We don’t have to credit Scott Morrison’s claim at Tuesday’s Coalition joint party room meeting that an election is the furthest thing from his mind, but we can take at face value his indication he wants to run full term.
Politics and the electoral implications of what he does are never out of Morrison’s thinking. But on the question of election timing, he didn’t have to be as categorical in his remarks, and what he said makes sense.
“I’m a full-termer, elections are too hard to win. I cherish every day – we’ll do it for the time we said we would,” he told his troops.
It’s always possible he flips his position (or is dissembling). But, as things stand, he probably means what he says because there are strong arguments for having the election when it’s due, in early 2022, rather than prematurely.
In recent weeks many in the media have been saying, publicly and privately, that we will likely have a late 2021 election.
But it’s clear from the polls and other evidence that the public don’t want to see too much political fractiousness now – and that might still be the position in a year’s time. One reason Labor is having so much trouble cutting through at the moment is that its attacks (inevitably) reintroduce partisanship.
Currently, it’s a period for incumbent leaders, even those under fire, as this week’s Essential poll again underlines. Despite Victoria’s slow emergence from lockdown, and the multiple problems of Dan Andrews’ government, 54% of Victorians approve of the job Andrews is doing as premier.
The Queensland election on October 31 will be a tangible test of the benefit of incumbency during COVID, but it’s accepted that the pandemic has put premier Annastacia Palaszczuk in a better position than she would have been in without it.
Even in ordinary times, people don’t like early elections. And, as Morrison says, he does “cherish every day” of power. An election late next year would mean most of 2021 would be in campaign mode, reducing what he could achieve.
Labor is apprehensive that the election might be held next year – in theory, a later date should advantage it. In practice, that wouldn’t necessarily be the case.
Elections are (with obvious qualifications) two-horse races and Labor faces an uphill task to present a convincing alternative whenever the poll is held.
Anthony Albanese is coming across as a trier, and his post budget pitch highlighting child care chose an issue of strong concern to many families. But colleagues continue to worry he and the opposition are not making an impact.
Switching leaders would be difficult and traumatic for Labor and not necessarily put it in a better position (and could burn a successor to no purpose).
Hard as it would be for Labor to accept, it may be a case of the COVID times simply not suiting it.
Having said that, we also know how quickly things can change in politics.
Morrison’s fate will rest on whether he has managed to get the country, and in particular its economy, convincingly on the road to “normality”. A 2022 election gives him more time to do that.
We don’t yet have any idea how 2021 will play out. It could be a rough year, easier to handle without the distraction of an election. And, who knows, by early 2022, we might even have people vaccinated.
If any other Australian leader had given the sort of evidence Gladys Berejiklian did to the Independent Commission Against Corruption on Monday, they’d probably have been out of their position by the end of the day.
The NSW premier was protected, in the immediate term, in part because the disclosures about her five-year secret relationship with the disgraced former Liberal MP Daryl Maguire seemed so bizarrely out of character with her unsullied past and apparent conservatism in her private life.
Also, she has been a highly competent premier, especially during COVID. The pandemic fireproofed her.
Her political performance this year is certainly one reason the prime minister is standing with her. As Scott Morrison has said repeatedly, NSW has set the “gold standard” during the coronavirus crisis.
But Berejiklian’s personal and political reputation should not obscure the seriousness of her actions, or rather her inactions, in relation to Maguire.
She didn’t just make a bad judgment about a sub-optimal boyfriend which can be written off as having “stuffed up” her personal life. She made a series of decisions that were inappropriate.
When in 2015 she changed the nature of her relationship with the then member for Wagga Wagga from friendship to a “close personal” one, she failed to disclose this to colleagues.
Her supporters say her private life was no one else’s business. If her relationship had been with the plumber down the street who was unconnected with government, that would be absolutely correct. It’s another matter when those involved are a senior minister, who then became premier, and one of her party’s MPs.
The premier could affect the fortunes of the MP; the MP could use the relationship, even if undeclared, to further his own interests by suggesting he could deliver access.
As Berejiklian has said, there is nothing wrong per se with two members of parliament having a personal relationship. But, given the position of one of them, in this case it should have been put on the record – at least to cabinet colleagues.
When Maguire fell foul of ICAC in 2018, Berejiklian should have belatedly admitted to the relationship, informing senior colleagues, so there would be no time bombs. Certainly she should immediately have broken off the connection with Maguire, rather than continue it until this year, when he was back in ICAC’s sights.
Most compromising, however, is the material captured by phone taps of Maguire’s conversations with Berejiklian.
Maguire told her of his lobbying for developers. The activities referred to might not have been illegal – Berejiklian makes the point MPs are allowed to engage in business – but for any premier they would be very uncomfortable.
Berejiklian certainly seemed uncomfortable and on two occasions said “I don’t need to know”.
