Lachlan R Dale

The Turnbull Government’s credibility risk

Approx Reading Time-12Malcolm Turnbull kicked off the election with a plea to avoid Labor’s high-taxing, debt and deficit agenda – but history shows that the Libs may not be able to do any better.

 

 

On Sunday, Malcolm Turnbull officially announced the 45th Australian federal election, and from his opening shots, gave us some early hints at the Liberal Party strategy for reelection:

At this election, Australians will have a very clear choice – to keep the course, maintain the commitment to our national economic plan for growth and jobs, or go back to Labor, with its higher-taxing, higher spending, debt and deficit agenda, which will stop our nation’s transition to the new economy dead in its tracks.

This statement shouldn’t be surprising to anyone who has followed Australian politics in recent decades; it represents Turnbull reaching for one of the most established “brand values” of the Liberal Party, namely strong economic management.

But is this reputation well-deserved? Looking at some of the numbers achieved by the outgoing Abbott-Turnbull Government, perhaps not: (1)

 

Taxation

To represent taxation, let’s look at Government general revenue (which is primarily taxation sourced) as a percentage of GDP.

Average revenue (as a % of GDP) per term:

  • LNP 2001-2003: 35.67%
  • LNP 2004-2007: 36.23%
  • ALP 2008-2010: 33.12%
  • ALP 2011-2013: 33.13%
  • LNP 2013-2016: 34.49%

graph1

Result: Under both recent Howard and Abbott/Turnbull Governments, revenue (primarily taxation) has been higher than those under the Rudd/Gillard Governments.

 

Expenditure

Average expenditure (as a % of GDP) per term:

  • LNP 2001-2003: 35.32%
  • LNP 2004-2007: 34.66%
  • ALP 2008-2010: 36.71%
  • ALP 2011-2013: 36.71%
  • LNP 2013-2016: 37.19%

graph2

Result: While the Rudd/Gillard Governments considerably increased Government expenditure, average expenditure per term has peaked under the current Abbott/Turnbull Government.

 

Net Government debt

  • LNP 2001-2003: 2.74%
  • LNP 2004-2007: -4.66%
  • ALP 2008-2010: -0.65%
  • ALP 2011-2013: 10.82%
  • LNP 2013-2016: 17.41%

graphy3

Result: While the Rudd and Gillard Governments considerably increased Australia’s net debt, the outgoing Abbott/Turnbull Government has failed to make a noticeable impact on the deficit, and have almost doubled the deficit during their term.

 

Unemployment

Average unemployment rate by Government term:

  • LNP 2001-2003 6.4%
  • LNP 2004-2007 4.9%
  • ALP 2008-2010 5.0%
  • ALP 2011-2013 5.3%
  • LNP 2013-2016 6.0%

graph4

Result: While Howard was successful in driving down unemployment between 2001 and 2007, the Turnbull/Abbott Government has averaged significantly higher unemployment than under the Rudd/Gillard Governments.

 

What can we make of these results? The Abbott/Turnbull Government would certainly protest that they have been unable to pursue the necessary legislation due to a lack of cooperation of Parliament and the Senate – but it is worth noting that when Julia Gillard faced similar challenges while piloting her minority Government, she enacted legislation at an exceptionally high rate, passing over 500 pieces.

The outgoing Government’s failure to pass legislation may be a result of their inability to win over crossbenchers to their cause.

Certainly Tony Abbott’s time as both Opposition Leader and Prime Minister was characterised by an aggressive, polarising and uncompromising personal style which filtered down to his cabinet ministers.

The 2014 Federal Budget demonstrated how badly Abbott and Hockey had read both Parliament and the general public, littered as it was with unpopular and unexpected policies, and broken election promises. (For the sake of the record, during the election campaign Abbott promised “No cuts to education, no cuts to health, no change to pensions, no change to the GST and no cuts to the ABC or SBS.” The 2014 Budget scrapped the Gonski education reforms, slashed billions from hospitals, and made cuts to the ABC and SBS – as well as sought to deregulate University fees, introduce a doctor’s co-payment fee and tougher criteria for Newstart Allowance.)

The Abbott Government’s attempts to bully this unpopular agenda through Parliament failed, heavily damaging both its credibility with the crossbench and the public.

It’s no wonder then that Turnbull’s statement also makes an appeal for the public’s continuing trust and patience – certainly the results on his party’s scoreboard don’t speak of overwhelming success. In fact, the Turnbull Government has utterly failed to make an impact on the very terms they defined while in power: improving the budget deficit, curbing spending, lowering taxes, and reducing unemployment.

While Turnbull has inherited Abbott’s legacy (for better or worse), his own actions have hardly improved the situation. In his acceptance speech, Turnbull was articulate, conciliatory and suggested at a coherent vision for the future, extending his hand to centrist voters. In the months since, he has largely failed to meet the public’s expectations. His Government has flip-flopped on numerous policies, from an increase in the GST, a Melbourne-to-Brisbane high speed rail link, and providing income tax for states, company tax transparency, and ending Federal funding for public schools. This has made his Government appear chaotic, amateurish and lacking a coherent vision.

Similarly, concerns still stand around the concessions Turnbull has had to make to lead a fractured Liberal Party and to placate the conservative right. In taking the top job he has had to shelve his past advocacy for an Emissions Trading Scheme, the push for an Australian Republic, and same-sex marriage – but even this has failed to calm the conservatives, who are furious at the removal of Abbott and his ilk from power.

As a result, we’ve seen a spate of leaks against the Government, as well as numerous MPs speaking out against party policy. The conservative faction’s influence has been evident, having forced Turnbull’s hand to de-fund Safe Schools and support a bizarre research grant into “wind turbine syndrome” at a time when dramatic cuts were being made to the CSIRO.

Perhaps the key question of this election is whether Turnbull can convince his colleagues to allow him to pursue his own policy vision, uninhibited by the conservative right – but what concerns me is that I put forward this exact same question when he took power last year.

Based on the the eight months since, I don’t find much cause to be optimistic.

 

 

 

All data sourced from the International Monetary Fund’s World Economic Outlook Database. My dataset and workings can be explored here.

I also tip my hat to the excellent work that Bernard Keane over at Crikey has done on the subject.

 

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