echoing warnings from the Organisation for Economic Co-operation and Development and the International Monetary Fund, says: “If, as is distinctly possible, the economy stalls in the March and June quarters 2019, commodity prices continue to weaken, and if there are some unexpected increases in government spending … [it] could leave the budget in deficit. It is a dangerous game, politically at least.”
These considerations could persuade Morrison to stick to Turnbull’s other strategy, a March 2 election announced after Australia Day. On the other hand, the latest Newspoll, which shows the government again trailing Labor by 10 points, suggests going to the people any time soon would result in a Liberal massacre. But such is the malaise gripping government MPs, there is an emerging view that Morrison should go before their situation gets worse. “If the people are itching to take to us with baseball bats, delaying the day will only infuriate them more,” says a veteran backbencher.
On Monday, Morrison and Shorten were keynote speakers at British billionaire Sanjeev Gupta’s unveiling of his plans for the South Australian steel city of Whyalla. Morrison was a very late acceptor of the invitation. His office was furious when they learnt the Labor leader would also speak. At first, Gupta’s people were told the prime minister would be a no-show unless Shorten lost his slot. When they refused to accede, Morrison insisted on speaking after Shorten.
Shorten referred to Morrison as “the current prime minister” when he acknowledged dignitaries. He seized on the fact Gupta is spending millions of dollars on renewable energy to power the expanded steel mill. This shows “the future for this country: co-operation not conflict. Renewable energy, working with heavy manufacturing.”
Morrison acknowledged Shorten without comment, but he betrayed how worried he is. He noted that Whyalla is the “comeback city of Australia” – a reference to the collapse of the Arrium ownership of the steelworks. He said, “I’ve got a keen interest in comebacks”, and later claimed he would take inspiration from the Whyalla story.
Morrison sure needs something. His shooting from the lip for quick political advantage on queer kids in religious schools and moving the embassy in Israel is a symptom of a political ineptness beyond repair. His promise to legislate away discrimination “within two weeks” for LGBTQIA schoolchildren is now shunted off for a protracted inquiry, while at the same time he wants to have a bunfight at the election over a new religious discrimination act. The fact it took a year to release the Ruddock report into the issue is confirmation of just how fraught and divisive it is, as much inside the Liberal Party as in the broader community.
Psephologist Kevin Bonham says Monday was the first time any government since Julia Gillard in 2013 had had three consecutive Newspolls where their two-party-preferred vote was 45 per cent. His opinion is the government is finished, no matter whether the election is held in three months or six. “No government has recovered from this far behind with this little time to go,” he says.
The Liberal machine went into damage control, telling The Australian Financial Review that its internal tracking of key marginal seats “was not as bleak”. The 10-point gap in the published poll is being driven by big swings in safe Labor and Liberal seats. The spin didn’t impress one marginal seat-holder. He pointed to swings of up to 30 per cent against the Liberals in New South Wales byelections and in the Victorian state election. Another Liberal says: “We are fucked, fucked, fucked.”
Labor strategists say Morrison and the government are obsessed with Shorten. In question time this year, they have personally referred to him 1260 times. Shorten says, “I don’t know what they would do if they couldn’t talk about me.” The fact is they believe, as does John Howard, that the Opposition leader is the chink in Labor’s armour and they will keep attacking Shorten in the hope that wary voters will not risk him. Except negative views of the Labor leader pale into insignificance when compared with the disgust at the government’s disunity and dysfunction over the past five-and-a-half years.
On Tuesday on 10 News First there was yet another window into the turmoil and conflict that has not gone away with the replacement of Turnbull. At the time when arch-conservative and coal-champion Craig Kelly was under siege by the moderates for preselection, former Nationals leader Barnaby Joyce hatched a plot for Kelly to defect to the Nats. The play was kept secret from the Nationals leader, Deputy Prime Minister Michael McCormack, and it is not clear if Morrison was told.
Morrison appeared more worried that Kelly was hinting he would quit the government for the crossbench. Joyce says he certainly did “reach out to Kelly”. The worst option would have been to lose him from the parliament. Had the plot worked, Kelly would have been another number in the Nationals party room for Joyce, who has ambitions to replace the bland McCormack before the election.
It’s not as if the government needs any more prodding on coal. Morrison’s environment and energy ministers are proving to be fossil fuel warriors. The energy minister, Angus Taylor, is working on ways to fund a new coal-fired power station to achieve “balance” in electricity generation. The environment minister, Melissa Price, took her scepticism over climate science to the United Nations climate conference in Poland this week. Though chairing a key committee, she lent no weight to the discussion on whether to note or welcome the latest IPCC special report on limiting rising global temperatures to 1.5 degrees Celsius. She preferred to stay silent. Is it any wonder voters are unimpressed with this government on an issue a significant majority believes needs urgent action?
The government is salivating at the thought of the Labor conference descending into a pitched battle over refugees and border security. It’s the third leg of the trifecta it hopes will help it to a miraculous election win. The economy and Shorten are the other two. John Howard, at the unveiling of his government’s cabinet papers from 20 years ago – yes, no new tricks from this old dog – says “[the] Labor Party once again is starting to wobble on border protection. They wobbled after Rudd was elected, they haven’t changed.” Morrison and Home Affairs Minister Peter Dutton chimed in, asserting Labor’s support for a humanitarian policy to bring sick refugees off Nauru would “end our successful system of border protection as we know it”.
Shorten goes into this weekend’s conference with the backing of key left figures such as Tanya Plibersek and Anthony Albanese for boat turnbacks, offshore processing and regional resettlement. He fully expects passionate debate – indeed, Labor for Refugees is promising one – but the numbers aren’t there to roll the leader. Shorten says what we will see at the end of the conference is “a lot of unity”, adding that the Labor Party nationally is the brand for unity. By contrast, he says, the government is the brand for disunity.
This article was first published in the print edition of The Saturday Paper on Dec 15, 2018 as "Surplus baggage".
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