Is he gun­ning for an early elec­tion?

As Mal­colm Turn­bull and Scott Mor­ri­son sell their ‘elec­tion’ bud­get, the prime min­is­ter is weigh­ing up a poll that could be as early as Au­gust.

The Saturday Paper - - Front Page - Karen Mid­dle­ton re­ports.

In every in­ter­view he has done since Tues­day’s bud­get, Mal­colm Turn­bull has been asked about elec­tion tim­ing. And in every in­ter­view ex­cept one, the prime min­is­ter has said the elec­tion will be next year.

“You should ex­pect the elec­tion to be at the due date, as I’ve said, which is in the first half of next year,” Turn­bull told jour­nal­ists on Wed­nes­day.

He said much the same to his own MPs in their party room meet­ing on Tues­day af­ter­noon.

The only time he did not give a di­rect an­swer was when the Seven Net­work’s David Koch asked him the morn­ing after the bud­get if his plan was to go to the polls in Au­gust.

“Well the eco­nomic plan is to de­liver stronger eco­nomic growth,” Turn­bull replied. “That’s the plan we’re work­ing on.”

Turn­bull’s sta­ble of stock re­sponses on the elec­tion ques­tion in­cludes the reminder that the Aus­tralian peo­ple ex­pect their par­lia­ment to run a full term.

But The Satur­day Pa­per un­der­stands he has told as­so­ciates pri­vately that, hav­ing seen the opin­ion polls tighten re­cently, he is pre­pared to go to an elec­tion later this year if the uptick starts to look like a trend.

The High Court’s lat­est sec­tion 44 de­ci­sion, rul­ing Aus­tralian Cap­i­tal Ter­ri­tory La­bor se­na­tor Katy Gal­lagher in­el­i­gi­ble to re­main in par­lia­ment on cit­i­zen­ship grounds, prompted a cas­cade of res­ig­na­tions this week from mem­bers of the House of Rep­re­sen­ta­tives whose cir­cum­stances were sim­i­lar. It also added a com­pli­cat­ing layer to Turn­bull’s cal­cu­la­tions.

The need for four more lower house by­elec­tions, plus a fifth to re­place West Aus­tralian MP Tim Ham­mond, who an­nounced last week that he was quit­ting for fam­ily rea­sons, has not nec­es­sar­ily ruled out this year as a gen­eral elec­tion op­tion.

The House of Rep­re­sen­ta­tives Prac­tice hand­book ex­plains there are no con­sti­tu­tional or statu­tory re­quire­ments that the writs for by­elec­tions be is­sued within any spec­i­fied pe­riod.

Even so, the speaker, Vic­to­rian Lib­eral Tony Smith, tends to move on such things promptly and was ex­pected as

par­lia­ment rose to set­tle on a by­elec­tion date by next week at the lat­est, hav­ing re­ceived the res­ig­na­tions on Thurs­day of La­bor MPs Jus­tine Keay from Tas­ma­nia, Su­san Lamb from Queens­land and Josh Wil­son from WA, along with that of their La­bor col­league Ham­mond. At time of pub­li­ca­tion, South Aus­tralian Re­bekha Sharkie, for­merly of the Nick Xenophon Team, now re­named the Cen­tre Al­liance, had fore­shad­owed her res­ig­na­tion but not for­mally ten­dered it.

What can in­flu­ence the speaker’s de­ci­sion, aside from the lo­gis­tics of se­cur­ing a date prefer­ably free of school hol­i­days and other in­con­ve­niences, and en­sur­ing the Aus­tralian Elec­toral Com­mis­sion is ready to roll, is whether there is a gen­eral elec­tion “pend­ing”.

In that case, the speaker is able to de­fer one or more by­elec­tions so Aus­tralians in the af­fected elec­torates aren’t asked to vote twice in short or­der.

It’s un­der­stood an elec­tion due in 12 months is not con­sid­ered pend­ing, so that is no im­ped­i­ment to sched­ul­ing the five by­elec­tions promptly, for within the next cou­ple of months.

How­ever, the rules also say that once the by­elec­tion writs are is­sued, they can be with­drawn again if a gen­eral elec­tion is called in the mean­time.