She explains her apparent dismissiveness of what Maguire was saying as boredom with his big-noting. It sounded, however, more like she did not want him to give her information she preferred not to receive. She had a deaf ear to clues she should have picked up.
Imagine the reaction if Morrison had given such evidence, or been embarrassed by such tapes. People would not be looking for reasons to excuse him.
The line that everyone makes mistakes in their private life – “people have all made personal decisions I’m sure they regret, that’s human”, Morrison says – won’t wash.
Berejiklian can be forgiven for initially being taken in by Maguire. But persisting with the relationship after he was found out is surely harder, if not impossible, to justify, regardless of her explanation he was in a “very dark place”. After all, she removed him from the Liberal Party and pushed for his resignation from parliament in 2018.
To maintain that different, tougher standards are applied to women leaders may often be true, but it doesn’t fit this instance. If anything she is being given a softer run.
Morrison has said “it would be a bit of a numpty of a decision” to replace her.
Former prime minister Malcolm Turnbull praised her integrity and said: “Her leadership of this state has been tried and tested in the toughest circumstances this year, from the bush fires to now the pandemic and she has excelled.” And, he pointed out, “Let’s be frank – leaders of her calibre are not easily found.”
If the point is that the alternatives on offer – and it is not clear who would become leader if she went – wouldn’t do as good a job, that might be a valid argument on strictly utilitarian grounds (although if she survives, this scandal will make it much more difficult for her to govern effectively).
When you compare the way the NSW and Victorian governments have handled the pandemic, NSW has been way ahead (the Ruby Princess debacle notwithstanding).
Yes, she would be hard to replace. But this should not be confused with a clear-eyed view about the ethical shortcomings in her behaviour over Maguire.
In recent decades we’ve seen declining trust in political institutions. The pandemic has led people to reattach to these institutions and all Australian leaders – Morrison and the premiers – saw their ratings rise.
What we don’t yet know is whether trust in general will again plummet when the pandemic subsides.
If politicians seem to be holding their noses when there’s the whiff of impropriety or corruption in the air, they are trifling with the public’s trust in them and in the political system. They are treating the electorate with disdain.
The ICAC hearings this week have reinforced the case for a federal integrity body. But the reactions of Liberal politicians show why they want it to be relatively toothless.
It is not being suggested Berejiklian, whose leadership hangs by a thread, has personally engaged in wrongdoing; her appearance at ICAC was as a witness in an investigation into Maguire’s alleged wrongdoing.
But on what we have heard this week, she has fallen short of the standards that should be expected of a premier. Federal and state colleagues who are defending her are being tribal or expedient or both.
Scott Morrison has thrown his weight behind the embattled Gladys Berejiklian, ahead of Wednesday’s evidence to the Independent Commission Against Corruption from disgraced former MP Daryl Maguire, with whom she had a “close personal relationship” for five years.
Morrison said Berejiklian, who had been “a tremendous premier”, had his “absolute support”.
Maguire, former Liberal member for Wagga Wagga, is due to give evidence over two days.
Berejiklian was grilled for several hours on Monday at ICAC, which is investigating whether Maguire misused his parliamentary position for financial gain. Tapped phone conversations were played in which he talked to her about his efforts to broker deals for property developers, notably a sale of land owned by Louise Waterhouse near Badgerys Creek, from which he hoped to get a huge commission.
Berejiklian, who says she did nothing wrong and is not being investigated, told a news conference after her ICAC appearance that she had “stuffed up” her personal life.
She only severed her secret relationship with Maguire recently, despite his resignation from state parliament in 2018, after his property activities came to light in an earlier ICAC inquiry.
Morrison said Berejiklian had shown “a lot of courage” on Monday.
“But I also thought she showed a lot of humility, which is the Gladys I know.
“We’re all human. And particularly in those areas of our lives, and Gladys is an extremely private person, and a person of tremendous integrity. She’s a great friend. And I know she’s been getting many messages of support from her friends and colleagues and including from me … and Jenny.”
Morrison thanked state ministers “Dom Perrottet and Brad Hazzard and the whole team down there in the New South Wales government” for “getting in behind her.”
The last thing Morrison would want at the moment would be the removal of Berejiklian – he has repeatedly praised her government’s performance as the “gold standard” in handling the pandemic and highlighted NSW’s economic progress. So far there has been no sign of a move against her by colleagues and she has indicated her determination to tough out the scandal.
At ICAC on Tuesday Maggie Wang, a former business associate of Maguire, related what he had told her after his appearance at the earlier ICAC investigation. He had said words to the effect, “There’s been an unfortunate accident where my phones and iPad have been run over by a tractor”.
“Blindsided” is a word originally derived from American football and means to be hit from a totally unexpected quarter by shocking information. Unsurprisingly, it’s a word used often with the flashy US president, Donald Trump.
