Finance Minister Mathias Cormann sent a very strong signal on whether the government would persist with its company tax cut policy all the way to the next election. “We are absolutely committed to this plan,” he said.
Absolutely committed. Remember that.
The signal wasn’t to voters, however, but to Cormann’s colleagues, on the backbench and within cabinet, who feel that the byelection results show that the idea of handing so much money to multinationals and giant companies — including $17 billion to the hated big banks — is so toxic it should be dumped. Many of them have thought that for a lot longer than the last 36 hours. But Cormann, a true believer in the fictional economic benefits of company tax cuts, is having none of it.
The problem for the Finance Minister — a man but for whom this government would long ago have collapsed into a mire of abject incompetence — is that he himself declared that “the byelections will be a referendum on who has the better plan for a stronger economy and more jobs”. Now the referendum results are in, and they’re not exactly a ringing endorsement for a windfall for large corporations. It’s a lot like the Prime Minister declared: the byelections were a contest between himself and Bill Shorten. No one forced the two leading figures of the government to frame the byelections those ways, but they went ahead and did it.
If the government backflips, Cormann will find a form of words to cover himself, and he’ll repeat them with the same discipline and stick-to-itness that he brings to everything. But to get that backflip, colleagues are going to have to go through him. Who else stands with him is an interesting question. His fellow right-winger, Peter Dutton, who has a veto role over economic policy as well as anything he can shoehorn into his vast Home Affairs portfolio, might be eyeing his margin in Dickson even more nervously after the bath the LNP took next door on the weekend.
The other problem is that, as Alan Kohler correctly noted, the government has no economic policy other than company tax cuts. If they’re abandoned — if they go the way of Turnbull’s first economic strategy of agility and innovation — what’s the government’s economic agenda?
It’s a rather ironic problem given the government has presided over huge jobs growth and a surge in revenue that has brought the return to surplus closer. Wage stagnation undercuts the government’s bragging rights on jobs growth, but the fact that they haven’t been able to get voters to focus on this enormous success in growing employment is one of Turnbull’s and Scott Morrison’s major political failings — or one of Bill Shorten’s successes.
Pauline Hanson might save the government from this dilemma by backflipping yet again and deciding to pass the tax cuts (or some form of them), having agreed to do that earlier in the year. Shorten — who was supposedly in all sorts of trouble and facing the end of his leadership — made quick work of that in the early stages of the Longman campaign by linking Hanson to a $17 billion gift to the banks. Even by Hanson’s own non-standards of consistency and logic, another backflip would now be very difficult.
That just leaves the Business Council and its media representatives, like Michael Stutchbury at the Financial Review, still desperately investing in efforts to spruik the tax cuts. A government backflip will inevitably have ramifications for business donations to the Liberals. There are no easy options. At least Cormann has the benefit of sticking to his principles when his colleagues want to cut and run.