Where did it go wrong for Turnbull? The budget

Bookmark and Share Economics & Deregulation | Chris Berg
The Drum 5th July, 2016

How did it all go wrong for Malcolm Turnbull?

The Coalition may be returned to government yet, either as a minority or a majority. But it's hard to deny that what we saw on Saturday night was partly the result of a strategic miscalculation.

The eight week campaign was held at the time of the Prime Minister's own choosing. The Government had to make some almighty efforts to do it. Senate voting reform had to be passed. Double dissolution triggers had to be lined up. Parliament had to be prorogued. The budget day had to be moved. Scott Morrison had to write a budget that both served as a steward of the Government's finances and a political campaign document.

Almost none of this worked as planned. The campaign - particularly its slow, strange, uncertain first month - only reinforced the impression that the Turnbull Government was dithering rather than driving.

The Senate reform was supposed to clear up the supposedly feral crossbench. Now it looks to be delivering at least as diverse an upper house as the previous term, but one that might be more hostile to the Coalition than what it replaced. Already it is clear that a joint sitting is unlikely to pass the double dissolution triggers.

But the biggest problem with this plan was the budget. Some of that was about timing. The Coalition found itself in a messy argument with its own supporters about its retrospective superannuation changes at the very same time it ought to have been energising the centre-right to defeat Labor.

The superannuation argument dragged on and on. This might have been predictable. Superannuation is a complex policy. It takes time for the downstream consequences of complex policies to spread, first to be identified by specialists and for their findings to flow through to the mainstream media. Julie Bishop was tripped up by the "transition to retirement" issue four weeks after the budget. The ABC ran an explainer on transition to retirement on June 2.

Imagine how frustrated Coalition strategists must have felt as they found themselves debating budget details with their own fundraisers halfway through an election campaign. As Denis Shanahan pointed out on election night, this issue has been an internal policy issue within the Coalition for eight weeks straight.

Of course superannuation did not swing the election. But superannuation is a particularly sensitive example of the Turnbull Government's broader economic problem - and speaks to the policy reasons the Government has found itself in such an ambiguous parliamentary spot.

Budgets frame Australian politics. They are the filter through which policy is conceived and announced. The 2016 budget failed to give the Turnbull Government's economic story the depth it needed. The Coalition made a pitch for economic certainty. They asked voters to "stick to the plan". What plan? "Jobs and growth" is as much a catchphrase as anything Tony Abbott ever said, at least without a coherent policy agenda to back it up.

Looking at the budget papers with the benefit of hindsight is revealing. What is marketed as the National Economic Plan for Jobs and Growth is barely distinguishable from anything a Labor government might propose: infrastructure spending, trade agreements, wage subsidies, defence spending, and hitting high income earners. To the extent this constitutes a "plan", then every budget that spruiks minor policy adjustments and boondoggles is a plan.

The real point of difference with the Labor Opposition is barely detectable in the budget glossies. One of the Coalition's few budget announcements that actually speaks to its jobs and growth mantra is the company tax cut. But the Government has been embarrassed by it. During the campaign the Coalition spruiked the small business tax cut more aggressively than their broader, better policy.

Perhaps Turnbull would have liked to talk about the company tax cut more. There are ideas and concepts that speak to him personally, and they work neatly together: jobs and growth, innovation, global competitiveness, digital technology, disruption, entrepreneurship. Turnbull is visibly giddy when inspecting cutting edge technology firms.

But not everybody works for cutting edge technology firms. Everything he says in this context is correct - the economy is undergoing a major transformation, technological change will define the future of work, we need to be smart, we need to be agile. But Turnbull has neither been able to translate his genuine enthusiasm into an electoral coalition, nor been able to devise a policy agenda that would suit these changes.

That is a great disappointment. Political drama, with its narcissism and bloodletting, tends to overshadow everything. But as the two parties vie for government, the Australian economy faces the same fundamental structural challenges it did eight weeks ago.