While much of the Press Gallery might describe the Coalition’s decision to oppose the stimulus package as “brave”, few have identified the blatant contradiction at the heart of Malcolm Turnbull’s position. He purports to believe both in the necessity of minimising a deficit, and the virtue of sweeping tax cuts.
These are — unless you’ve just beamed in from the Reagan Administration — mutually-incompatible positions.
Further tax cuts will embed the Commonwealth Budget in deficit, regardless of when the recession ends. Regardless of the merits of the specific elements of the Government’s stimulus package, it has the virtue of being temporary spending. The Coalition wants a permanent stimulus locked in.
This is boom-years thinking, when Chinese growth and the resources sector could be relied on to direct a flood of cash into government coffers. This enabled the Howard Government to cut taxes without cutting spending — indeed, Howard put Gough Whitlam in the shade by running the highest spending Government in Australian history.
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The Republicans in the US did the same — except they never had a mining boom to keep their budget in surplus. The Reagan and Bush Administrations cut taxes and raised spending, and left the US budget in massive deficit each time.
Unless he’s prepared to identify the programs he would eliminate to offset his tax cuts, Malcolm Turnbull would do exactly the same. Or is the Coalition relying on another mining boom to rescue us again?