Until this week, it was not a word the people of New South Wales associated with the modest, determined and workaholic Gladys Berejiklian. This is the premier who has enjoyed a public approval rating of between 59% and 70% for her handling of coronavirus.
‘Close personal relationship’
In an appearance before the NSW Independent Commission Against Corruption (ICAC) on Monday, Berejiklian admitted to a “close personal relationship” with Daryl Maguire, the former Liberal member for Wagga Wagga who resigned from NSW Parliament in 2018.
Two years ago, he was targeted by ICAC for allegations he was using his public office for personal gain through commissions for Sydney property projects. Since then, we have found out he may have been involved in a “cash for visas” scheme.
This was the person the premier had a “close personal relationship” with for five years until recently. Former Labor leader Bill Shorten said what many were thinking when he told Channel Nine:
She’s a smart lady who I think has been punching below her weight with perhaps a much more average guy.
A lightening strike
So, what transpired on Monday was like a lightning strike from a clear blue sky. This jolted people to hurried conclusions, including calls from NSW Labor leader Jodi McKay for the premier’s resignation to predictions her political future was doomed.
Unless something more eventuates from the ICAC hearings — which will continue this week — we haven’t heard evidence of Berejiklian using her public position for some private gain.
At this stage, she is guilty of bad political judgement and bad personal judgement, the latter of which she shares with the rest of us on occasions.
The damage at this point is to her hitherto squeaky clean reputation. Berejiklian’s story had always been about hard work, as well as her immigrant family history.
We got some indication of her drive from a 2019 interview, when she spoke of her twin sister, who didn’t survive birth:
It was just luck that I came out first. Imagine if you had a twin; you came out first, they didn’t make it, I feel like I’ve got to justify my existence by sacrificing. So I don’t care if I’m not happy all the time. I feel like I’ve got to work hard.
Until this week, the premier has always been an intensely private person who even talked in media interviews of her dedication to a political career that came at the expense of a personal life and marriage. All fair enough.
However, the sudden revelations have catapulted many to quick verdicts about Berejiklian’s career prospects, while bringing out the armchair psychologist in us all.
We wonder about the secret life of this 50-year-old woman, who retains the air of the captain that she was at high school in North Ryde. She told no one about this relationship, not even her own, very close family.
So, this can’t help but make us ask: what other information is she not sharing?
Support from colleagues
At the moment, Berejiklian is being supported by her colleagues. As a member of the moderate faction, she is possibly under threat from the right of the party, but importantly, Treasurer Dominic Perrottet was by her side on Monday.
This conservative faction leader backed the premier continuing in her job and with good reason. Any undermining of her leadership would threaten the current factional peace, publicly confirm there was something amiss with Berejiklian, and give the public the impression that the bad old days are back with revolving door premiers.
NSW Premier Gladys Berejiklian has admitted having a secret intimate relationship with disgraced former MP Daryl Maguire, which she only ended recently, despite his being forced to quit state parliament in 2018.
Berejiklian’s explosive appearance on Monday at the NSW Independent Commission Against Corruption saw her personal life embarrassingly exposed, her political reputation thrown under a cloud, and her future put on the line.
ICAC, which is investigating whether Maguire sought to monetise his position as an MP between 2012 and 2018, heard damaging tapped phones conversations between him and Berejiklian in which he spoke extensively of his lobbying on behalf of developers. He also talked about his concerns over his huge debts, which he said amounted to $1.5 million.
Maguire, who was a parliamentary secretary and member for Wagga Wagga, was forced to quit in 2018 after an earlier ICAC inquiry, which heard recordings of him seeking payment to help broker a deal with a Chinese property developer. This prompted a byelection that the Berejiklian government lost to an independent.
The premier’s colleagues and observers of NSW politics are gobsmacked at the revelation of Berejiklian’s “close personal relationship” with Maguire. There had been no whisper until her disclosure of it on Monday morning.
The relationship began in 2015 and lasted until after she gave evidence privately to ICAC in August.
After her Monday evidence, running for several hours, Berejiklian told a news conference: “I stuffed up in my personal life”. But she said she wouldn’t consider resigning from her position because she had done nothing wrong.
She said she had trusted Maguire, whom she had known for 15 years, but she had not told her family or friends of their relationship because it didn’t have “sufficient status”.
Berejiklian said she had sacked Maguire from the Liberal party and engaged others to press him to leave parliament. But she hadn’t broken with him earlier because he was “in a very dark place”. “I didn’t feel that I could stop being his friend during that time, rightly or wrongly, on compassionate grounds.”
She told reporters she always applied the “highest level of integrity” in doing her public job.
The phone taps indicated Maguire was considering whether to resign at the 2019 election if he was in a financial position to do so. Berejiklian admitted to the hearing she had thought if that happened, they could be in a position to make their relationship public.
