Paul Bongiorno
Jumping on the campaign trail

A government doesn’t spend $100 billion in a budget addressing every political problem, either of its own making or imposed on it, and leave anything to chance.

Scott Morrison certainly didn’t this week. No sooner had parliament adjourned than he hot-footed it to Queensland – the state that did the most to save his government and without doubt holds the keys to the Lodge at the next poll. Morrison’s first port of call was the Gladstone-based seat of Flynn, held by the Nationals member Ken O’Dowd, who is set to retire.

Traditionally Flynn sits on a margin of about 1 per cent. In 2019, O’Dowd not only held the seat, but he also increased the margin to closer to 9 per cent. He was able to leverage the pickle Labor found itself in over mining jobs, unwise remarks on the demise of the coal industry by senior Victorian Labor MP Richard Marles, and former Greens leader Bob Brown’s provocative Stop Adani convoy.

It’s no surprise that our politicians watch each other like hawks. Especially as everyone accepts that the Frydenberg budget was a starting gun for election campaigning. One key Queensland Labor strategist says Morrison knows Flynn is the Coalition’s most marginal seat: the fact he gave it priority after the budget merely confirms this. Labor believes the government’s research in the Sunshine State, like the opposition’s own data, shows 2019 was a high-water mark for the Coalition. Right now, Labor stocks are improving.

Labor leader Anthony Albanese, like Morrison, spent much of the week on the campaign trail in Queensland. Labor’s research shows that much of its improving fortunes up north come from the fact that Albanese has neutralised the coal jobs issue. His message – oft-repeated in local radio interviews around regional Queensland – is that he supports coal jobs while there is international demand for the commodity. He says the industry’s future will depend not on decisions taken by politicians in Australia but by those taken in boardrooms in Beijing, Tokyo, Seoul or Delhi.

Boosting Labor’s optimism in Flynn – and no doubt increasing the Liberal–National party’s heartburn – is Albanese’s return to the winning formula he applied in the Eden–Monaro byelection. There a popular local mayor, Kristy McBain, was endorsed and won the seat. After months of arm-twisting and cajoling, he has persuaded the popular Gladstone mayor, Matt Burnett, to run as his candidate. Burnett, a long-time Labor member, won the mayoralty with a 75 per cent popular vote.

What we now have a week after the budget is evidence from the major published opinion polls that despite a trillion dollars of debt accumulating over the next four years, and the billions spent this year, the major parties are neck and neck.

In the Newspoll two-party preferred, Labor is marginally in front, and it’s a similar result in the new Resolve Political Monitor poll in Nine newspapers. Resolve’s director Jim Reed, a seasoned pollster who honed his skills with the formidable Crosby Textor outfit, says the result in two-party terms is “way too close to call”. He says this is the case “whether preferences were applied according to the last election or statements from those surveyed”.

Newspoll found the 2021 budget was the best received since Peter Costello’s final one ahead of the 2007 election. But that big spending splurge failed to save the Howard government, and the then prime minister lost his seat and the general election in a landslide to Kevin Rudd’s Labor party.

On Tuesday, at the end of his Queensland foray, Morrison looked the Channel Seven’s Mark Riley squarely in the eye and proclaimed: “There’s not an election this year, the election’s next year.” Riley asked if that was “a promise or an assumption?” The prime minister couldn’t foresee the circumstances that might change this but added, “Who knows? There would have to be very, very, very good reasons.” And you don’t need to have been covering federal politics for more than 30 years to know nothing is more of a “very, very, very good reason” than calling an election when you think you can best win it.

Bolstering the conclusion that an election is imminent is the fact that Morrison made room on his government jet for the political editors of the two highest-rating TV news shows and their pool camera crew. Besides Riley, Nine’s Chris Uhlmann went along for the ride, as did Phil Coorey from The Australian Financial Review, with a photographer.

The choice of Coorey is also indicative of where the government really wants to fight the election, and that’s on its traditional turf of the economy and national security rather than on Labor’s preferred strengths of health, education and social policy. Morrison even gave the AFR’s political editor a scoop by linking the Victorian government’s land tax rises with federal Labor.

