Turnbull weighs up double-dissolution election
A Liberal MP who has known and worked with Malcolm Turnbull for a long time says the prime minister is “incapable of telling a lie”. And this is in the context of Turnbull telling the Coalition party room on Tuesday that a double-dissolution election is “a live option that would have to be weighed up”. He repeated it three times.
A double dissolution that takes out all the senate and the house of representatives is the only real option if the PM is considering an election any time soon. The senate has fixed six-year terms. Every three years, half the upper house is up for election and the next such election is not due until July. Before then, only dissolving the entire parliament in the name of breaking frustrating deadlocks avoids a poll for the house of representatives alone. No one thinks the latter is a good idea, for sound historical reasons. It turns the subsequent half-senate poll into a giant byelection.
While it is true that Turnbull also told his parliamentary troops that they could “reasonably expect” an election for half the senate and the reps in the August to October period, this was not “set in stone”. For nervous backbenchers such as veteran Victorian Liberal Russell Broadbent, that is a mighty relief.
Last year, at a meeting of the joint party room, Broadbent warned a newly installed Prime Minister Turnbull that going to an election with a GST as a key policy was a very bad idea. He had fought two GST elections, in 1993 and 1998, and lost his seat in both.
If Turnbull pulled the early election trigger, it would cut short Scott Morrison’s preparations as treasurer for wide-ranging tax reform based on a 50 per cent rise in the GST to 15 per cent and its possible extension to food. The sweetener would be company and income tax cuts. For MPs such as Broadbent, Turnbull can’t call an election soon enough, if for no other reason than it would stymie any GST plans.
Despite the first Newspoll for the year showing the government retaining its pre-Christmas lead over Labor, 53-47, MPs returning to Canberra are reporting negativity to a GST increase. A Queensland Liberal, in a seat much safer than Broadbent’s was back in the ’90s, says Labor’s scare campaign is biting. Constituents are coming to the electorate office worried and angry about the government’s plans to raise the consumption tax. When told there are no such plans, the rejoinder is inevitably, “But Bill Shorten keeps telling us that is what’s happening”.
Blunting the assurance is the prime minister and treasurer’s mantra “that everything is on the table”. More than that, Turnbull told Radio 3AW that increasing and broadening the GST is certainly being “actively considered by the government, as it should be”.
Last Monday, Treasurer Morrison boldly ignored an amber light on raising the GST when he brushed off a Newspoll finding that 54 per cent of voters oppose a rise to 15 per cent, despite promised tax cuts and compensation. He homed in on the 37 per cent support, and took heart from it being higher than for his “boat turn-backs” policy before the 2013 election. “It’s important,” he said, “that when you believe that something’s right for the country that you remain focused on that.”
The prime minister’s office went into damage control. They trawled the press gallery with the message that the treasurer was being a little too enthusiastic and “what is right for the country” has not yet been decided.
In the party room, Turnbull assured any nervous Nellies that he understood taking a 15 per cent GST to the people could rob the Coalition of the convincing victory they crave. It may not be worth the political risk, he said: “We have to win and we have to win well.” But here’s the problem, and more than one conservative MP is concerned about it: the cat is already out of the bag.
The argument that a GST rise could be good and necessary is already part of the Liberals’ baggage. Even if the GST option is shelved, the way is still open for Bill Shorten to emulate Andrew Peacock in the 1984 election against the popular Bob Hawke. The Liberal leader ran Hawke to a tight finish after he stumped the country warning voters “as sure as night follows day” the Labor PM would hit aged pensioners’ assets. That policy had also been floated but canned before the campaign.
The longer the GST option is left hanging, the more ingrained becomes the perception that the conservatives really, really want to do it. Shorten also believes there is an impression the prime minister and his treasurer are stuffing about and are incapable of making a decision. Turnbull, he said, is showing himself as surprisingly tentative. “This government talks a lot but they don’t make a lot of decisions,” he said. “And in the meantime we need to see an economic plan and a budget.”