In one of their phone conversations, Berejiklian said to Maguire: “You will always be my numero uno.” She told the hearing this showed “in my personal life I placed importance on how I felt about him”.
Berejiklian repeatedly stressed to the hearing she had taken no interest in Maguire’s financial affairs or his business activities, although he constantly referred to them in the phone conversations.
She said he was always talking about deals, but they then fell through. She always thought Maguire had made the appropriate disclosures.
On one occasion, she flagged to him that her chief of staff planned to call him to tell him a minister visiting China would raise a business matter Maguire was involved in.
In some calls she sounded anxious to distance herself from the details.
In one phone conversation, Maguire referred to “my little friend” and said, “you know my little friend?” Berejiklian replied, “Not really. I don’t need to know.”
In another conversation, Berejiklian said, “I don’t need to know about that bit.”
In relation to a deal involving land owned by Louise Waterhouse, from the racing family, near Badgerys Creek, Maguire asked if she had received an email from Waterhouse. When she said no, he said, “You will, she’ll send you an email. She’s really pissed off now, you know, about the airport. They’re all passing the buck.”
In September 2017 he told her, “It looks like we finally got the Badgerys Creek stuff done … I’ll make enough money to pay off my debts, which will be good.” He added, “Can you believe it, in one sale?”
The hearing went into closed session twice to listen to tapes which were considered too private to be played publicly.
Berejiklian stressed to ICAC she would never compromise her public position: “I would never turn a blind eye to any responsibility that I had to any wrongdoing that I saw.”
She emphasised she was an independent woman with her own finances. “Anybody else’s finances would be completely immaterial to me,” she said.
Her colleagues are standing by her, at least at the moment. The NSW Opposition said she should resign. Maguire gives evidence on Wednesday and Thursday.
Head of Daniel Andrews’ department resigns
The secretary of the Victorian Department of Premier and Cabinet, Chris Eccles, has resigned, in the latest dramatic development in the hotel quarantine affair.
But his resignation has not clarified the central mystery of who decided private security should be used, a fateful move in what ended up as the Victorian second wave of COVID.
Eccles quit after his phone records showed he called then police commissioner Graham Ashton as the quarantine arrangements were being set up.
Ashton had told the board of inquiry investigating the quarantine debacle he had received information that private security would be used but could not remember who told him – although he had sent a text to Eccles asking about arrangements. Eccles told the inquiry he did not recall phoning Ashton, but he didn’t rule out doing so.
The inquiry at the weekend called for the phone records.
On Monday Eccles said in a statement the records showed he had called Ashton at 1.17 pm on March 27 and spoke with him for just over two minutes.
But Eccles stuck to his evidence to the inquiry about not passing on a decision about private security guards.
“I am absolutely certain I did not convey to Mr Ashton any decision regarding the use of private security as I was unaware any such decision had been made, and I most certainly had not made such a decision myself.
“The totality of my evidence to the Board was that I may have contacted Mr Ashton following Mr Ashton’s 1.16 pm text message.”
Eccles said to continue in his position would be “a significant distraction … as we enter a critical phase of easing COVID-19 restrictions”.
This week’s Newspoll, conducted October 8–10 from a sample of 1,527 voters, gave the Coalition a 52–48% lead over Labor in the two-party preferred question, a one-point gain for the Coalition since the previous Newspoll three weeks ago.
Primary votes were 44% Coalition (up one), 34% Labor (steady), 11% Greens (down one) and 3% One Nation (steady).
Prime Minister Scott Morrison remained very popular: 65% were satisfied with his performance and 31% were dissatisfied, for a net approval of +34. These figures are unchanged from the last poll.
Opposition Leader Anthony Albanese’s net approval slid three percentage points to -4. His net approval is down six points since late August. Morrison led as better PM by 57-28% (compared to 59-27% three weeks ago).
Newspoll asks three questions after each budget: whether the budget was good or bad for the economy, whether it was good or bad for you personally, and whether the opposition would have delivered a better budget.
On the economy, 42% said the budget was good and 20% bad. When it came to people’s personal fortunes, 26% said they would be better off after the budget, compared to 23% who said worse off. By 49-33%, respondents said Labor would not have delivered a better budget.
Analyst Kevin Bonham tweeted a graph showing this budget performed well compared to historical budgets. The 16-point deficit for the question of whether Labor would have delivered a better budget is the worst for an opposition since 2009.
The one-point gain for the Coalition on people’s voting intentions is also consistent with a well-received budget.
Australian state polls: Victoria and WA
A Victorian Morgan SMS poll, conducted September 29-30 from a sample of 2,220 voters, gave Labor a 51.5-48.5% lead over the Coalition, unchanged from mid-September.
