As the treasurer lauds supply-side economics, a once-controversial recovery theory is gaining traction.This is the essence of modern monetary theory – that government budgeting is nothing like household or business budgeting, for the simple reason that government can create money.
Turnbull’s muddle kingdom fails on extradition treaty
The Chinese ambassador was shaking with anger when he learnt that the Turnbull government had completely failed to deliver on its assurances that it would finally ratify a 10-year-old extradition treaty this week. Foreign Minister Julie Bishop did her best to mollify him, but she will also need to put in a lot more time trying to win back the confidence of many of her Liberal colleagues.
The botching of the treaty ratification with our biggest trading partner exposed much that is wrong with this government. It brought to the surface, yet again, deep divisions that have leadership implications. And it exposed a political tin ear that is destroying the government’s attempts to regain political ascendancy. Malcolm Turnbull bears much of the blame but the foreign minister is copping her fair share, too.
Bishop’s central role in the fiasco is draining what respect many in the government may once have had for her. The perennial deputy Liberal leader can forget any ambitions she may still harbour to replace Turnbull should he fall or quit. The messages coming through from angry Liberals were things like: “What the hell was she doing? Choosing her outfits for her next overseas trip?” And: “What about her staff? Were they absent on coiffure training?” Not kind or pretty but a taste of the exasperation consuming MPs. It is not only the opposition that is lampooning Bishop for “fashion diplomacy”.
On Monday, thanks to former Liberal conservative now independent Cory Bernardi, word spread quickly in the press gallery that government backbenchers opposed to ratifying the treaty were about to have a showdown with the foreign minister in Room 1R1. Journalists counted 12 filing in to the room. Remember, the government has a majority of one in the reps and a deficit of nine in the senate.
No one hid the fact that the meeting was tense as Bishop lectured them about the importance of the ratification. She assured her colleagues safeguards would be in place that would mean no Australian minister would ever have to send anyone to China to face trial no matter what Beijing wanted. Her audience was unimpressed.
Had Bishop’s antenna been more finely tuned, she would have picked up on the mood and mutterings. Some were so exercised by the prospect of Australia extraditing Chinese dissidents to face the possible death penalty that they could well have crossed the floor. They were furious with the process that had put them in this position. Where was the political nous? Sadly absent, was the conclusion.
But the foreign minister had an accomplice in the imbroglio. Last Saturday, Malcolm Turnbull himself called the leader of the opposition. He urged Labor to support the ratification. He came away from the phone call with the impression that Bill Shorten was onside. That was not Shorten’s understanding. Labor had been signalling opposition since last December, when it lodged a dissenting report in the joint treaties committee. It spelt out Labor’s view that the time was not right to ratify the treaty and it was providing the government with a diplomatic out. Before any more extradition treaties are signed, Labor argued, there should be an inquiry into the 39 already on the books. Those include the Philippines, Vietnam and the United Arab Emirates, none beacons of human rights.
But what undermined the prime minister’s ability to win unqualified support from Shorten was his tying of the fate of Australians detained in Chinese custody to the treaty. If China was meting out this level of intimidation now, imagine what it would do if Canberra ignored an extradition request it believed was covered by a ratified treaty?
That was the last straw. Labor’s shadow cabinet decided last Monday night to join the senate crossbench and the Greens in disallowing the ratification. Had it gone to a vote, at least three government senators, led by inveterate Turnbull critic Eric Abetz, would have crossed the floor. It would have been a complete rejection of the government’s position, aided and abetted by some of its own. That result would have humiliated not only Turnbull and Bishop, but also China.
Bishop and Justice Minister Michael Keenan had made a last-ditch attempt to win Labor support on Monday afternoon. They met Shorten, his shadow attorney-general, Mark Dreyfus, and shadow foreign minister Penny Wong. Again, Bishop apparently left thinking Labor would come to the party. “Sheer arrogance and hubris on all their parts,” is the assessment of the Labor people.
