Coalition’s eye on the numbers
Politics is all about numbers. It’s how they fall in a budget, in an election and in the counting train wreck that is the national census that determines everything.
To make the point, consider a meeting between then treasurer Peter Costello and leader of the Democrats Natasha Stott Despoja back in 2002. Costello was trying to persuade the Democrats to use their balance of power in the senate to support his increase to the cost of pharmaceuticals on the Pharmaceutical Benefits Scheme. The encounter lasted 45 minutes. As was his wont, the treasurer supplied graphs and slides to show the cost of the scheme was blowing out exponentially. At the end of his spiel he looked at Stott Despoja and said: “You’ve seen the numbers – are you still intent on blocking the change?” Stott Despoja looked back at him and said they were certainly going to block the change: “I have seen the numbers, Treasurer, and you don’t have them in the senate.”
A meeting soon after with the prime minister, John Howard, was equally fruitless for the government – though the Democrats leader found him more persuasive, just not persuasive enough. That was the same Peter Costello who appeared on Four Corners this week to share his wisdom about an embattled Malcolm Turnbull. This prime minister definitely lacks the numbers in the senate and scarcely has them in the house of representatives. One is a powerful number when it comes to delivering a majority; the trick is maintaining that crucial margin in all circumstances.
Costello’s advice on how to deal with the senate crossbench had former Democrats gagging in disbelief. “As a negotiator, Costello was hopeless,” was the view of one. It was left to Howard to steer what he could of the goods and services tax through the senate. The treasurer was scarcely seen at the time. Now, however, he says to win over crossbenchers “you have to woo them ... you have to talk to them, you have to be attentive to them, you have to flatter them and you have to stroke their egos”.
The scale of that task is huge, although the wooing has already begun. If Labor and the Greens decide to block a government bill it would take nine of the 11 crossbench senators to come on side to pass it.
But what has some of Costello’s former Liberal colleagues still in the parliament fuming is his unhelpful advice to Scott Morrison. Rather than make the current treasurer’s job easier he laid down benchmarks he himself did not achieve. More galling, he did not own up to being greatly responsible for the structural deficit still bedevilling the budget.
The chutzpah is almost breathtaking. Economist Stephen Koukoulas says the level of government spending as a share of gross domestic product at the end of Costello’s period in government was at that time the highest ever. It would have made one of our PMs with a big-spending reputation, Gough Whitlam, blush. That was in December 2007, before the global financial crisis.
Unperturbed, Costello told the ABC: “Superannuation changes aren’t going to balance the budget – that’s obvious. The only way you’ll balance this budget is if you get spending below 25 per cent of GDP, right? We are at about 25.8 per cent now. You cannot balance a budget on that.” He went on to emphasise the need to get spending well below 25 per cent.
These are changes dealing with the fiscal time bomb that Costello as treasurer put in the budget when he introduced tax-free superannuation earnings. That enabled wealthy individuals to stuff millions of dollars into super. Wealth accumulation rather than provision for retirement became the main goal at a huge expense to the budget bottom line.
Morrison has set out to redress this fundamental and costly unfairness. He is meeting great resistance within the government and from leading Liberals such as the man who lit the fuse more than a decade ago. Costello did nothing to help his successor push the debate in the direction of curbing other hugely expensive tax concessions, either – concessions he also introduced and apparently believes should be kept in place. Evidently middle-income families and less wealthy individuals should be called on to shoulder more of the burden of budget repair so that higher-income individuals can prosper. Good luck selling that.
But Morrison is going to try. The one advantage he has over the man he replaced as treasurer, Joe Hockey, is that at least he won’t be breaking promises. Millions of dollars’ worth of Hockey’s nominated cuts to health, education and family payments were still in this year’s election manifesto budget. Labor calls them “zombie” measures because they’re like the walking dead. Can anyone believe that this senate will be any more accommodating than the previous one in waving them through while at the same time agreeing to $48 billion worth of corporate tax cuts that include the big banks and reluctant taxpayers such as the multinationals?
