Economic policymaking is in crisis among conservatives at a moment in Australian politics when we need a coherent narrative about liberal economics in the face of resurgent populism.
And while Labor has — despite an almost reflexive and damaging pandering to economic nationalism and neo-protectionism — got its policy house in order on infrastructure, fiscal policy and reducing inequality, the right are fighting among themselves on key issues:
- The entire future of the peak business lobbying body, the Business Council of Australia, is being debated by senior Liberals and business figures, and there is an open dispute between the chair of the BCA and one of its highest-profile directors about the fundamental role of the lobbying body;
- The fiercest opposition to the government’s high-quality and entirely appropriate superannuation taxation changes is coming from within its own ranks, and Treasurer Scott Morrison, who to his credit has been fighting the good fight on the issue, has been unable to work out a deal to satisfy internal opponents, especially with the dispute fueled by right-wing enthusiasm for undermining both Morrison himself and the Prime Minister; and
- Morrison’s pandering to economic nationalism in his decision to ban Chinese firms from bidding for electricity assets has wrecked the NSW Liberal government’s plans to use privatisation to leverage further infrastructure investment in that state, while signalling a new era of xenophobic head-under-the-doona policymaking about foreign investment.
Throw in that Morrison is attacking his Coalition partner’s Western Australian branch for proposing higher taxes on mining companies and you’d be forgiven for thinking the right is in total disarray on economic policy.
This morning’s speech from the Treasurer confirmed that the government is bereft of ideas beyond its current awkward mix of defence neo-protectionism, free trade deals of minimal benefit and trickle-down economics based on tax cuts for big business. Like the Prime Minister’s CEDA speech last week, Morrison ignored infrastructure, mentioning it just once in passing like his boss did, leaving the government as the sole absentee from a political and economic consensus about the need to lift infrastructure investment. And like Turnbull’s speech, climate change was absent, as well.
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It was, however, big on the kind of “budget emergency” rhetoric that we used to hear from Tony Abbott and Joe Hockey in the early days of their government — although the phrase itself was of course absent. Morrison devoted considerable time to conjuring debt scenarios and warning of debt exceeding $1 trillion, the kind of figure likely to scare Telegraph readers. “The period of this term could well prove to be the tipping point on the trajectory of debt our children and grandchildren will be saddled with,” Morrison declared.
On that he is correct — but how long this sort of rhetoric will last from the Treasurer isn’t clear. Hockey and Abbott went from warning that the fiscal bushfire was about consume us to expressing a certain contentment with debt reaching 60% of GDP. It was Abbott and Hockey who, as Morrison himself reminded us after he took over as Treasurer, had allowed spending to reach 26.2% of GDP, higher than at any level in the Labor years. Will Morrison, two years from now, be declaring himself satisfied with current debt levels as well? “We have consistently rejected Labor’s tax and spend approach,” Morrison insisted in his speech, which is a complete lie — spending is still well above the level of every Labor year but one, the 2009 GFC stimulus year, and taxation is well above any level reached under Labor. The Liberal Party is currently the party of tax-and-spend in Australia.
This lie matters, because it’s not just about crass partisanship or hypocrisy, of which both sides are constantly guilty, but because it reflects a continuing incoherence from the Liberals about what their economic agenda actually is. And that incoherence is at a time when we need the forces supporting the liberal economic consensus of the last 30 years (viz, the Liberal Party and most of the Labor Party) to be explaining its benefits to voters and the risks of turning our backs on it.
Labor, at least, is offering a coherent economic narrative centred on health, education, infrastructure, long-term fiscal repair, carbon pricing and renewables investment and addressing inequality. What is the government’s agenda? It is opposed to tax-and-spend, but it taxes and spends at a higher rate than Labor. It is “open for business” but opposes foreign investment. It says infrastructure investment is crucial, but that investment has collapsed. It says we must make tough fiscal decisions but offers a huge tax cut to the world’s biggest companies. It preaches free trade but is spending billions propping up the local defence manufacturing sector for political purposes. It says we need a more sustainable retirement incomes system but then has a pitched internal battle over relatively minor adjustments affecting high-income earners.
No wonder economic populists is resurgent. No matter where they come from on the political spectrum — from the racist far right like One Nation or the political centre like NXT — they offer a simpler, more coherent narrative of Australia-first economic interventionism.
Saying one thing and doing another is never a good look for a government, but at a time when the core economic consensus of the last three decades is under serious threat, it means handing the opponents of the economic agenda that has delivered such great outcomes to Australia since the 1980s an easy win.