The ear­li­est a gen­eral elec­tion for the House of Rep­re­sen­ta­tives and half of the Sen­ate can be held with­out muck­ing up the Sen­ate’s ro­ta­tion is Au­gust 4. The lat­est is May 18 next year.

It seems the only way it would be fea­si­ble to leapfrog the pend­ing by­elec­tions and go straight to an elec­tion would be if they were de­layed for some rea­son beyond June. Across Aus­tralia, the next school hol­i­days fall be­tween July 2 and July 20 and could the­o­ret­i­cally pro­vide a rea­son.

If the by­elec­tions are sched­uled for after that, an elec­tion this year could still be in the off­ing. If not, it ap­pears un­likely.

Hold­ing a so-called su­per Satur­day of by­elec­tions could suit Turn­bull, with sev­eral of them La­bor-held seats on a knife edge and the SA seat, Mayo, a chance of re­turn­ing to the Lib­er­als, who have tra­di­tion­ally held it.

Also mil­i­tat­ing against the early elec­tion sce­nario is the need to have all can­di­dates pre­s­e­lected – and con­firmed as hold­ing solely Aus­tralian cit­i­zen­ship – and to have the money to run a cam­paign. Se­nior govern­ment sources in­sist those con­di­tions are still to be ful­filled.

Nev­er­the­less, the bud­get and the em­bar­rass­ing La­bor res­ig­na­tions over cit­i­zen­ship – after Op­po­si­tion Leader Bill Shorten in­sisted that his party had “the strictest pro­cesses in place” – have helped give the govern­ment mo­men­tum this week. Se­nior peo­ple in both ma­jor par­ties con­cede such mo­men­tum may be harder to muster next year.

Within hours of the High Court’s rul­ing on Wed­nes­day, Turn­bull had his lines ready, weav­ing the bud­get and the week’s other events into an anti-Shorten nar­ra­tive around trust.

“You can’t trust Bill Shorten,” Turn­bull told Syd­ney’s Ra­dio 2GB. “You can’t trust him to be straight­for­ward with the Aus­tralian peo­ple on mat­ters of cit­i­zen­ship and you cer­tainly can’t trust him with your money.”

Turn­bull and Trea­surer Scott Mor­ri­son have pitched their bud­get around steadi­ness, reli­a­bil­ity and, yes, trust.

“A stronger econ­omy, more jobs, guar­an­tee­ing es­sen­tial ser­vices, the govern­ment liv­ing within its means – that is what this bud­get is about,” Mor­ri­son told par­lia­ment as he pre­sented it.

In re­ply, Bill Shorten and La­bor are em­pha­sis­ing fair­ness.

In a break from La­bor’s tra­di­tional fo­cus on the low­est in­come earn­ers, this year it has broad­ened its scope de­lib­er­ately to those on mid­dle and up­per mid­dle in­comes – an at­tempted coun­ter­point to the govern­ment’s hip­pocket of­fer­ings.

“We can do bet­ter than this,” Shorten told par­lia­ment, com­par­ing his own pro­pos­als to the govern­ment’s. “The peo­ple of Aus­tralia de­serve bet­ter than this and a La­bor govern­ment will de­liver bet­ter than this.”

The govern­ment’s anti-raz­za­matazz bud­get, un­veiled on Tues­day night, em­pha­sised peo­ple re­tain­ing more of their own money but also pay­ing what they owe.

It promised a re­turn to sur­plus one year early, in 2019–20 – at just $2.2 bil­lion Mor­ri­son is choos­ing not to trum­pet that, de­scrib­ing it in­stead as achiev­ing “bal­ance” – and a big­ger-than-fore­cast sur­plus of $11 bil­lion in 2020-21.

Ac­cord­ing to the bud­get pa­pers, there has been a $10.7 bil­lion tax wind­fall in the five months since the midyear eco­nomic and fis­cal out­look, or MYEFO, was pub­lished, but only a lit­tle of that is be­ing put to­wards re­duc­ing debt and low­er­ing the deficit.

Most is be­ing spent, in­clud­ing on a tax cut – the bud­get’s cen­tre­piece – to be pro­vided in three phases, the third of which does not take ef­fect un­til 2024–25.

The first stage, sched­uled from

July 1 this year, in­volves a new tax off­set for peo­ple on low and mid­dle in­comes, to be paid in a lump sum at the end of next fi­nan­cial year.