But the political squeeze on the treasurer and his prime minister is as much from within the scarcely governing Coalition as it is from their political opponents across the despatch boxes in both chambers. One Labor veteran saw the Four Corners program as akin to an Abbott and Costello cyber attack on Turnbull. The former prime minister didn’t rule out reviving the “Abbott era”, though he did say the initial one was over. Costello was more pointed: “I don’t think, you know, Tony plans to be a backbencher for the rest of his life.”
Ominously, Costello was joined by the embittered Tasmanian powerbroker Eric Abetz in reminding Turnbull that it would only take one or two government backbenchers to cross the floor to defeat legislation. The former treasurer also raised the prospect of Liberals or Nationals quitting to sit as independents to get their way.
It wasn’t a pretty sight seeing the Abbott ally and dumped senate leader Abetz attacking Turnbull for failing to restore himself, Abbott or Kevin Andrews to cabinet. It’s hard to see how anyone could take Abetz’s talk of “rapprochement” seriously. After all, he helped engineer the dumping down the Tasmanian Liberal senate ticket of Turnbull ally Richard Colbeck. Colbeck, a cabinet minister, was replaced on the ticket with a docile Abetz acolyte. The net result: the Apple Isle does not have a representative in the engine room of the government. One Liberal MP, fed up with these antics, wondered when Abetz would be held to account for the appalling failure of the party to return any of its three lower house MPs in the state.
As if to perversely prove the point that being an independent may guarantee more cachet in current political circumstances, the prime minister has spent almost an hour with the re-elected Tasmanian independent Jacqui Lambie. In 2013 she ran for the Palmer United Party, after the Tasmanian Liberals wouldn’t endorse her. She came with quite a shopping list but also with suggestions for $98 billion worth of budget repair over 10 years. These included a financial transaction tax, death duties on estates worth more than $5 million and removing the capital gains tax exemption on homes worth more than $2 million. It all makes sense in Australia’s poorest state, where 70 per cent of the population receive government payments. Turnbull listened politely.
Assisting Lambie with this repair plan is the progressive think tank The Australia Institute. That might seem like an odd fit, but the institute’s executive director Ben Oquist says to make sense of the state of play in the knife-edge parliament “you have to realise that traditional left–right labels don’t fit the current political debate”. Oquist says, “It used to be accepted that foreign investment and privatisation were good. Now you have Rod Sims, the Australian Competition and Consumer Commission chief, saying privatisation is overblown and foreign investment is a risk to national security. This strikes at two of the Liberals’ old bulwark arguments on economics and national security.”
Labor, of course, could make life much easier for the government’s budget-repair task by voting with it and sidelining the minor parties. In fact, even the Greens could come to the rescue. Their nine votes in the senate are enough for the Coalition to pass bills. Permutations of these numbers are sure to feature in the next three years, if the government lasts that long.
It won’t if Bill Shorten can help it. He had other numbers on his mind after this week’s census computer crash, accusing Turnbull and Morrison of gold medal incompetence. As a former minister responsible for the census, he says the buck stops with them. The hapless Michael McCormack pleaded that he had only been minister for three weeks. But the “stable” Coalition government has had three ministers in the role in three years. They kept changes flagged in Labor’s last budget. The green light was given for the first online census, to outsource it and to extend the length of time for names and addresses to be held. All without serious explanation or adequate planning. The government even left the Australian Bureau of Statistics leaderless for a year and substantially cut its budget.
In the Westminster system, this is more than enough for heads to roll. Blaming IBM, the computing giant hired to do the work, doesn’t wash. Just ask former Queensland premier Anna Bligh after the debacle of the health payments system on her watch. Voters didn’t give her the numbers when she needed them most.
This article was first published in the print edition of The Saturday Paper on Aug 13, 2016 as "Drowning by numbers". Subscribe here.