The Turnbull government has spent the first few days of the election campaign trying to neutralise Labor’s political advantages across a range of issues. Normally, starting an election campaign on the defensive — without the barnacles having been cleared, to use some political old-speak — would be a disaster, but at 10 weeks this campaign is so long that the government could devote half of it to fixing problems and still have time for a normal campaign.
Which, indeed, it may very well end up doing.
Rather than making its preferred issue of union corruption the focus of the week, the government has spent it trying to pass off its hastily contrived deal with the banks over ASIC as an answer to the problem of banking scandals. It also dropped hints it would use the budget to try to address perceptions of unfairness around multinational company taxation and the abuse of superannuation tax concessions. This week also heralded what will likely be an ongoing attempt to use defence policy to shore up the government’s political problems in South Australia by committing to as much shipbuilding in the Rustbucket State as possible, with Monday’s patrol boat construction announcement and some further edging toward a local submarine build. That’s all in the hope that voters will forget about the Abbott government’s determination to buy Japanese subs and its hounding of the automotive industry out of Australia.
There’ll presumably also be an attempt to address the weeping sore of the government’s war on climate science at the CSIRO, although whether that will get noticed while buffoons like George Brandis and Fiona Nash parade their climate denialism isn’t clear.
If the government manages to secure an election win, these defensive operations will be the foundations of the victory. Labor may profess satisfaction that the government is stealing its policies, or argue that the bank-Liberals deal on ASIC is far inferior to a royal commission, but in neutralising issues where Labor is strong, the government significantly improves its chances of victory and gives itself more room to talk about its agenda.
Unfortunately, each of these issues has major policy ramifications that mean their intensely political treatment will create long-term problems.
The government’s position on banking scandals is a wholly political one. The government is led by a former banker; the Assistant Treasurer and the Cabinet Secretary are former bankers, the Liberal Party is closely allied to the banking industry and receives hundreds of thousands of dollars in donations from banks. Its inability or unwillingness to understand that the industry has a deeply toxic culture, and its preference that the corporate regulator be as toothless as possible — the primary reason why ASIC had its budget savaged in 2014, on top of existing efficiency dividend cuts by Labor — mean that nothing in banking behaviour will change, further discrediting the industry and creating further community pressure for tougher action. If the banks think Labor is being too harsh in calling for a royal commission, and Scott Morrison thinks it’s “populism” to do so, wait until another Hanson or Palmer emerges on a platform of bank nationalisation or break-up.
On tax fairness, the government seems to have worked out something that its focus groups would have been yelling at it for a year: there’s a deep and growing anger within the electorate about how multinationals and big corporates like half the membership of the Business Council of Australia treat our tax laws as vague guidelines to be ignored as convenient. Until now, the government strategy on tax avoidance was to make a few marginal changes (after dumping Labor’s more substantial reforms) and plead that real action needed to be led by the G20 because unilateral action wouldn’t work. That tune now seems to be changing, although O’Dwyer was still talking about concerted international (how many more years do we need to wait for that, minister?) this week. This, too, is a longer-term problem — unless community concerns about tax fairness are properly assuaged, taxpayers will take the view that if large companies and the rich can end up paying less tax than they themselves do, it’s time to investigate every possible lurk to reduce their taxes as well. It will also mean there’ll be zero support for any tax reform measures that, even if they favour companies, have wider economic benefits — and voter support for “reform” is already fragile as it is.
Meanwhile the use of defence policy as de facto industry policy continues apace, with little or no regard given to whether defence protectionism actually serves the national interest. In this regard, a Productivity Commission paper on the benefits of local defence procurement versus international procurement would be most interesting. The last one was in 1994, which may as well have been when dinosaurs ruled the earth — in fact, the PC was called the Industry Commission back then. It recommended against minimum local content requirements and mandating the use of local contractors. The PC did look at defence procurement in its 2012-13 Trade and Assistance Review and unloaded on local preference, but it was only a drive-by effort. Even so, the commission managed to destroy arguments about “the valley of death” and defence procurement multipliers sufficiently well enough to prompt the question of why, when the government has committed to spend tens of billions of extra dollars on defence procurement over the next decade, the PC hasn’t been tasked with identifying the best way of ensuring value for money and maximum economic benefit.
None of that will be featuring in the government’s current thinking. That thinking extends to July 2, and not beyond — and the need to defend against what has turned out to be obstinately competitive opposition.