Next morning, about 8.30, political incompetence degenerated into farce. Bishop and the deputy prime minister, Barnaby Joyce, gave media interviews arguing for the ratification. At 8.40 Shorten rang Turnbull to tell him of shadow cabinet’s decision. The prime minister immediately called in his leadership group – Bishop, Joyce, George Brandis and Mathias Cormann – and decided to kill off the ratification. At 8.50, he called Shorten back to inform him. No one told Trade Minister Steven Ciobo, who went on Sky News at the same time oblivious to the new position.
That was bad enough, but Tony Abbott saw an opportunity and grabbed it. As a government insider laments: “He strikes when he sees a vulnerability.” The vulnerability was the backbench revolt that Abbott then amplified by publicly joining the rebels. That infuriated Bishop who, as foreign minister in his government, knew that Abbott’s policy was to ratify the treaty. This was something he twice told the Chinese government. He now says he had no intention of bringing it to a conclusion. At least as prime minister he was diplomatically attuned enough to see kicking the can down the road saved face for China.
But visiting premier Li Keqiang let Turnbull know in no uncertain terms that Beijing’s patience was wearing very thin. In the end, the prime minister’s mishandling of the situation only made matters worse. China watchers have no doubts that his standing with the regime will have plummeted.
Labor’s public response is very instructive. It is increasingly confident that the next election is its to lose. This confidence is bolstered by two opinion polls this week that have the government trailing by nine or 10 points, a trend that is looking entrenched. Shorten and Wong see no benefit in further antagonising the regional giant that they will have to deal with in two years’ time. So there was no contradiction of Bishop trying to keep ratification open when the time is right.
Instead, the opposition went for the same vulnerability exploited by Abbott – government disunity. Shorten tied in the potent issue of penalty rate cuts with Turnbull’s weakness in dealing with party room dissent. This question was a taste: “We know the prime minister is prepared to give in to his Liberal opponents on every other issue, so why won’t the prime minister now give in to Labor and support our private member’s bill to protect penalty rates? When will the government stop fighting itself and start fighting for the conditions of Australian workers?” Almost every opposition question on Tuesday had the same refrain.
The Essential poll had disunity as one of the biggest negatives for the Coalition government. It found 68 per cent of voters seeing it as divided, compared with 49 per cent for Labor. But an indication that the penalty rate issue is gaining traction is the shift on the senate crossbench. Pauline Hanson, Nick Xenophon and Derryn Hinch have sniffed the wind and now think they should support Labor’s move to legislate against the Fair Work Commission decision and ensure future determinations can’t leave workers worse off. That will increase the pressure on the government, but a resolution before the next election is highly unlikely, which would suit the opposition just fine.
What would also suit Labor is the government sticking with its enterprise tax plan, including its tax cut for major corporations. The prime minister’s office briefed last weekend that despite the treasurer appearing to leave open the option of ditching what doesn’t get through the senate, Turnbull is resolute the policy will remain. That resolve will be tested if Turnbull is still in charge in the run-up to the election.
Here, the Chinese whispers about Turnbull’s fate are beginning to sound more like a roar in the Liberal Party. Morale was already low before this week. But as politicians flew back to Canberra recently, one Victorian Liberal told the Labor member beside him, “Nothing personal, but we are going to try to destroy Shorten over the next six months, and if that doesn’t work we may have to destroy Turnbull.”
Turnbull has certainly taken to the task like a man possessed. Shorten, he says, is a phoney, a hypocrite, a purveyor of falsehoods. The standing orders don’t allow him to use the word liar. And now the speaker won’t allow him to accuse the Labor leader of taking “backhanders” at workers’ expense in union negotiations. The accusation rankles the Labor leader. The fact is the Heydon royal commission, set up in great part to get Shorten, could find no evidence of corruption against him. That won’t stop the smear campaign.
The appalling opinion polls, which in reality are more like market research than predictors of who will win the next election, suggest whatever the government is doing is not working. And it’s hard to see that throwing mud can fix it.
This article was first published in the print edition of The Saturday Paper on Apr 1, 2017 as "Turnbull’s muddle kingdom".
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