Welcome to your first day as Treasurer, and congratulations on your promotion!
It’s been some decades since that degree in applied economic geography at UNSW, we acknowledge. So here are a few things you need to know before you meet with Treasury secretary John Fraser.
1. It’s the economy, stupid.
This matters. A great deal hinges on you.
2. Keynes, your old friends’ whipping boy, is your new friend.
How much the government spends matters. Don’t listen to theoreticists who say otherwise. And don’t do what Joe did and take your foot off the accelerator when the economy is going uphill. Recession talk is in the air, and that’d be an awful way to start your new job.
3. The difference between ‘real’ and ‘nominal’.
Real means adjusted for inflation. Nominal is unadjusted. They are awfully easy to mix up. Get them right every time and avoid looking like a goose.
4. Our surplus fetish is getting unhealthy.
Change the narrative. Laugh at the surplus-ists and call them simple. Borrow up if a good investment comes along. A bit of debt can be a good thing.
5. Land tax.
It’s pro-growth and it’s progressive — very few policy choices left on the shelf meet those two criteria. Something to think about …
6. Fixing the long-term budget position.
It’s not clear how we can afford the NDIS, needs-based school funding, an ageing population and the infrastructure we need. We need creative thinking. You can either be the Treasurer who kills these ideas or the one who made them happen.
Remember this: cuts rarely feature in the writing of a legacy. For example, who ever talks about how John Howard strangled the dole down below some measures of the poverty line?
7. Unemployment matters most.
This is where the rubber hits the road and all those dusty columns of figures turn into human suffering. Small kids who aren’t getting proper nutrition and parents whose labour market skills are atrophying every week they spend on the dole. Focus on jobs.
8. Budget-process rules matter.
Very soon, the Expenditure Review Committee will meet to start considering next year’s budget. This process is sacrosanct. If you let people spend money outside the budget, you undermine the whole point of the budget. Spending decisions should happen at the budget, and at the budget only, unless it’s an emergency. Be disciplined.
9. Fund the Australian Bureau of Statistics properly.
In your new job there are no “on-water matters”. Everything’s out in the open. And if you’re going to be transparent you should also be accurate.
The ABS has been a mess recently, and this can’t go on. If you can’t measure it, you can’t manage it. The statistics bureau is a Treasury portfolio body, so you can make this happen.
10. Rising house prices aren’t in your interest.
The RBA governor said it the other day. It’s a money-go-round, not a wealth fountain. You don’t control house prices, but you can and should tweak debt markets, foreign investment and land supply. The alternative could swallow us all up.
11. Land tax
This is worth repeating. Want a legacy that’s constructive, not just destructive? Land tax is the answer. Smart people are thinking about it.
12. Senator Richard Colbeck: remember his name.
Don’t worry, we hadn’t heard of him before either. But he’s a Tasmanian Senator and since yesterday he is now in charge of tourism and education. You depend on him more than you realise. Those two industries can go boom and deliver the economic boost Australia needs. You and he must get together and figure out how to exploit the falling dollar to double our services exports.
13. $20k business write-offs are good PR, not good policy.
And we know it. And you know we know it. And we know you’re going to roll out more of them anyway. Sigh.
14. Land tax.
Did I mention this already? Realists will tell you it’s too hard. But nobody will tell you it’s bad policy. Remember — good ideas tend to win in the end.
15. Economic forecasts are stabbing in the dark.
You’ll have to sign off on a lot of these. But that doesn’t mean you can trust them. It doesn’t matter who made the forecasts, they’re wrong. We’re all fumbling in the dark.
16. Empty your humidor.
Romeo y Julietas ought not be puffed in view of camera lenses. It is perhaps best if they are not puffed at all. Tell the Finance Minister he can smoke on his own.
17. The GST.
It’s pretty easy for NSW Premier Mike Baird to say the GST should go up. He won’t take the heat if it does. Don’t get too excited. There is an obsession with indirect taxes (taxes on things other than productive activity). View it with a degree of scepticism.
18. ‘Reform’ is a dirty word.
Jargon without much meaning can absorb meaning and emotional cadence from elsewhere. This word, in many people’s ears, is now poison. You’d be wise to never again speak it. Instead, call tax changes “tax changes” and legal changes”‘legal changes”. It will help.
19. Know your enemies.
You no longer have colleagues, you have supplicants. Every day you will deny funding to some junior minister’s pet project, dream, or vision of a better Australia. They won’t like that. Stay strong in the face of their entreaties. Wear their bitterness with pride. The purse you’re protecting is ours, not theirs.