Primary votes were 39% Labor (up two), 39.5% Coalition (up one) and 10% Greens (down two). Morgan’s SMS polls have been unreliable in the past.
In a forced choice, Premier Daniel Andrews had a 61-39% approval rating, down from 70-30% in early September.
Three weeks ago, Newspoll gave Andrews a 62-35% approval rating (compared to 57-37% in late July).
An Utting Research poll of five Western Australian marginal seats showed an average swing to Labor of 16%. In Liberal leader Liza Harvey’s Scarborough seat, the result was 66-34% to Labor.
Labor had a big victory at the March 2017 state election, and this poll suggests a Liberal wipe-out at the next election, due in March 2021.
Biden’s national lead over Trump exceeds ten points
In the FiveThirtyEight national poll aggregate, Democratic presidential nominee Joe Biden now leads President Donald Trump by 10.4% (52.2–41.9%). It’s somewhat closer in the key swing states, with Biden leading by 8.0% in Michigan, 7.3% in Pennsylvania, 7.2% in Wisconsin, 4.5% in Florida and 3.9% in Arizona.
Since my article about Trump’s coronavirus infection and the first presidential debate, Biden’s national lead has increased by 1.4%.
With Pennsylvania and Wisconsin now polling very closely, both can be seen as “tipping point” states. Previously, Pennsylvania had been better for Trump than Wisconsin.
The gap in Trump’s favour between the national vote and the tipping-point states of Wisconsin and Pennsylvania has increased from 2.4% to 3.2%. If Trump were within five points nationally, this election would be highly competitive. But this difference isn’t going to matter with Biden up ten points nationally.
CNN analyst Harry Enten says Biden is polling better than any challenger against an incumbent president since 1936, when scientific polling started.
US polls include undecided voters, so it is hard for candidates to reach 50%. In 2016, Democratic candidate Hillary Clinton never reached that mark in polls, and Trump was able to win far more of the late deciders.
The FiveThirtyEight forecast gives Trump a 14% chance to win, down from 17% last week. Trump has just a 6% chance to win the popular vote.
The Senate forecast gives Democrats a 72% chance to win the Senate, up from 70% last Wednesday. The most likely Senate outcome is still a narrow 51-49 Democratic majority.
He’s certainly no shoo-in, however. There are already multiple candidates, the pandemic will make campaigning complicated, and Australian’s record on climate change might be a negative.
But he’ll have strong government support and, given his meticulous organisational skills and network of contacts abroad, nothing will be left undone.
Finance minister throughout the Coalition’s term, Cormann is respected across the political spectrum, which has made him effective as the government’s “wrangler” of the difficult characters in the Senate.
His dour image conceals a lighter side, seen in Wednesday’s cameo appearance on the ABC’s “Mad as Hell” as he jested with his “spokesman” Darius Horsham, a long-running character on the show.
Cormann’s October 30 parliamentary exit – the timing determined by the OECD’s process – is a significant loss for the government. But Scott Morrison was determined not to let it become a disruption.
Morrison has filled Cormann’s shoes even before his minister has stepped out of them, announcing Simon Birmingham will take over the finance portfolio and Senate leadership when Cormann goes.
The PM said he’d make no other changes at that time, but there’ll be a reshuffle at year’s end.
Birmingham will then shed his trade ministry, and Morrison will have the opportunity to make other alterations to his team. With aged care set to be a mega issue after the royal commission reports in February, one thing he should do is put a heavyweight into that portfolio and elevate it to cabinet.
Thursday’s small shuffle was a side show in the major play of the week, which saw a budget with a deficit of $213.7 billion this financial year that gambles on being large enough to get the country marching to recovery.
It will take months to judge whether the government has pitched its budget well (and that’s assuming no new seismic setbacks), but it is satisfied with the immediate reception. Income tax cuts are likely to be popular even if their critics argue other measures would be better. Business can only welcome the massive incentives to invest, although many enterprises won’t survive to take advantage of them.
Labor has given its support to the huge tax concessions for business in Josh Frydenberg’s second budget.
This ease of passage is in sharp contrast to the company tax cuts in then treasurer Scott Morrison’s first budget, which embroiled the Turnbull government in a debilitating fight from 2016 to 2018. Even Cormann couldn’t wrangle the big business tranche of those through the Senate; it was abandoned in the final week of Malcolm Turnbull’s leadership.
The budget has come under fire on various fronts – for example, the wage subsidy for younger workers carries the risk of being rorted, and there’s criticism about the lack of assistance for older workers.
Nevertheless, it has been a difficult budget for the opposition to savage, given Labor is endorsing its core elements of income tax cuts and business concessions.
But one fertile area for the opposition has been the lack of specific assistance for women, many of whom have been particularly hard hit by the pandemic. They’re often in casual jobs, and in sectors with the biggest job losses (although Frydenberg pointed out women have been strongly represented in the restored jobs). Women have also carried a disproportionate load of home schooling.
