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March 5, 2021

The Greens, business and the art of fiscal discipline

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Crikey Canberra correspondent Bernard Keane writes:

The Greens haven’t lacked for advice and analysis since Friday, from pretty much everyone. Watching the press gallery having to briefly pretend it understood the Greens was to watch an exercise in contextless narrative churning. We even got Ye Olde Stalinist Narrative, albeit from the surprising source of Annabel Crabb rather than The Greens Must Be Exterminated crowd at The Australian, because the Greens are ‘not much given to gossiping with journalists’.

Of course, you know who else didn’t gossip with journalists…

But whatever the presumably rocket fuel-tinged whiff of Pyongyang apparently lingering in the corridors outside their offices, Christine Milne and Adam Bandt have been talking plenty to journalists over the past few days. What’s immediately noteworthy is that Milne has a tighter, sharper message than Bob Brown, particularly around refocusing the economic debate on issues of greater immediate importance to families and equality of opportunity. Milne has also aligned herself with the economists and sections of the ‘business community’ arguing the government’s determination to achieve a surplus is dangerous. That’s where the generous advice to the Greens gets interesting.

Business has renewed its conniption over the non-news that the Greens wouldn’t be changing their line on blocking corporate tax cuts linked to the mining tax. Milne, revealing a sharp eye for detail in the ATO’s tax revenue data, notes that corporate tax cuts will disproportionately favour the mining industry and banks. That’s because our corporate tax take is heavily reliant on those two sectors – worryingly so given how cyclical they are.

In any event, the Greens find themselves criticised for proposing a fiscally responsible position of ruling out a tax cut while the budget is in deficit. Notice, by the way, how all that talk of monetary policy ‘doing the heavy lifting’ vanishes when it comes to corporate economic activity – lower interest rates are apparently fine for the rest of us but companies need lower taxes more than lower interest rates.

All that is before David Murray appears on the scene. Now unencumbered by his Future Fund chairmanship, Murray evidently feels free to fulminate on any subject he likes – although, really, he never felt particularly encumbered when he was at the Future Fund. Like his comb-over, the chairmanship did little to hide reality – that he’s a particularly clueless climate denialist and a fiscal masochist who’d make even the German axis of austerity crowd blanch. Last August, Murray demanded a budget surplus so big it would ‘stabilise debt levels’, meaning in the tens of billions.

Now, apparently permanently wired up to journalists at The Oz and The Australian Financial Review so no thought bubble or rocking chair prognostication will go unreported, he’s expressing concern that the Commonwealth’s credit rating is at risk. Perhaps he can replace Barnaby Joyce in the Senate when the Senator for Cubbie Station moves to the lower house.

In any event, the Greens are simultaneously not fiscally disciplined enough and too disciplined for business.

While Milne’s analysis of the government’s surplus commitment is exactly right – it was a political decision by a government that felt it had to demonstrate its economic competence via the headline budget figure – the Greens are overreacting to the impact of budget cuts. If the economy is going to go into recession, $10 billion in spending one way or another won’t make any difference, and cuts will simply give the Reserve Bank more comfort to cut rates. It’s the quality of the spending cuts and tax rises that should be the subject of debate.

An undercurrent of all this is the perception that the Greens remain the most economically illiterate, fiscally undisciplined of the parties. In fact, they aren’t even the strongest advocates of big government in the parliament – an honour that belongs to the Nationals – and they are more consistent advocates of market mechanisms to achieve carbon emissions abatement than either Labor or the Coalition.

They also have the bad form of pointing out that, while the government is putting a carbon price in place, it is still heavily biasing the tax system towards fossil fuels via tax concessions. In rushing to criticise them, their critics reveal as much or more about themselves as about the Greens themselves.

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