Morrison goes from royals to rate cuts to raids
As it was for his many predecessors, Scott Morrison and his wife, Jenny, were ushered into the Buckingham Palace parlour the Queen reserves for meeting her prime ministers. The antique two-bar electric heater was not turned on in the fireplace but it didn’t matter. Morrison supplied all the warmth, presenting equine tragic HM Elizabeth II with the biography Winx.
The odds of Morrison being in the august presence of the monarch as her Australian prime minister were much longer than Winx ever commanded in the betting markets. But, like the champion mare, Morrison wants to maintain a winning record. And to do that, he and his treasurer will need to heed the lessons of history, particularly what happened to the Keating Labor government after “the sweetest victory of all”.
In 1993, the Liberals’ John Hewson lost the unloseable election with a great big tax agenda. Keating promised L-A-W tax cuts without introducing a goods and services tax, saying the GST meant “every time you put your hand in your pocket, Dr Hewson’s hand will be there too”. Morrison, who was derided as “no Keating” by Labor apparatchiks before the election, proved just as adept at scaring voters over the prospect of more and bigger taxes. But it’s what came after the election that is instructive.
In the first budget after the election, Keating’s treasurer, John Dawkins, couldn’t make the numbers add up. Dawkins sliced the L-A-W tax cuts in half and raised a number of indirect taxes. Few doubt Labor lost the next election then and there. Like Keating, Morrison promised tax cuts. Yet how he will pay for them and deliver on his self-proclaimed yardstick for economic success – a budget surplus next year – has many economists baffled. Especially in light of the national accounts this week, which saw economic growth at its weakest since the global financial crisis.
The Liberal chair of the house of representatives economics committee, Tim Wilson, was quick to blame Labor for the anaemic growth of 0.4 per cent in the past quarter and for the 1.8 per cent year-on-year figure. The result is a long way below the Reserve Bank’s forecast of 2.5 per cent growth in 2019-20. To get to that figure will require another of Morrison’s miracles. Wilson told Sky News that in the first months of this year “Australians lived in terror at the prospect of a Labor government”. Warming to his task, he said this was the case last year, too, but now that the “terror has been removed” all will be well.
On Tuesday, Reserve Bank governor Philip Lowe dropped the official cash rate to 1.25 per cent, well below the crisis levels of 3 per cent during the GFC. But, like Wilson, he was a glass-half-full man, saying the RBA’s decision did not “reflect a weaker outlook”. Rather, he said: “It will assist with faster progress in reducing unemployment and achieve more assured progress towards the inflation target.” Translated, this can only mean a sluggish economy needs stimulating. Shadow treasurer Jim Chalmers questions the optimistic gloss. He says, “There is weakness as far as the eye can see. Stagnant wages, weak consumption, underemployment, job insecurity all feeding into the broader economy.” He does not accord the RBA’s projections the status of Holy Writ. He says, “They’re forecasts, not necessarily facts yet.”
They certainly won’t become facts if the government doesn’t do its part. The banks haven’t done theirs, with only two of the four majors passing on the full 25-basis-point cut to their customers, blunting whatever effectiveness they may have had. The governor, perhaps realising that there is only so much he can do pulling the interest rate lever, is looking for a substantial bringing forward of spending on infrastructure, as well as the government delivering the promised tax cuts and other structural reforms. Dare we mention tax reforms that look at curbing multibillion-dollar concessions that could better be used elsewhere, such as for matching Labor’s investment guarantee?
Morrison and his treasurer, Josh Frydenberg, don’t intend to repeat the Keating government’s mistake of crab-walking away from their key pre-election promises, not that they made many. Frydenberg still trumpets the $100 billion promise over 10 years for infrastructure, but is just as adamant he won’t be bringing any of it forward. He says half of it will be spent during the next four years. The RBA governor is looking for more stimulus now. The treasurer believes, or maybe hopes, he is doing enough to ensure “sufficient strong economic activity”. He told Laura Tingle on 7.30: “That’s why we’ve committed to surpluses – $45 billion of surpluses over the forward estimates.” His day of reckoning will come earlier than that next year but he insists: “We will deliver the surplus.”
