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Thus Spake Mungo: Turnbull’s budget act may prove a hit

MungoAnd with one bound, our hero was free.

Well, perhaps not completely; it will take more than one agile budget to loose Malcolm Turnbull from his self-imposed bondage.

He remains chained hand and foot to the right over climate change and same sex marriage and he cannot remove himself from the Nationals’ pork barrel of provincial perks in the name of infrastructure.

But his tax-and-spendathon has made the initial effort to stagger back towards the sensible centre of modern politics, in which reformist zeal must be tempered with the occasional gesture towards fairness – if it costs too much to give serious relief to the masses. At least they can gain satisfaction that a few of the fat cats will cop a hit as well.

Thus the bank levy – or tax, or cash grab – or whatever you want to call it. It is true that this is lazy economics: it is hard to justify an impost that singles out a particular section of a particular industry at any time. And to claim it is designed specifically to fund a pet cause, however worthy, is the purest sophistry.

Consolidated revenue doesn’t make choices, the government does. Turnbull and Scott Morrison will decide who gets what spending, so hanging the NDIS on the bank tax is plainly dishonest.

And of course the same applies with the Medicare levy. Once again, the NDIS is offered as the carrot, the tax increase the unavoidable stick.

The usual Liberal victims – the young, the unemployed (the random drug testing is gratuitous sadism), the university students,  the foreign workers,  the recipients of overseas aid – all get the usual caning.

Fake budgeting. However, raising the Medicare levy, which in fact means an overall tax increase, is sensible policy, and, crucially it is fair.It is not a flat-rate, across-the-board, slug like the GST for example; it is part of the progressive system of income tax by which the rich pay more and the poor pay less – and none at all if they are really poor.

Bill Shorten’s insistence that it should only apply to the top two income brackets is opportunism, pure and simple. It is far preferable to raise progressive taxes, as the budget is trying to do, than raise the GST, which is presumably the alternative.

But this does not mean, as Turnbull’s latest slogan is trumpeting, that the budget is a model of fairness. The usual Liberal victims – the young, the unemployed (the random drug testing is gratuitous sadism), the university students,  the foreign workers,  the recipients of overseas aid – all get the usual caning.

This, presumably, is to placate the hardliners in the party room, and perhaps to take some of the heat off screams of the better funded and organised critics – the banks, the Catholics, and recalcitrant state premiers from both sides of politics.

These, according to Tony Abbott and his still hopeful insurgents, are the Liberal Party’s base. Disturbing them, let alone rousing them to rebellion, is political suicide.

And certainly they will be annoyed; they have been the entitled ones for so long, they have all but forgotten that their privileges are not a right, but a gift of compliant governments.

Which is why Turnbull and Morrison are so eager to join Shorten’s rejection of the commentariat’s verdict that the budget was Labor-lite. If this was the case it would be a disaster: why should any rational voter embrace wishy-washy, half way house, prescription if the real thing was available?

Shorten’s budget reply hammered this point – rather than praising Turnbull for appropriating the fringes of his own policies, he lambasted the government for not following him the whole way down his social democratic road. He, like Turnbull, is keen to emphasise irreconcilable differences rather than the common aims of 21st century government.

Which is not to deny that much of what he said made sense. If there was ever a need for a deficit levy on the rich, then it is hardly logical to repeal it as the deficit has increased tenfold, and still looks likely to drag on for another four years at least.

The much vaunted housing affordability package is a cruel hoax; the superannuation switch will only drive up house prices now while leaving more retirees on the government payroll later. And while it is worth noting that Morrison has finally dangled his little toe over the dangerous waters of negative gearing, the result is flaccid to the point of impotence.

The insistence on the jobs and growth package from last year, the corporate tax cuts package (now suddenly rising by $15 billion, a 30 per cent increase as the earlier estimate – shades of things to come?) is still being sold as an good policy.

But so, apparently, is lowering the profits of the big banks – go figure. And the pachydermous presence of climate change dose not even rate a mention – if ever there was a need for fairness, opportunity and security, then surely attempting to make the world tolerable for future generations should have been front and centre.

John Howard, the super-pragmatist whose squandering of the minerals boom bonanza started the debt and deficit disaster (now decently veiled by Turnbull and Morrison, in the manner of Victorian maidens draping chintz around the legs of tables in the name of decency) has scored the budget eight or nine out of ten, which seems absurdly generous.

Even the neo-conservative of trolls of the Murdoch press have been muted in criticising policies which, had Labor ever dared suggest them, would have produced demands for dismemberment and disembowelment.

Reflexively, they have sailed into Shorten instead; Dennis Shanahan was even more than usually incoherent on the subject.

So obviously Turnbull will get a welcome bounce from the public, if not from the ideologues among those he likes to see as his own troops. Whether or not it lasts will depend largely on the extent to which they play ball. Fortunately for the prime minister, Shorten is foreshadowing massive resistance.

If he and his supporters make enough noise, perhaps they will drown out the anger and the angst of the lunar right.

But Turnbull will still have to deal with the heavies in the banking industry and the Catholic accountants.

He, Morrison and the estimable Simon Birmingham, seem determined to hold their ground. Whether the hard liners and the bed wetters in the party room do the same is less certain.

Our hero may be out on parole, but there is a long way to go before he can celebrate his liberation.

 

 


One response to “Thus Spake Mungo: Turnbull’s budget act may prove a hit”

  1. Nicholas Hills says:

    A well written piece, Mungo.

    One minor thing: When you wrote, “However, raising the Medicare levy, which in fact means an overall tax increase, is sensible policy, and, crucially it is fair.It is not a flat-rate, across-the-board, slug like the GST for example,” you missed a key point. A 0.5% increase in Medicare levy is a flat rate, it is a flat tax on all incomes of 0.5% It is really no different from a GST increase of 0.5%, which would be a flat tax on all spending of 0.5%.

    However increasing flat Medicare levy or flast GST rate would still leave our overall taxation system as progressive, thanks to our stepped income tax scales.

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