That will equate to about $200 a year for the low­est-earn­ing tax­pay­ers, ris­ing to $530 for those earn­ing $125,000 a year.

The up­per thresh­old for the 32.5 per cent tax bracket also rises from $87,000 to $90,000, al­low­ing peo­ple to earn more be­fore they are pushed up into the next bracket.

In the sec­ond stage, from 2022–23, the up­per thresh­old for the 19 per cent tax bracket rises from $37,000 to $41,000, which the govern­ment says will ef­fec­tively lock in per­ma­nently the pre­vi­ous year’s an­nual lump-sum bonus.

The thresh­old for the 32.5 per cent rate rises again to $120,000 in what would be the third thresh­old in­crease in that bracket since 2016–17, when it was $40,000 lower.

Fi­nally, seven years from now, the next bracket – the 37 per cent rate – will be abol­ished, cut­ting the num­ber of brack­ets from five to four.

That means all tax­pay­ers earn­ing be­tween $41,000 and $200,000 will be taxed at the same rate: 32.5 per cent. The top rate of 45 per cent will ap­ply above that.

The govern­ment in­sists this would still con­sti­tute a pro­gres­sive tax sys­tem and one that would abol­ish the prob­lem of bracket creep for most tax­pay­ers, whose in­comes would have to rise sub­stan­tially – by a mul­ti­ple of five for those at the bot­tom – be­fore they would be pushed into the high­est bracket. It says by 2025, 94 per cent of tax­pay­ers would be pay­ing 32.5 per cent.

But the Op­po­si­tion and Greens say it’s ef­fec­tively a flat tax and not pro­gres­sive at all, favour­ing the high­est earn­ers most.

The cost of the first phase is

$13.4 bil­lion. The whole pack­age is worth $140 bil­lion over a decade but the govern­ment is re­fus­ing to itemise it, year on year.

It wasted no time in ask­ing par­lia­ment to en­dorse it, rush­ing leg­is­la­tion into the House of Rep­re­sen­ta­tives first thing Wed­nes­day morn­ing.

La­bor has said it will sup­port the first stage of cuts for low- and mid­dle-in­come earn­ers but not the rest, protest­ing that par­lia­ment is be­ing asked to en­dorse mea­sures seven years hence for which there are no avail­able cost­ings.

The govern­ment in­sists it’s all or noth­ing – part of a strat­egy to tell vot­ers they will have to re­turn the Coali­tion to guar­an­tee they will re­ceive the whole lot, three elec­tions from now.

In his bud­get re­ply on Thurs­day night, Shorten promised to bet­ter the first-year tax cuts for low- and mid­dlein­come earn­ers. La­bor also op­poses the govern­ment’s pro­posed com­pany tax cuts for busi­nesses with a turnover of more than $50 mil­lion.

The govern­ment con­tin­ues to ne­go­ti­ate with the Sen­ate cross­bench, try­ing to win enough sup­port to leg­is­late that next round, but it has re­fused to pro­vide any up­dated cost­ings for the whole pack­age.

La­bor was chas­ing itemised cost­ings on both the pro­posed cor­po­rate tax pack­age and the one al­ready leg­is­lated for smaller busi­nesses so it could know how much money it would have avail­able to al­lo­cate to other mea­sures in its own ver­sion of the bud­get.

For the same rea­son, the govern­ment re­fused to give them.

The big­gest ticket sav­ings in the govern­ment’s bud­get come from shift­ing more peo­ple with dis­abil­i­ties off the pen­sion and into work, sav­ing an es­ti­mated $4.5 bil­lion over four years; a crack­down on the im­port and sale of il­licit to­bacco, reap­ing $3.6 bil­lion over four years; and a tight­en­ing of busi­ness ac­cess to re­search and de­vel­op­ment tax breaks from July 1 this year, sav­ing another $2 bil­lion.

The govern­ment is in­tro­duc­ing a suite of mea­sures aimed at tack­ling the black econ­omy in which cash trans­ac­tions al­low ser­vice providers to avoid tax, and will be chan­nelling ex­tra fund­ing to the tax of­fice to help it chase down more tax debts and faster.

The knock-on ef­fect of pre­vi­ous de­ci­sions to raise the pen­sion age will save another $2.3 bil­lion over four years.