Morrison said the Victorians had “belled the cat”, because in his words, “that’s what Labor governments do, they’ll put up taxes”. Never mind that to repair the budget, two former Liberal treasurers have done just that. Peter Costello in his 1996 budget whacked a $2.5 billion superannuation surcharge levy on wealthier savers, which he kept in place for nine years. In 2014, Joe Hockey imposed a 2 per cent deficit levy on those earning above $200,000.

Though the Morrison–Frydenberg budget predictions are deep in the red beyond 2030, they have rejected the Aged Care Royal Commission’s recommendation for an income tax levy to properly fund its reforms. The result is funding far short of what the inquiry found was needed. The government could hardly demonise any proposed Labor tax rise if it also raised one of its own. But it does invite the question on when Morrison will decide that the time has come to begin addressing the debt mountain. After the next election is a fair bet.

Economist Stephen Koukoulas says the evidence is the Liberals are every bit as big – if not bigger – spenders than Labor, even before the pandemic. The 2019 budget papers forecast net government debt at zero by 2030. This year the forecast is for government debt of $1.5 trillion by 2030. He asks rhetorically: “Did Covid really cost the budget $1.5 trillion?”

Still, voters don’t seem to mind government cash splashes so long as they directly benefit them. It was on this pretext that in the final week of a state byelection in the Hunter Valley, the Morrison government announced an extraordinary intervention in the market. It would use $600 million of taxpayers’ money to build a gas-fired power station at Kurri Kurri. Energy Minister Angus Taylor said it would deliver cheap and dispatchable electricity. The government’s own experts reject both the need and the claim. It would be expensive power, according to the chair of the Energy Security Board, Kerry Schott. The fact no private investors would touch it with a barge pole is proof enough that taxpayers are being asked to fund what the market judges to be a potential stranded asset.

The announcement also coincided with the International Energy Agency calling on Australia and other rich countries to reach net-zero emissions earlier than 2050, to phase out dirty coal-fired power stations by 2030 and to slash oil and gas consumption. The budget thumbs its nose at all of that: no mention of electric vehicles, just billions for oil refineries and scant mention of climate change. Maybe, again, the Liberals are relying on pandemic-panicked voters not noticing the dearth of initiative and action on the other existential threat to them and the rest of the planet’s inhabitants.

What we are seeing is short-term, cynical politics – instead of moving the tax debate to genuine tax reform, such as looking at the billions of dollars’ worth of tax concessions that not only cost the budget but fuel the overheated property market and the housing affordability crisis. Or looking again at a mining super profits tax that could channel billions of dollars earned from Australia’s vast non-renewable mineral resources to even better fund aged and disability care, or childcare. No, what we are seeing is a spurious defence of the $130 billion stage-three tax cuts. The treasurer struggled in his Insiders interview on Sunday to link this flattening of the tax scales directly to an economic growth dividend. He struggled because there is no such link, according to economist Richard Denniss.

The prime minister says the dividend is “baked into the budget numbers”. This is a brazen admission because those numbers show no significant abatement in the tsunami of red ink. The billions of dollars are mostly to be borrowed as the forecasts do not show strong enough growth to pay for the tax cuts. All of this matters because with no credible fiscal repair plans, the cost of that debt will rise. Already one of the big three international rating agencies, S&P Global Ratings, has a negative outlook on Australia, putting the country’s triple-A credit rating at risk.

But those who travelled with the prime minister in Queensland say he appeared relaxed and comfortable and met plenty of voters who thanked him for keeping Australia safe. No doubt the reckoning is if border closures could work like a treat for Premier Annastacia Palaszczuk in the Sunshine State, it can also work for him. No doubt he’s hoping his – and the country’s – luck continues to hold.

This article was first published in the print edition of The Saturday Paper on May 22, 2021 as "Taxing credibility as they are off and running".

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Paul Bongiorno is a columnist for The Saturday Paper and a 30-year veteran of the Canberra Press Gallery.

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