Anthony Albanese tapped into this area of government vulnerability when he delivered his Thursday night budget reply.
The opposition leader had several imperatives to meet as he went into that speech. To produce some policy flesh. To set up an ideological difference with the government. To cut through to the public.
With possibly only a little over a year before an election, the opposition is under pressure to start rolling out detailed policies. Albanese’s promises to make child care more affordable (at a cost of $6.2 billion) and to modernise the energy grid (a $20 billion investment) were substantial commitments.
The child care policy will appeal to women in particular. The pandemic has made families, but especially women, even more aware how important child care is for them – the brief period of it being free only increased the appetite for a better system – and the budget didn’t respond.
The proposals Albanese put forward to boost skills and local manufacturing highlighted Labor’s message that it believes in using government as a driver of change, through prescriptions, procurement policy and other means.
Albanese proposes mandating that a certain proportion of workers on major government-funded projects should be apprentices and trainees. He even suggests this could be extended to government-funded sectors such as aged care – how practical that would be is debatable.
There wasn’t a detailed social housing policy but Albanese flagged Labor would invest substantially in this area – that’s spending favoured by many economists as well as necessary to improve lives.
While Albanese is at pains to argue he’d mobilise the power of government, Morrison has muddied this political water.
The budget might be heavily private-sector oriented (and from that vantage point, seen as ideological), but Morrison is also interventionist when it suits him. His so-called gas led recovery, and his identification of designated sectors in his manufacturing policy are examples.
In terms of the imperatives he was trying to meet, Albanese did produce some policy flesh but of the announcements, probably only the child care initiative is likely to achieve general “cut through”.
The danger for Albanese is that come the next election, if Morrison sees child care as a political weak spot, he’s likely to address it.
In his stress on child care and social housing, Albanese made his point that Labor had different priorities to the government’s. And we got the message about putting government in the driver’s seat.
But the picture of what an Albanese government would actually look like wasn’t clear – as it can’t be, because that remains a work-in-progress.
Nor did we get any comprehensive idea of how, if this had been a Jim Chalmers budget, Labor would be tackling the immediate crisis differently.
Albanese’s problem was that circumstances demanded too much of him in his budget reply. He had a fair crack at meeting those demands, but he couldn’t change the perception that the pandemic has made the opposition one of its victims.
Cormann indicated in July he planned to leave parliament late this year. He has been Finance Minister throughout the Coalition government and a central figure in the preparation of its seven budgets.
Morrison said Birmingham would be sworn in as finance minister at the end of the month when Cormann retired. He would continue as minister for trade, tourism and investment.
“I am not planning on making other ministerial changes at that time,” Morrison said.
But there will be a reshuffle at the end of the year. With the current COVID-19 restrictions on international travel, Birmingham will be able to juggle his trade and extra responsibilities for a time, and he has trade negotiations in train.
Employment Minister Michaelia Cash will become deputy Senate leader, a position Birmingham has held since 2018.
Birmingham has served in the Senate since 2007 and was education minister between 2015 and 2018.
Cormann, who came to Australia from Belgium in the 1990s, demonstrated his multilingual skills at a Thursday news conference with Morrison, giving short speeches in French and German.
His election to the OECD job is not certain, but Australia will campaign hard for him.
Morrison said this was “the most important Australian nomination for a major international body in decades”.
“Senator Cormann has already been an influential contributor in regional and global institutions, having attended every G20 Leaders’ meeting since 2014 and numerous G20 finance ministers, IMF and World Bank meetings over the period,” Morrison said.
“Over the last seven years, Senator Cormann has worked with many OECD leaders, and dozens of treasury, finance, and trade minister counterparts from developed and developing countries.”
Cormann will step down from the ministry and the Senate on October 30, before he is formally nominated for the OECD role. Nominations close at the end of October, with interviews and consultations beginning after that and an outcome expected in the first part of next year.
Accelerated tax cuts, cash splashes for pensioners, massive incentives for business to invest and a subsidy to hire unemployed people are the centrepieces of the Morrison government’s COVID-19 budget.
More than 11 million taxpayers will get a tax cut backdated to July 1, giving lower and middle-income earners tax relief this financial year of up to $2,745 and dual income families relief of up to $5,490, compared to their tax in 2017-18.
Australians on pensions and other eligible recipients will also receive a cash handout of $250 from December and another $250 from March next year.
Treasurer Josh Frydenberg said the Australia economy was “fighting back”, with more than half of those who had lost their jobs now back at work. But “there remains a monumental task ahead,” he said, assuring Australians “we have your back”.
“The road to recovery will be hard — but there is hope,” he said
A budget focused on creating jobs delivers multiple measures to boost business activity, and a new plan to subsidise hiring young people who are unemployed for up to a year.