The govern­ment is cut­ting back its visa pro­gram for over­seas doc­tors, sav­ing $442 mil­lion, and in­creas­ing in­cen­tives to use lower-cost generic medicines over branded ver­sions, sav­ing another $317 mil­lion.

The cre­ation of the Home Af­fairs De­part­ment has al­lowed some back-of-house op­er­a­tions from var­i­ous agen­cies to be amal­ga­mated, sav­ing an es­ti­mated $256 mil­lion over four years.

The fund­ing for the Aus­tralian Se­cu­ri­ties and In­vest­ments Com­mis­sion (ASIC) is be­ing cut by $28 mil­lion over three years, re­sult­ing in av­er­age staffing lev­els be­ing re­duced by some 30 po­si­tions.

And there is a freeze on ABC fund­ing, equat­ing to a cut of $83 mil­lion.

Some of the sav­ings to pay for the tax pack­age come from cuts to wel­fare, par­tic­u­larly for refugees and newly ar­rived mi­grants.

From next fi­nan­cial year, refugees need­ing job-search as­sis­tance will have to wait twice as long, 26 weeks in­stead of 13, sav­ing $68 mil­lion over four years.

From July 1, new mi­grants to Aus­tralia will have to wait an ex­tra year – from three to four – to ac­cess cer­tain wel­fare ben­e­fits, sav­ing $202.5 mil­lion.

The con­tro­ver­sial wel­fare-deb­tre­cov­ery pro­gram, dubbed “robo-debt”, is be­ing ex­tended, with the govern­ment plan­ning to tar­get for­mer re­cip­i­ents

with large out­stand­ing debts, even­tu­ally us­ing new data match­ing be­tween the Aus­tralian Tax Of­fice and the De­part­ment of Hu­man Ser­vices to track them down. It es­ti­mates this will re­coup another $299.3 mil­lion.

Re­strict­ing ac­cess to un­em­ploy­ment ben­e­fits and a drop in the num­ber of stu­dents ac­cess­ing wel­fare sup­port will save another $1.2 bil­lion.

There are fur­ther changes to wel­fare. Any­one ac­cept­ing govern­ment sup­port will have their pay­ments docked if they are “se­rial fine de­fault­ers” – def­i­ni­tion un­clear – or have out­stand­ing fines im­posed by state and ter­ri­tory courts.

Those with out­stand­ing ar­rest war­rants for in­dictable crim­i­nal of­fences will have pay­ments sus­pended or can­celled. There is no fig­ure placed on es­ti­mated sav­ings be­cause it is sub­ject to ne­go­ti­a­tion with state and ter­ri­tory gov­ern­ments.

The in­come-man­age­ment pi­lot pro­gram be­ing run in Ce­duna, South Aus­tralia, and WA’s East Kim­ber­ley is be­ing ex­tended by another year.

There is also spend­ing in the bud­get beyond the tax cuts, spear­headed by bil­lions on in­fra­struc­ture projects across Aus­tralia.

Adding a range of new spe­cial­ist drugs to the Phar­ma­ceu­ti­cal Ben­e­fits Scheme will cost $748 mil­lion over four years.

De­fence spend­ing will in­crease by $787 mil­lion and there is a fund­ing boost for Aus­tralia’s se­cu­rity agen­cies.

Se­cu­rity screen­ing in air­ports will also be in­creased, at a cost of $293 mil­lion.

The govern­ment has al­lo­cated

$440 mil­lion to im­prov­ing re­mote In­dige­nous hous­ing in the North­ern Ter­ri­tory.

The na­tional schools chap­laincy pro­gram, pro­vid­ing pas­toral care and other sup­port ser­vices and whose con­sti­tu­tion­al­ity was chal­lenged and up­held in the High Court, has been ex­tended at a cost of $247 mil­lion over four years.

There is also a suite of mea­sures aimed at age­ing Aus­tralians.

A $258 mil­lion pack­age, tak­ing ef­fect from July next year, will al­low pen­sion­ers to earn up to $7800 a year with­out af­fect­ing their pen­sion – in­clud­ing those work­ing in their own busi­nesses. It will also ease the pen­sion means test rules to al­low re­tirees to in­vest in life­time su­per­an­nu­a­tion prod­ucts, to help avoid out­liv­ing their sav­ings, and set up a spe­cial loans scheme so pen­sion­ers can bor­row against the eq­uity in their homes.

