PAUL BONGIORNO

The Saturday Paper - - Front Page -

Next Tues­day Trea­surer Scott Mor­ri­son will un­veil the govern­ment’s blue­print for sur­vival. His po­lit­i­cal op­po­nents are con­vinced one bold move would go a long way to achiev­ing it. And it’s giv­ing Bill Shorten night­mares.

Not that he’s ad­mit­ting that pub­licly. In fact, the ex­act op­po­site. On Mon­day, in a big set piece pre-bud­get speech, Shorten said: “I hope, for Aus­tralia’s sake, that they drop the cen­tre­piece of the last elec­tion cam­paign and the last two bud­gets.” He was re­fer­ring to the en­ter­prise tax plan, the grand vi­sion to cre­ate jobs and growth by giv­ing cor­po­ra­tions tax re­lief to the tune of

$80 bil­lion.

That’s the lat­est cal­cu­la­tion, as an­other year is added to the plan. Don’t be­lieve the bravado. The anx­i­ety in the La­bor camp is pal­pa­ble. The rab­bit out of the hat on bud­get night could be a dead com­pany tax. The bud­get speech would be­come Shorten’s night­mare on Par­lia­ment Drive.

“It would be a shocker,” was the frank ad­mis­sion of one se­nior strate­gist. That’s be­cause La­bor has made these tax cuts the fo­cus of its at­tacks on the govern­ment. Its link­ing of the be­hav­iour of the big­gest cor­po­ra­tions set to ben­e­fit, namely the banks, has added bal­last to the cam­paign. And if you can be­lieve the eighth an­nual Per Capita Tax Sur­vey, it is work­ing a treat. It found 62 per cent op­posed the tax cuts for large busi­nesses. That in­cludes more than 55 per cent of Coali­tion vot­ers.

The govern­ment re­jects ex­empt­ing the banks from their plan, dis­miss­ing the calls as a “moral­ity tax”. Shorten is un­de­terred. He says “it is im­moral to give the big banks of Aus­tralia a $17 bil­lion tax hand­out, es­pe­cially in light of the shock­ing and preda­tory rev­e­la­tions of the royal com­mis­sion that the Turn­bull govern­ment never wanted to see ex­posed”. He calls the tax pro­posal a “mon­stros­ity” and a “re­verse do­na­tion” to the Coali­tion’s “bud­dies at the big end of town”.

For Mor­ri­son to walk away from this pol­icy would se­verely test the govern­ment’s cred­i­bil­ity, if not de­stroy it com­pletely. But it didn’t stop him drop­ping the Medi­care in­come tax levy hike and its de­liv­ery of rev­enue worth $8 bil­lion. And this was after a year of in­sist­ing his ab­so­lute com­mit­ment to it. Ac­cord­ing to The West Aus­tralian, plans to axe the en­ergy sup­ple­ment for pen­sion­ers, an­other un­pop­u­lar mea­sure to raise rev­enue, will also be ditched. This mea­sure, to raise $1.4 bil­lion, was be­ing blocked in the Se­nate and was caus­ing a lot of elec­toral pain, ac­cord­ing to govern­ment back­benchers.

Emp­ty­ing the cred­i­bil­ity bank is a risk the trea­surer is pre­pared to take, and per­versely it may be work­ing. At least for now. Even though the trea­surer and his se­nior cabi­net col­leagues op­posed a royal com­mis­sion into the banks 263 times, ac­cord­ing to an Op­po­si­tion tab­u­la­tion, vot­ers seem to be in a more for­giv­ing mood now the in­quiry is un­der way. This may ex­plain a re­cov­er­ing trend in the opin­ion polls, with the lat­est poll aver­age fur­ther nar­row­ing La­bor’s lead to

3.6 points. This has some La­bor in­sid­ers baf­fled. But it may en­cour­age Mor­ri­son and Mal­colm Turn­bull to go for broke and re­verse their key pre­scrip­tion for the econ­omy on the same grounds as the other back­downs: the Se­nate won’t pass it, the peo­ple don’t want it and we can’t sell it.

Steal­ing La­bor’s clothes is noth­ing new. The Lib­er­als’ founder, Sir Robert Men­zies, made it an art form. Mor­ri­son was chan­nelling the great man on Tues­day when he laid into Com­mon­wealth Bank and sounded ut­terly anti-busi­ness in his re­ac­tion to the Aus­tralian Pru­den­tial Reg­u­la­tion Author­ity’s damn­ing re­port. The trea­surer sooled APRA on to the bank in Au­gust, in a vain at­tempt to head off calls for a royal com­mis­sion after rev­e­la­tions the bank had al­lowed mas­sive money laun­der­ing through its au­to­matic teller ma­chines.

APRA found there was a com­pla­cent cul­ture, dis­mis­sive of reg­u­la­tors; an in­ef­fec­tive board that lacked zeal and failed to pro­vide over­sight; a lack of ac­count­abil­ity and own­er­ship of key risks by se­nior ex­ec­u­tives; a re­mu­ner­a­tion frame­work that had no bite, was re­ac­tive and slow; and in­ter­nal sys­tems and pro­cesses that were un­der­re­sourced. Mor­ri­son said he was shocked by this “rap sheet” and said ev­ery di­rec­tor on ev­ery board in Aus­tralia should read the re­port and heed it. Re­mark­ably, APRA did not im­pose any fines or de­mand that heads roll. Mor­ri­son said some al­ready had and more would fol­low.

This was a hol­low per­for­mance as far as the shadow trea­surer, Chris Bowen, was con­cerned. He ac­cused Mor­ri­son of grand­stand­ing after run­ning “a pro­tec­tion racket for the banks for the last two years”. By now, he said, we should be re­ceiv­ing the fi­nal re­port of a royal com­mis­sion had the govern­ment not re­sisted La­bor’s calls.

