Several weeks ago, Brendan Nelson declined to back Malcolm Turnbull when Treasury Secretary Ken Henry handed out one of the biggest don’t-argues ever dealt by a bureaucrat to a serving politician.
Turnbull had claimed that Treasury recommended a specific minimum wage increase in the Government’s submission to the Fair Pay Commission. “These claims are false,” Henry immediately said, in a rare public statement. Nelson, asked at the National Press Club whom he believed, said he preferred Henry’s version of events. Turnbull was humiliated, and it was naturally seen in the context of the Liberal leadership issue.
But today Nelson has fully signed up to Turnbull’s agenda as shadow Treasurer, arguing that there is no inflation crisis and that there is no need for cuts in government expenditure. The entire focus on inflation, Nelson reckons, is a Rudd-Swan plot to discredit the Coalition’s economic credentials.
The anxiety of the Coalition leadership to prevent damage to the Howard-Costello economic brand is motivated by a worry that, like Labor under Beazley, a successful discrediting of their economic record will make it even harder to present as a credible alternative government.
They also still hold hopes that the inflationary effects of the Government’s reversal of Workchoices can be established as a credible narrative – even though they themselves have declared Workchoices dead.
Turnbull’s role in defending the Howard-Costello record is particularly mystifying. He was a relatively junior minister in the previous Government. He has no direct ownership of the profligate spending of the previous Government’s last term. Perhaps he wants to demonstrate to his colleagues that he can play by the rules and work in a team – even if most of that team has now left Parliament or are sitting on the backbench.
But it is surely not beyond the wit of Turnbull to make the far more credible case that the Howard-Costello economic record was sound and included significant reform, but like all Governments, spending discipline relaxed toward the end, even if the bulk of spending was in the form of tax cuts. He could even argue that Workchoices was an attempt to ensure the inflationary effects of the resources boom didn’t feed into the rest of the economy.
That’s a far more plausible story than the “what inflation?” rubbish he’s been peddling for months. And it would do the Coalition credit to be upfront about where it went wrong in its last term. Instead, Turnbull has now yoked Nelson to this unworkable story about how there’s no inflation problem and no need to cut spending. In protecting their predecessors’ legacy, they’re pushing themselves further and further out into economic irrationalism.
That Turnbull has managed to drag Nelson out onto the decidedly shaky branch he’s been occupying since December also means that Australia now has no party of small government. Nelson wants the Government to “hold the line” on spending. “Hold the line” used to mean stop it from growing. Nelson’s idea is to stop it shrinking.
When in power, the Coalition at least talked about small government, even as it taxed and spent its way to victory. Now it won’t even do that. If the conservative side of politics, with nothing to lose, won’t argue the case for reducing the size of government in Australia, then who will? Not the Government.
It’s clear, amidst all the mixed messages emanating from the Government, that it won’t tackle the big ticket items of Howard-Costello spending in middle-class welfare, health and defence because of Kevin Rudd’s me-tooism in 2007. So Lindsay Tanner is stuck trying to find savings at the margins. The chances of any actual reduction in government outlays next Tuesday looks minimal.
So, really, this is a fake debate. The Government and the Opposition are arguing the toss over expenditure reductions of a couple of billion dollars when neither will seriously contemplate taking the meataxe to spending that Rudd promised.
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