The budget, as Turnbull admits, is going to be tight and tough. He received support for that view from none other than former Labor treasurer and prime minister Paul Keating. Writing in the Fairfax papers, Keating said the big falls in commodity prices mean that Australia’s income has been cut: “We cannot pretend we can go on spending as though nothing has happened.” But he argued strongly against making up the massive revenue shortfall with a 15 per cent GST. He believes it will set Australia on the path to a European-style 20 per cent consumption tax. When you combine that with the average 24 per cent personal income tax rate, it would leave the country “jammed at just on 45 per cent of tax on income and consumption; and stuck with it forever.”
In typical style, he said “the GST is just a flat bang-you-over-the-head tax. It changes nothing; no behaviour other than to put the tax weight onto the wrong people.” It would lead to lazy big government and was fiscal folly. But Keating parts company with Shorten by condoning a 1 or 2 per cent rise in the tax providing it all went to the states’ hospitals. That would cover the $7 billion they lost after the 2014 budget.
Scott Morrison cherrypicked Keating’s remarks. He liked the idea that fiscal policy should be to make the private sector larger and not restrain it with ever more taxation. He also agreed with the former prime minister that a higher rate of GST should not be used for higher spending. He told parliament the government has no such plans for higher taxes or higher spending. It seems we are back in Lewis Carroll’s Wonderland, where Humpty Dumpty’s words mean exactly what he says they mean – a tax rise to fund spending is not a tax rise to fund spending. The nation waits with bated breath to see what the treasurer’s final package will look like.
Privately, Keating believes that if the government does opt for a 15 per cent GST they might just come unstuck. Liberal Democrat senator David Leyonhjelm is not so sure. He says Turnbull is a better salesman than Shorten and much more popular: “He could probably threaten to kill your first-born son and still get elected.” Perhaps, but that ignores the lessons of 1993 and even 1998. Those polls showed that voters were acutely sensitive to cost-of-living rises and taxes that would hit them directly. And they are resistant.
Certainly Shorten is hoping that Morrison’s bravery wins out over Turnbull’s caution. He suspects that Turnbull’s warning on an early election could even pre-empt the May budget. That’s why he’s begun taking out insurance, telling reporters midweek, “It seems to me that Mr Turnbull is actually afraid of bringing down a budget.” Not much weight can be put on opinion polls that find a big majority of voters don’t want an early poll. Newspoll puts it as high as 70 per cent. But the fact remains: once an election is called, it’s on, like it or not. More than one Liberal thinks Turnbull should grab whatever excuse he can to push home the advantage of his popularity and ascendancy over Shorten to consolidate his authority in government. He’s already laid the groundwork for that, ramping up attacks on Labor and threatening the senate crossbenchers if they reject for a second time restoration of the Australian Building and Construction Commission.
There’s no doubt “honest Malcolm” – as his old mate has it – gave himself the wriggle room on Tuesday. Now if he goes earlier rather than later he hasn’t broken his word. And there’s nothing like a pending election to focus the minds of politicians and restore party discipline. You know things are fractious when the new federal Liberal Party director, Tony Nutt, called for just that – discipline – at the same meeting. Nutt also told the gathering that research shows voters don’t believe Labor is ready to return to power.
There is anxiety in Labor’s ranks that Shorten hasn’t been able to press home the political advantage the government is gifting more regularly than expected. There was the loss of two ministers over summer, the tax imbroglio masquerading as a considered discussion, and continued infighting centred on a disgruntled Tony Abbott and his allies. Reports the opposition leader has been given until the budget to lift his stocks are dismissed by the leader’s office – as you would expect.
An early election may save Shorten’s bacon – only to then cook it, especially if there is no 15 per cent GST attached.
This article was first published in the print edition of The Saturday Paper on Feb 6, 2016 as "Double dissolutions of grandeur". Subscribe here.