The govern­ment pro­poses an ex­tra 14,000 high-level home care pack­ages over four years, and 13,500 res­i­den­tial aged care places.

In a bid to boost re­tire­ment sav­ings, it is also propos­ing to change the law so young peo­ple with low su­per­an­nu­a­tion bal­ances have their fees capped and are not forced to pay for un­nec­es­sary life in­sur­ance. It aims to ban exit fees, to en­cour­age peo­ple to close ex­tra­ne­ous ac­counts and con­sol­i­date their su­per.

There are also some one-off mea­sures with high price tags.

As Prime Min­is­ter Turn­bull and Trea­surer Mor­ri­son an­nounced late last month, the govern­ment will fund a se­ries of events and ex­hi­bi­tions over the next four years to mark the 250th an­niver­sary of Cap­tain James Cook’s voy­age to Aus­tralia and the Pa­cific, at a cost of

$48.7 mil­lion.

Tues­day’s pa­pers also con­firm

$50.3 mil­lion from the for­eign af­fairs bud­get is be­ing al­lo­cated to help­ing fund the Dutch in­ves­ti­ga­tion into the shoot­ing down in the Ukraine of flight MH17 in 2014. The money will keep the Aus­tralian Em­bassy in the Ukraine open for the du­ra­tion and will fund travel to any fu­ture court pro­ceed­ings for the fam­i­lies of Aus­tralia’s 38 vic­tims.

In the wider for­eign af­fairs bud­get, Aus­tralia’s over­seas aid is be­ing frozen again at $4 bil­lion a year, sav­ing $170 mil­lion over four years. In­dex­a­tion is now due to re­sume in 2022–23.

And the bud­get re­veals the High Court cases over MPs and se­na­tors’ cit­i­zen­ship have cost tax­pay­ers

$11.6 mil­lion.

Over­all, the govern­ment’s em­pha­sis is on help­ing those who help them­selves and the bud­get is as telling for what it doesn’t in­clude as what it does.

De­spite the ad­vo­cacy of a di­verse range of ex­perts, the govern­ment de­clined to in­crease the New­start pay­ment, now at about $39 a day and frozen in real terms since 1994.

In an un­usual cho­rus, the Busi­ness Coun­cil of Aus­tralia had joined the Aus­tralian Coun­cil of So­cial Ser­vice in ad­vo­cat­ing a rise to the un­em­ploy­ment ben­e­fit. After the bud­get, and even more un­ex­pect­edly, for­mer prime min­is­ter John Howard agreed with them.

“I was in favour of the freeze when it hap­pened but I think the freeze has prob­a­bly gone on too long,” Howard told a post-bud­get break­fast in Mel­bourne on Wed­nes­day.

In re­sponse to protes­ta­tions that $39 a day is not enough to live on, Trea­surer Scott Mor­ri­son said: “New­start is not in­tended to be a pay­ment you live on, it sup­ports you while you get your­self back into work. Our pri­or­ity is to pro­vide tax relief for work­ing Aus­tralians and en­sure we cre­ate a stronger econ­omy so we can pro­vide those peo­ple not in work with the best from wel­fare which can be pro­vided, which is a job.”

Govern­ment sources ar­gue that the bot­tom line in their de­ci­sion not to raise New­start was the bot­tom line: cost.

La­bor has not com­mit­ted to a New­start rise. The Greens are push­ing for New­start to in­crease by $75 a week.

In his bud­get re­ply, Greens leader Richard Di Natale is re­ject­ing the govern­ment’s pro­posed tax changes.

“We don’t have a tax sys­tem, we have a tax avoid­ance sys­tem,” Di Natale told The Satur­day Pa­per.

He ad­vo­cates an over­haul of the tax sys­tem to in­tro­duce what is known as the “Buf­fett rule” after its chief pro­po­nent, en­tre­pre­neur War­ren Buf­fett, in which all earn­ings over $300,000 would be taxed at a min­i­mum of 35 cents in the dol­lar, re­gard­less of de­duc­tions.

The Greens have had the mea­sure costed by the Par­lia­men­tary Bud­get Of­fice, say­ing it would raise $9.5 bil­lion over four years.