It wasn’t only the sluggish economy that had the government on the back foot. Two police raids on journalists were widely seen as pre-emptive intimidation of the media and an attempt to shut down whistleblowers in the public service. On Tuesday seven federal police agents spent hours combing the Canberra apartment of Annika Smethurst, one of the Murdoch tabloids’ senior political journalists, over a story she wrote 14 months ago revealing internal government discussions proposing new powers for the Australian Signals Directorate to spy on citizens without a warrant. The next day, more federal agents raided the ABC’s Ultimo headquarters, looking for clues on who leaked hundreds of pages of secret documents revealing the clandestine operations of our special forces in Afghanistan. The most disturbing included an episode where Australian troops killed unarmed men and children.
The raids raised alarm bells for the Centre Alliance senator Rex Patrick. He suspects they waited until the federal election was out of the way. Certainly, targeting the Murdoch tabloids before polling day would have been politically foolhardy, because News Corp was running a strident anti-Labor, pro-government agenda.
Patrick said, “Home Affairs Minister Peter Dutton and Home Affairs Secretary Mike Pezzullo clearly hate media scrutiny. The actions of the federal police are very clearly intended to have a chilling effect on journalistic inquiry.” News Corp agreed, releasing a statement condemning the raids as heavy-handed and a “dangerous act of intimidation”.
The president of the Parliamentary Press Gallery, David Crowe, says by any measure Smethurst’s story was in the public interest. “Democracy suffers when journalists are raided for reporting on governments,” he added. He also wrote in the Nine newspapers: “No Australian should want to live in a society where agencies can seek an increase in their powers, insist on secrecy and claim a breach of national security when the press reports on their proposals.”
After initially responding cautiously, Labor demanded a full briefing on Wednesday, with the opposition leader, Anthony Albanese, saying, “It is quite frankly, I think, outrageous that seven officers spent seven-and-a-half hours … going through everything throughout [Smethurst’s] home.” He said democracies rely on the freedom of the press and Smethurst was a “serious, professional journalist” whom he respects.
The backlash forced a flu-affected and hoarse attorney-general, Christian Porter, to go on RN Breakfast and deny that Dutton or any minister sooled the AFP onto Smethurst. He said Patrick’s views were “absolutely absurd” and “ludicrous”, although he could not explain the timing or the raid’s delay. What he did reveal was a heightened sensitivity to public service whistleblowers. He said the raids are about “someone who may or may not have made an unauthorised disclosure against the terms of a very well-known provision of the Crimes Act ...”
The sensitivity of Dutton and the government is no doubt heightened by the appointment of Senator Kristina Keneally as shadow Home Affairs minister. While some suspect Albanese gave her the job to sideline a potential rival in an area where Labor traditionally runs dead, the Labor leader doesn’t see it that way. He believes Keneally, who played an attack dog role for Bill Shorten in the campaign, is just the weapon he needs to expose Dutton’s underperformance and turn what the government claims as a strength against it.
The new mega-department of Home Affairs has been shambolic in its administration. There have been budget blowouts, resignations and chronic understaffing. Public servants past and present are already talking, and in Keneally they will have a receptive ear with a mission to “apply the blowtorch”.
Keneally says there has been a massive increase in the number of asylum seekers coming by plane – 81,000 during the past four years. The number of people on bridging visas is at a historic high of more than 200,000. As well, there is a massive backlog of 230,000 whose citizenship applications have been stalled “thanks to cuts and chaos” in the department.
Morrison was in statesman mode while overseas this week – assuring our “Pacific family” we now care more about them. To prove it, he promised the Solomon Islands $250 million to help achieve “independent sovereignty and independent economic sustainability”, which can only really mean “independent of China”. Albanese was very much in political mode at home, going on his listening tour of electorates in Tasmania and Queensland.
Besides getting in early, defining himself before the Liberals do, Albanese says he has three years to tell us what he’s heard. In the meantime, his job is “to hold the government to account each and every day”.
This article was first published in the print edition of The Saturday Paper on Jun 8, 2019 as "With a Winx and a nod". Subscribe here.