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Byron Shire
October 16, 2021

Thus Spake Mungo: Lead balloon

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Another of Malcolm Turnbull’s thought bubbles has collapsed like a lead balloon.

Our Prime Minister’s bold back-to-the-future plan (back some 74 years, in fact) has been rejected within 48 hours, as soon as the premiers realised that it was not an April Fool’s day joke.

And it was hardly surprising. When Turnbull announced what he called the most fundamental tax reform in generations at the Penrith Panthers car park, without warning, detail or documentation, it was never going to be taken seriously.

And even the hapless Treasurer, Scott Morrison, once again caught short by his leader, said it was just speculation: he was certain that Turnbull had not intended to imply that state taxes could actually rise.

But all that showed that Morrison was not only out of the loop, he was just about round the twist. If taxes did not increase, then what was the point of the exercise? Was it just to be churn, duck-shoving the responsibility from one jurisdiction to another without doing anything to solve the looming crisis threatening hospitals and schools?

The idea, such as it was, appeared to be that the states would have to become responsible for finding their own funds, however they chose to do so. That, at least, seemed to be what Turnbull was saying; he even foreshadowed the proposal that the commonwealth would abandon the public state school system entirely, and would only give money to the private schools, the ones he and his cronies inhabited. He was worried, he said, that the state sector might compete unfairly with the bastions of privilege, the ones that sometimes declared multi-million dollar profits.

The optics were appalling, and Turnbull never tried to pursue his case. And in any case the scheme never got that far; the premiers had already declared it a shit sandwich and consigned it to the waste disposal unit – or, as Turnbull more delicately put it, there was no consensus so the proposal was withdrawn.

Instead, the Premiers accepted a few urgently required bucks to get on with, and agreed to talk about a regular allocation of tax revenue from the commonwealth, instead of the grant system that currently prevailed. This would not make them financially independent; they would still have to rely on the grace and favour of successive commonwealth administrations. But it would give them a degree of certainty as they framed their annual budgets, and it would remove the need to beg and plead for ambit claims on their humiliating trips to Canberra.

So the premiers could celebrate a win, of a kind; but Turnbull is left to try and explain whatever possessed him to try such a reckless and unsaleable suggestion. One possibility is that he was just using it to wedge the premiers: he had made them an offer they could not refuse and when they refused it he could say that they had been given a chance to fix their problems with health and education, and if they didn’t like it, then it would not be the commonwealth’s fault; the arguments about the $80 million Tony Abbott stripped out of the 2014 budget were no longer operative.

But the problem with that is that the voters just want results; they want their schools and hospitals, and they are not concerned with which level of government pays for them. In the end, the buck – or, rather, the lack of it – will stop with Turnbull and his predecessor to made the commitments in the first place. And this is where all the pontificating and theorising breaks down.

Academic economists, conservatives commentators and the other deep thinkers in the media may well be worried about vertical fiscal imbalance, and they can produce weighty and sometimes even cogent arguments about the need to reform the federalist system. But the voters, if they think of the issue at all, are just not interested.

And in any case the theoreticians are always pissing against the wind. The fact is that since federation, indeed many years before that, the movement has been inexorably towards more centralism, more uniformity. Successive governments decisions and High Court constitutional cases have almost invariably gone in the same direction: the states have been whittled away, and any attempt at devolution or deconstruction is doomed.

Any attempt to revive competitive federalism, especially in an age of unprecedented social mobility and global economics, will be not only unpopular but practically unworkable; the aberrations across state borders are irritating enough, but the idea of different taxes to go with the various different statutes would be less of an opportunity than a nightmare.

Kevin Rudd wanted not to hand the funding of hospitals over to the states but to take over their administration by the commonwealth; in his incarnation as John Howard’s Health Minister Tony Abbott had the same idea. Both foundered on the grounds of expense and complexity; but how much more daunting would it be to set up eight separate account books to the states and territories to give them the kind of autonomy Turnbull was proposing? The imagination boggles, and so did the premiers.

Whatever the merits or otherwise of Turnbull’s latest brainstorm, the result was a political fiasco, an ignominious defeat. The impression left to the public was of an arrogant and foolhardy captain’s pick, another illustration of the perception that the obscenely wealthy prime minister was more interested in his own agenda than with the legitimate daily concerns of ordinary people. Federation may well be a mess, a long term problem which should, in the long term, be resolved. But it is not an ambush in the lead up to an election campaign which Turnbull badly needs to clarify in the short months left to him and his government.

And blaming the premiers will simply not hack it. Turnbull is the prime minister of the commonwealth of Australia, and whatever loopholes the founding fathers left for the states in the constitution, there was one clear directive: if state laws conflict with commonwealth laws, the commonwealth will prevail. For all the lofty talk of consultation and cooperation, it is the Prime Minister who is the boss. So get on with it Malcolm – stop buggering about and start governing while there is still time.


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