Di Natale pro­poses a greater ef­fort to ad­dress multi­na­tional tax avoid­ance, in­clud­ing a boost for the ATO and an in­sis­tence that any se­cret set­tle­ments with com­pa­nies be made pub­lic.

He crit­i­cises the bud­get’s crack­down on refugees and mi­grants and the lack of any de­tail about rein­tro­duc­ing a pe­tro­leum re­source rent tax. He says there is far too lit­tle em­pha­sis on ad­dress­ing cli­mate change.

“It is a bud­get that sticks the mid­dle finger up at any­one who cares about a safe and sta­ble cli­mate,” he says.

Bill Shorten’s bud­get re­ply in­cluded what he said was a tax cut dou­ble the size of the one in the govern­ment’s first stage. He pro­poses to fund 100,000 fee-free TAFE places in ar­eas in need of skilled work­ers. He is also propos­ing to re­verse the govern­ment’s cuts to hos­pi­tals, which La­bor has costed at $2.8 bil­lion over the next seven years.

The La­bor re­ply tar­geted spend­ing on health and ed­u­ca­tion, un­der a fair­ness ban­ner.

As one se­nior La­bor fig­ure ob­served pri­vately, the com­ing elec­tion – when­ever it is held – is likely to be one of the rare oc­ca­sions when both ma­jor par­ties are fo­cused on sim­i­lar is­sues, al­beit with dif­fer­ent em­pha­sis.

As Shorten’s re­ply ap­proached this week, the govern­ment was fo­cused squarely on him, seek­ing to un­der­mine his per­sonal cred­i­bil­ity.

Se­nior Coali­tion fig­ures have ac­knowl­edged they aim to dam­age Shorten but not so badly that they risk his more pop­u­lar front­bench ri­val, An­thony Albanese, re­plac­ing him.

The govern­ment has taken out a lit­tle in­sur­ance against Albanese in the bud­get, in the form of its mea­sure to abol­ish a tax that charges craft brew­ers 40 per cent more than mass-pro­duc­tion op­er­a­tions for us­ing smaller kegs.

“This not only cham­pi­ons the craft brew­ers that we’ve all grown to love, it raises a very tan­ta­lis­ing prospect for Aus­tralians: the like­li­hood of cheaper craft beer,” Scott Mor­ri­son said, an­nounc­ing the mea­sure a few days be­fore the bud­get.

Albanese has cam­paigned for an end to the tax since its in­tro­duc­tion and has a craft beer named after him – mi­cro­brew­ery Wil­lie the Boat­man’s “Albo Corn Ale”, pro­duced in his Syd­ney elec­torate. Hav­ing pre­vi­ously in­tro­duced a pri­vate mem­ber’s bill in par­lia­ment aimed at mak­ing the change, he has been busily tak­ing credit for the govern­ment’s left-field move this week.

But for now, the govern­ment’s main fo­cus is on the bloke who’s in the op­po­si­tion leader’s job, not the bloke who ran against him once be­fore and lost.

“This is the de­liv­erer of rolled-gold guar­an­tees,” Mal­colm Turn­bull bel­lowed at Shorten in par­lia­ment on Thurs­day, mock­ing his prior as­sur­ances about the cit­i­zen­ship sta­tus of his MPs.

“He is a guar­an­tee de­liv­erer of Olympic pro­por­tions.”

Turn­bull elected not to re­mind par­lia­ment that he had given his own guar­an­tee last year, that his then deputy prime min­is­ter Barn­aby Joyce was not a dual cit­i­zen, in­sist­ing that the High Court would “so hold”. La­bor was quick to do it for him.

With Joyce ruled in­el­i­gi­ble and forced to a by­elec­tion, Turn­bull’s orig­i­nal as­ser­tion was found to be some­what shy of cor­rect.

It re­mains to be seen whether his re­cent as­sur­ances on elec­tion tim­ing are

• any more re­li­able.


Prime Min­is­ter Mal­colm Turn­bull in Can­berra this week.

KAREN MID­DLE­TON is The Satur­day Pa­per’s chief po­lit­i­cal cor­re­spon­dent.

KAREN MID­DLE­TON is The Satur­day Pa­per’s chief po­lit­i­cal cor­re­spon­dent.

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