Frydenberg said the Australian economy had been hit hard, but “we have a plan to rebuild our economy and to create jobs”.
The budget has a massive $213.7 billion deficit for this year. It will stay in the red throughout the budget period, with deficits totalling $480.5 billion over the next four years.
Net debt will reach $703 billion this financial year – more than 36% of GDP, rising to $966 billion (44% of GDP) by June 2024.
Frydenberg told parliament, “this is a heavy burden, but a necessary one to responsibly deal with the greatest challenge of our time”.
The economy is forecast to contract by 3.75% this calendar year, with unemployment peaking at 8% in the December quarter. In the 2021 calendar year, economic growth is forecast to be 4.25%, with unemployment falling to 6.5% by the June quarter 2022.
In his speech to parliament, Frydenberg reiterated the government’s two-phase strategy.
The first phase is to focus on “boosting consumer and business confidence, growing the economy and creating jobs”.
Once unemployment is “comfortably below 6%” the government will move to phase two, “where there is a deliberate shift from providing temporary and targeted support to stabilising gross and net debt as a share of the economy.”
“We will then rebuild our fiscal buffers, so that we can be prepared for the next economic shock,” Frydenberg said.
The income tax cuts, at nearly $7 billion, are the biggest cost this financial year, rising to nearly $18 billion in total over the forward estimates.
Tax cuts brought forward
The government is bringing forward stage two of its already legislated tax plan, lifting the 19% threshold from $37,000 to $45,000 and the 32.5% threshold from $90,000 to $120,000.
It is also retaining the Low and Middle Income Tax Offset for an extra year.
Frydenberg said, as a proportion of tax payable, compared to 2017-18, the greatest benefit would flow to people on lower incomes, with those earning $40,000 paying 21% less tax, and people on $80,000 paying about 11% less tax this year.
“Under our changes, more than seven million Australians receive tax relief of $2,000 or more this year,” Frydenberg said.
JobMaker hiring credit and huge tax breaks
A new JobMaker hiring credit will be available for employers who take on people on JobSeeker aged 16 to 35. The subsidy will be $200 a week for those under 30 and $100 a week for older people. These new hires must work at least 20 hours a week. All businesses except big banks will be able to use the scheme and the government says it will support about 450,000 jobs for young people.
The hiring credit will cost $850 million in the current financial year, rising to $2.9 billion in 2021-22, and $4 billion in total over the forward estimates.
The government says the initiative will support about 450,000 young people into jobs.
Tax breaks for business are huge over the budget period.
From budget night, more than 99% of businesses will be able to write off the full value of any eligible asset they purchase. The concession will be available for businesses with a turnover of up to $5 billion until mid-2022, with the program costing $26.7 billion over the forward estimates.
Frydenberg described the concession as “a game changer” which “will unlock investment”.
“It will dramatically expand the productive capacity of the nation and create tens of thousands of jobs.”
In another business initiative, companies will be able to use their losses earlier.
Frydenberg said the combination of these two measures would create an extra 50,000 jobs.
Infrastructure and water spending
The government is also looking to infrastructure to stimulate activity, with Frydenberg saying “the budget will see $14 billion in new and accelerated infrastructure projects.”
As part of supporting the regions, Frydenberg announced $2 billion in new funding to build water infrastructure.
With women’s jobs particularly badly hit during the recession, the budget has a women’s economic security statement including $240 million in measures.
Thousands of new home care packages
On aged care, Frydenberg announced an increase of 23,000 home care packages, costing $1.6 billion. He said the government would provide “a comprehensive response” after the royal commission’s final report on aged care, which comes early next year.
The government is also implementing reforms to superannuation arrangements.
New superannuation accounts will no longer be automatically created when a worker moves jobs. “Under our reforms, your super will follow you,” Frydenberg said.
The government had previously flagged that it would implement the change, recommended by the Productivity Commission.
Labour described the budget as a “grab bag of headline seeking announcements” which would “rack up a trillion dollars of debt, but still doesn’t do enough to create jobs, fails to build for the future and leaves too many Australia’s behind”.
Business welcomed the budget, with the Business Council of Australia saying it was “about getting Australians back to work, and getting businesses back on track”.
The Australian Chamber of Commerce and Industry said “Australian entrepreneurs will be energised by the unparalleled investment incentives”.
ACTU secretary Sally McManus tweeted:
The Community Housing Industry Association said the budget’s extension of the government guarantee for the National Housing Finance and Investment Corporation by $1 billion was welcome but criticised the lack of direct investment in social housing.
It’s easy get the impression the massive government spending and deficits and debt required by the pandemic are new.
It would be understandable, because much of what happened before the 1980s has been forgotten.
