The Arthur Sinodinos-Malcolm Turnbull plan for the Coalition
Months before Malcolm Turnbull ousted Tony Abbott, his chief backers had already plotted out the change in direction they believed was needed to resuscitate the Coalition’s fortunes.
It could be called the Sinodinos strategy. And it’s all about agility.
At its best, it’s about leaving space for reasoned debate and room to move if circumstances change. But it’s also – at least at this stage – about avoiding breaking promises by not making any.
Back in June, Arthur Sinodinos, whom Turnbull has now elevated to cabinet secretary, spelt it out to The Saturday Paper.
“The issue for us in the run-up to the next election is to make sure that, in policy and other commitments we make, we leave room to do things and are not too hemmed in by promises,” he said.
At that stage, Sinodinos – then a backbench senator – was still insisting Abbott had earned the right to lead the Coalition to the next election.
But Abbott’s tendency to rule out policy options, in order to score political points against Labor, was causing growing unease.
He did it on superannuation tax concessions in May, shifting the Coalition from no changes this term to no changes ever. And then he doubled-down in June, slamming the door on any reforms to negative gearing and tax breaks for investors, even as housing affordability became a challenge too big to ignore.
As Labor outlined policy approaches for tackling these issues, Abbott locked the government into inaction.
It bought him some favourable tabloid headlines, but Abbott’s vow to “protect our superannuation”, as The Daily Telegraph put it, also contributed to his downfall.
Although sustained poor polling was a major factor in Abbott’s ousting, his at times rash approach to policy decisions also played a part.
Asked on Sky News in May about the government’s positioning on superannuation, Sinodinos implied it was motivated by political tactics, as Abbott sought a point of difference from Labor. The party room had not been consulted. “I think it’s really something that has come from the leadership,” said Sinodinos.
Behind the scenes, the Turnbull camp was preparing for leadership change.
When, in late August, business, union and community leaders put aside their differences to discuss future policy directions at the National Reform Summit, the response from Abbott was muted.
The event was, in part, a response to the paucity of real debate under his leadership. Perhaps he was also wary of the summit, because of the involvement of Craig Emerson. The former Labor minister was a co-convener, along with Nick Cater, the executive director of the Liberal-friendly Menzies Research Centre.
If the nonpartisan tone was a problem for Abbott, it was tailor-made for Turnbull. He and Sinodinos paid close attention. And so he was quick to reply when the leaders of the Australian Council of Social Service, the Australian Council of Trade Unions and the Business Council of Australia wrote to him last week, offering him an update on the issues where they had found common ground.
This week, Turnbull invited the summit’s leaders to Canberra to meet him, Sinodinos, Treasurer Scott Morrison and other economic ministers.
Options that had been ruled out by Abbott were back on the table at the three-hour talks on Thursday.
There were still evident differences among the groups – including on tax levels and the GST – but there was a willingness to continue talking across all topics. A government that was prone to shutting down debates is now reopening them.
As Turnbull warned that policies would continually be reviewed and would change under his government, Abbott was sticking to his old habits.
When he surfaced for his first live interview since losing the leadership, he chose to speak to one of his long-time supporters in the media, Ray Hadley.
He was still preaching to the choir, urging Hadley’s conservative 2GB listeners to continue to support the Coalition, even through “gritted teeth”.
In the interview with Hadley on Tuesday and one on Thursday with 3AW’s Neil Mitchell, it was clear that Abbott is still smarting from his ousting three weeks ago.
It was equally clear he is still in denial about the reasons for it. He defended the 2014 budget as “brave” and “exactly what our country needed” and told Mitchell he was “absolutely confident” the Coalition would have won the next election under his leadership, declining to say whether he had forgiven Turnbull. From the backbench, he was still ruling out policies, saying it would be a “terrible mistake” to increase the GST.
“I have often said that Malcolm didn’t stay in the parliament to be someone else’s minister,” he said. “He’s now got his chance in the top job, he’s a very capable person, let’s hope he makes the most of it.”
But Abbott’s claim no policies had changed since he was deposed soon seemed hollow.
Within days, the Turnbull government had shelved plans, twice rejected by the senate, for university fee deregulation this term and announced a long-range plan for Australia to again pursue a seat on the United Nations Security Council, for 2029.
Then Turnbull, who tethered himself to the government’s existing Direct Action climate policy to secure support for his leadership, said even it could be changed.
“The mechanism will be reviewed in 2017 and, obviously, if there are elements of it that are not working as well as they should, then they can be tweaked or amended and so forth,” he told ABC Radio National on Thursday.