Iron­i­cally, if Mor­ri­son does run away from his firmly held eco­nomic pol­icy pre­scrip­tion, he will save his bud­get $80 bil­lion over a decade. So far we are in the dark as to how he in­tends to make up the short­fall from mea­sures al­ready binned. How­ever, there has been a sig­nif­i­cant tax-led bud­get re­cov­ery this year, one un­fore­seen by the trea­surer and un­der­es­ti­mated in his midyear re­view. New Depart­ment of Fi­nance fig­ures show a rolling an­nual bud­get deficit of $14 bil­lion, the low­est since 2009. Com­pany tax rev­enues are up 23.3 per cent, per­sonal in­come tax rev­enues up 5.4 per cent. The over­all tax take is up $57.5 bil­lion.

Ac­cord­ing to the Deloitte Ac­cess Eco­nomics Bud­get Mon­i­tor, this could al­low the trea­surer to de­liver tax cuts worth $8 bil­lion a year. But Deloitte’s chief econ­o­mist, Chris Richard­son, warns the rev­enue surge won’t last. He ex­plains it as com­pa­nies pay­ing tax again after writ­ing off their post-global fi­nan­cial cri­sis losses. And he fears the trea­surer will give it all away with elec­tion sweet­en­ers. La­bor, on the other hand, is promis­ing firmer fis­cal con­sol­i­da­tion to fund its spend­ing and in­come tax cuts, at­tack­ing multi­bil­lion-dol­lar tax con­ces­sions and dis­counts.

If Shorten is hav­ing night­mares over the thought of Mor­ri­son de­mol­ish­ing his po­lit­i­cally toxic cor­po­rate tax cuts, the Busi­ness Coun­cil of Aus­tralia (BCA) has sig­nalled it is putting to­gether a war chest es­ti­mated at $26 mil­lion to cam­paign for them. Here, the Lib­er­als should be care­ful what they wish for. Newly re-elected pres­i­dent of the Vic­to­rian Lib­eral di­vi­sion, Michael Kroger, has been highly crit­i­cal of the BCA for its fail­ure to ef­fec­tively pros­e­cute its case back­ing govern­ment ef­forts to look after its in­ter­ests. When he founded the Lib­er­als seven decades ago, Men­zies was adamant it would be a broad­based party and not a cap­tive of busi­ness as its fore­run­ner, the United Aus­tralia Party, was per­ceived to be.

BCA chief ex­ec­u­tive Jen­nifer Wes­ta­cott in­sists her or­gan­i­sa­tion is “not and never will be a par­ti­san or­gan­i­sa­tion”. Ap­par­ently she can’t help it if only one side of pol­i­tics thinks the same as her on what is “good pol­icy”. A more re­al­is­tic assess­ment comes from the Aus­tralian In­sti­tute of Com­pany Di­rec­tors. Its chair, El­iz­a­beth Proust, told ABC Ra­dio she thinks the cam­paign to pro­tect the busi­ness tax cuts, whether it is overt or covert, is “highly un­likely to be suc­cess­ful”. She said the fo­cus on com­pany tax re­duc­tions alone has been mis­guided. Her in­sti­tute would pre­fer to see broader tax re­form.

Surely un­der­min­ing any cam­paign, no mat­ter how ex­pen­sive, is the stench com­ing from the bank­ing royal com­mis­sion. The APRA re­port is just ex­tra ev­i­dence that busi­ness is do­ing more than La­bor or the ad­vo­cacy group GetUp! to give it­self a bad name.

But an­other Mor­ri­son pol­icy som­er­sault isn’t the only thing play­ing on Shorten’s mind. Out of the blue one of his most promis­ing up-and-com­ers, Tim Ham­mond, has an­nounced he is quit­ting his seat of Perth within weeks. Not be­ing able to com­plete his first term in par­lia­ment has drawn sym­pa­thy from other MPs but couldn’t come at a less con­ve­nient time for the leader.

La­bor’s mar­gin in Perth is 3.3 per cent. A by­elec­tion there could be a reprise of the tight race in Bat­man. The Greens at­tracted 17 per cent at the gen­eral elec­tion and the Lib­er­als may not run, to save money and to try to stall Shorten’s mo­men­tum. Ham­mond re­jected an of­fer to go to the back bench and hang on un­til the elec­tion, cit­ing ur­gent fam­ily is­sues that for once are gen­uine.

The Perth by­elec­tion may co­in­cide with four oth­ers if the High Court re­jects La­bor se­na­tor Katy Gal­lagher’s ar­gu­ments that she had “taken all rea­son­able steps” to re­nounce her Bri­tish ci­ti­zen­ship. A de­ci­sion is ex­pected soon. Three La­bor MPs – from Tas­ma­nia, Western Aus­tralia and Queens­land – and Cen­tre Al­liance MP Re­bekha Sharkie in South Aus­tralia – may then fall foul of the same in­ter­pre­ta­tion. The stakes are high all round. The Lib­er­als couldn’t avoid run­ning in at least three of the seats where on pa­per they should have a good chance of wrest­ing them back.

Those chances will de­pend in no small way on how

• bold or brazen the trea­surer is next week.

EMP­TY­ING THE CRED­I­BIL­ITY BANK IS A RISK THE TREA­SURER IS PRE­PARED TO TAKE, AND PER­VERSELY IT MAY BE WORK­ING. AT LEAST FOR NOW.

PAUL BONGIORNO is a colum­nist for The Satur­day Pa­per and a reg­u­lar com­men­ta­tor on the ABC’s

RN Break­fast.

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