Yet for almost all of the years since Federation – almost every one – the Commonwealth budget has been in deficit, right through til the late 1980s.
And it has hurt us not at all.
Seventy five years ago, the world faced daunting challenges: the reconstruction of Europe and Japan; the long-overdue end of an empire; the threat of communism; urgent demands for public services, social welfare and housing; and the orientation of economic activity away from the demands of war towards improvements in the quality of life.
In Australia, the Commonwealth published a white paper, Full Employment in Australia, in which it accepted responsibility for ensuring that there would always be enough demand for labour so that everyone who wanted to a job would be able to get one.
In pursuit of this goal, both sides of politics understood that they would usually need to run budget deficits.
For 40 years under prime ministers Chifley, Menzies, Holt, Gorton, McMahon, Whitlam and Fraser that is exactly what happened, as it had for most of the 40 previous years without the guiding light of the white paper.
Governments would spend as much as was needed (some of it in the form of gigantic nation-building projects such as the Snowy Mountains Scheme) and tax as little as was needed in order to keep the unemployment rate at close to zero as practical without putting too much pressure on prices.
If there were deficits, low interest rates and the economic growth that flowed from those deficits would shrink the resulting debt as a proportion of GDP.
Banks were regulated to ensure interest rates stayed low and credit was directed to businesses and households.
Menzies was a Keynesian
These were the golden years of so-called Keynesian economics with a consensus across the political spectrum that it was right to use government spending and tax measures to sustain the economy, disputed only by Marxists on the Left and a small band of neoliberals on the Right.
Up until the mid-1970s, when war in the Middle East, fautrising energy prices in a world dependent on oil and rising union militancy in Australia combined to create double-digit inflation and an unemployment rate far higher than the one or two per cent Australia had enjoyed since the war.
In Australia and elsewhere it allowed a takeover by a new band of neoliberal politicians and economists who believed in small government (sometimes austerity), balanced budgets and outsourcing economic management to central banks who were given the autonomy to adjust interest rates and the supply of money in a deregulated market.
It happened slowly, under the governments of Margaret Thatcher in the United Kingdom, Ronald Reagan in the United States and (Labor prime minister) Bob Hawke in Australia.
Hawke was an exception
By the 1990s, the old consensus had not only disappeared, its successes had been erased from memories. A new academic and institutional consensus emerged, shared by prime ministers Hawke, Keating and Howard and treasurers Keating and Costello.
Although it does not require balanced budgets, the Charter of Budget Honesty introduced by Treasurer Peter Costello requires governments to publish the fiscal strategy they intend to use in drawing up budgets.
The first, in 1997 required the government to achieve “underlying budget balance, on average, over the course of the economic cycle”.
Over time it was hardened to “achieve budget surpluses, on average, over the course of the economic cycle”.
It has been honoured in the breach since 2008, because surpluses usually aren’t consistent with good economic management, regardless of charters.
If the private sector is a net saver, as it usually is, the public sector usually needs to be a net spender in order to keep resources fully employed.
In last year’s election Prime Minister Scott Morrison and his opponent Bill Shorten disagreed about many things, but the need for surpluses wasn’t one of them
Surpluses no longer
No longer. In the leadup to tomorrow’s budget Treasurer Josh Frydenberg has promised a new fiscal strategy, one that for the first time is likely to promise neither a surplus or a balanced budget.
“It would now be damaging to the economy and unrealistic to target surpluses over the forward estimates, he said in September. “This would risk undermining the economic recovery we need to bring hundreds of thousands more Australians back to work and to underpin a stronger medium-term fiscal position”.
Proponents of the neoliberal consensus would argue that the decade of surpluses between the late 1990s and the global financial crisis was a golden time. It was certainly helped by the mining boom.
Inflation has been below the Reserve Bank’s target and unemployment above it for a decade. The budget is about all that’s left to support the economy. It certainly shouldn’t be getting out of the way to allow the private sector to create wealth, as those proponents used to suggest.
We are on the cusp or a second Keynesian revolution, one expression of which is Modern Monetary Theory, which suggests deficits need to be embraced where they are necessary to bring about full employment.
A government such as Australia’s which issues its own currency is able to fund deficits for as long as it needs to, and would be wise to do so up until the point where it creates too much inflation.
With the package comes the idea of a job guarantee, first put forward by the American economist Hyman Minsky in the 1960s, and promoted now by University of Newcastle labour market specialist Bill Mitchell and the founder of the Cape York Institute Noel Pearson.
It is the unconditional offer of a job at a minimum wage to anyone willing and able to work, normally funded by budget deficits and bigger when the economy is weak and smaller when it is strong.
Will it happen? As Stephanie Kelton, the world’s most prominent Modern Monetary Theorist and author of the New York Times bestseller The Deficit Myth said recently, “I won’t say no. But it’s going to be a hell of a fight.