“We are an agile government… We are not writing the laws of the Medes and the Persians here that can never be changed… We are constantly learning and prepared to change to achieve our objectives sooner, cheaper, better.”
Kate Carnell, the chief executive of the Australian Chamber of Commerce and Industry, says there has also been a marked shift in the mood among ministers.
“For somebody who lives and breathes it like me,” says Carnell, “the thing that is most evident is that the ministry feels quite empowered: they feel like they can get on with the job in their portfolio areas, with a much less centralised approach.”
Carnell and the ACCI have, through talks with other groups, shifted position on superannuation tax concessions this year. She now accepts the case for a reduction in top-end tax breaks on superannuation, in favour of increased incentives for those on lower incomes to save for retirement.
“We still understand totally that many of our members would think we should have no changes in super,” she says. “But the purpose of superannuation is not to have a tax-effective place to save money in excess of what you need for retirement income.”
Ahead of Thursday’s talks with Turnbull, she thought superannuation was “one space where we can come up with a joint view that is in everybody’s best interest, except high net-worth individuals who may end up having to pay more tax on money they have in a super fund above a certain level”.
Superannuation seemed to be emerging this week as a topic on which the government was catching up with growing calls for reform, which Abbott had ignored.
It is not just ACCI that supports change.
“The system is absurdly generous,” says John Daley, CEO of the Grattan Institute. “It’s so generous that even the industry is saying it has to change, which is like the turkeys voting for Christmas.”
As far back as February, Treasury Secretary John Fraser said in his first public speech in the role: “We need to consider whether the level and distribution of these concessions remains appropriate”.
For a while, the then treasurer Joe Hockey had been open to change, urging a bipartisan approach. But Abbott had overridden him, focused as he was on
“There will be no changes to super, no adverse changes to super, in this term of parliament,” Abbott said on May 13. “And we have no plans to make adverse changes to super in the future.”
Asked on Tuesday about the prospects for an overhaul of the superannuation regime, Morrison acknowledged there was “an opening up of what is being prepared to be considered”.
He continued: “I think there is a very fresh breeze of pragmatism about some of these issues.” It was a momentary departure from the slogans he has so far resorted to in his first outings as treasurer: that there is a “spending problem, not a revenue problem” and that all policies must “encourage people to work, save and invest”.
It would, however, be a mistake to assume that a willingness to debate retirement savings necessarily means an end to the generous tax concessions, which are worth about $40 billion a year.
Cater, from the Menzies Research Centre, says that although participants in the National Reform Summit agreed the issue needed to be reviewed, there was no consensus about how it should be changed.
“There’s much, much stronger resistance to changes to superannuation concessions than you might imagine,” Cater says. “That resistance is based not on a crude help-the-rich approach but I think on quite reasonable concerns about changing the system and the overall philosophy that you shouldn’t tax savings anyway.”
On the other side, the Grattan Institute argues Labor’s changes, reducing the tax breaks for the wealthiest superannuants, do not go far enough.
Daley outlines a three-pronged strategy involving a dramatic reduction in the amount of tax-free contributions allowed to superannuation, as well as cutting the tax concessions on contributions and on earnings in the retirement phase.
The Menzies Research Centre favours a much more softly softly approach.
Cater suggests a gradual shift over 40 years to a system that would exempt superannuation contributions from tax entirely but treat earnings from superannuation savings as ordinary income.
Turnbull and his government are, for now, ruling nothing in or out, making no promises.
Political promises have always been problematic and have become downright awkward since Abbott so successfully prosecuted the case against Julia Gillard’s broken carbon tax promise and then proceeded to tie himself up in his own iron-clad vows that he could not keep.
In opposition, Labor under Bill Shorten has dealt with this quandary by keeping his party’s promises thus far to a few well-defined policies that it believes are achievable and meaningful.
Turnbull is trying to turn to his advantage the fact he comes to the prime ministership with what amounts to a blank slate, having not previously led the party to an election.
In his first days in the role, he wiped the slate clean of his former views on policies regarding climate change and same-sex marriage.
In the ensuing weeks, he also sought to erase Abbott’s promises of inaction.
But in politics, a slate cannot stay blank for long.
In Turnbull’s talks with various interest groups this week, he may have already begun doodling on it.
“I’m an activist, but a thoughtful and considered activist,” he told Radio National on Thursday.
At some point, the Sinodinos strategy of avoiding being hemmed in by promises will need to switch to at least setting some concrete goals and plans for achieving them.
For agility, in the end, is more about action than inertia.
This article was first published in the print edition of The Saturday Paper on Oct 3, 2015 as "The Sinodinos-Turnbull plan". Subscribe here.