Grattan on Friday: Josh Frydenberg has a great job at the worst time


Michelle Grattan, University of Canberra

Josh Frydenberg is highly ambitious – in the fashionable jargon, you’d call him a “forward-leaning” politician. But even he must be
surprised, reviewing the past 12 months, at where he is, given where he was.

Mid last year he was working up the National Energy Guarantee for the Turnbull government. By August that had imploded, decapitating the then prime minister but catapulting Frydenberg into the treasurership.

Great job. Just an unfortunate time to have it. Rather a parallel with the situation of Chris Bowen, appointed treasurer in the ill-fated second Rudd government, and now Frydenberg’s opposite number.

As Scott Morrison is trying to persuade people that voting Labor will land them in a recession (he is careful with the wording but that’s his thrust) Frydenberg this week had to counter the economic
pointy-heads seizing on the latest national accounts as showing a “per capita recession”.

To put this notion in simple terms, the low December quarter growth
rate (0.2%) when looked at against population, meant that on a per
person basis growth has now gone backwards for two quarters.

The technical definition of “recession” is two quarters of negative growth.

It should be stressed that Australia is NOT in a recession. But you
see the political risk for the government of these musings. No wonder Morrison dismissed the “per capita recession” term as a “made up” statistic.




Read more:
Vital Signs: Australia’s sudden ultra-low economic growth ought not to have come as surprise


Leaving the “per capita” debate aside, with the government campaigning on its economic management, it is not good for it to have the latest numbers showing growth slowing to an annual rate of 2.3%, though Morrison tries to feed the economic challenges into his don’t-trust-Labor narrative.

The national accounts are the last big set of economic numbers before the April 2 budget. The Treasury boffins, under secretary Phil Gaetjens, are now putting them into the figuring as Morrison, Frydenberg and other members of cabinet’s expenditure review committee work on the policy measures in a budget that will be driven almost totally by the needs of the election to be held within weeks of its delivery.

Gaetjens and Frydenberg might reflect, incidentally, that this, the first budget for each of them as secretary and treasurer, is likely to be their last in these roles – if the opinion polls are right.

Labor has indicated it would probably sack Gaetjens (who was chief of staff to Morrison when he was treasurer). And a treasurer ousted in an election wouldn’t normally expect to get another bite at that job, though Bowen looks like he will be the exception.

The stakes could hardly be higher for Frydenberg’s maiden budget. It will needs a certain “wow” factor to appeal to as many voters as it can reach. It has to avoid landmines (sometimes even small things can blow up) and dubious numbers; either could give the opposition grist for the scrutiny that will follow.

The political climate in the run up to the budget will be influenced by another election – on March 23 in NSW.

With the two sides in that state close in the opinion polling,
doubt about what’s going on in the regions and an optional
preferential voting system, there is a lot of uncertainty about the result.

In a legislative assembly of 93, 47 is the number for a majority. If the Coalition loses six seats it will be forced into minority government. At present the Berejiklian government has 52 seats, Labor 34, Greens 3, the Shooters, Fishers and Farmers 1, and there are 3 Independents.

If there is a big swing in NSW, it will further rattle the federal
Coalition before the budget. The only upside would be the Morrison
government might hope NSW voters had got rid of some of their general angst in the first of the two visits they are making to the polls this year.

On the other hand, if the Berejiklian government did better than
anticipated, that would give a morale boost to the Feds (whether
justified or not).




Read more:
Politics with Michelle Grattan: Ian McAllister on voters and issues in the coming election


Once budget week (which will include Bill Shorten’s reply on the
Thursday night) is finished, the question will be whether Morrison
announces the election immediately for May 11, or opts for a May 18 poll.

(There has been speculation he could go even later, to the extreme inconvenience of the Australian Electoral Commission, but that would seem pointless.)

As things stand, it is hard to see what the government would gain by delaying until May 18. With campaigning already in full swing, voters will be totally sick of it by budget time and surely will want the election over as soon as possible after that.

If the government did not call the election immediately budget week was finished, this would allow more Senate estimates hearings. That week contains two days of hearings; without a poll announcement, they would continue another week.

These interrogations of ministers and officials work to the advantage of an opposition. Remember how in 2016, Labor extracted the decade-long cost of the proposed company tax cuts (nearly $50 billion) which it used to effect in its campaign?

Whether the election is May 11 or 18, the campaign will be much about the budget, putting huge pressure on Frydenberg, only months into the treasury job. Not least, colleagues will be able to look at his performance through the lens of his potential suitability for another job – opposition leader.




Read more:
Event: your Q&A with Michelle Grattan in Melbourne


The week brought some added pressure on the Treasurer, this time on
the home front, with high-profile barrister and refugee advocate Julian Burnside declaring he will run for the Greens in Frydenberg’s seat of Kooyong. Burnside will be campaigning hard on
climate change. A former member of the Liberal party, Oliver Yates,
was already in the Kooyong field, with messages on climate and Liberal divisions.

In 2016, Frydenberg had about 58% of the primary vote with Labor and the Greens nearly equal (almost 20% and nearly 19% respectively).

Frydenberg’s primary vote would have to take a huge hit for him to be at any risk (and his record on the NEG has him on the right side of the climate debate). But the presence of Burnside will mean the
Treasurer will have to put extra effort into his electorate just when he’ll be stretched to the maximum in the national campaign.The Conversation

Michelle Grattan, Professorial Fellow, University of Canberra

This article is republished from The Conversation under a Creative Commons license. Read the original article.

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Frydenberg is wrong to support Ivanka and Donald Trump on the World Bank. It’d be better to let it die


Mark Crosby, Monash University

Treasurer Josh Frydenberg has offered support to Donald Trump’s pick for the World Bank Presidency.

David Malpass is currently Under Secretary of the United States Treasury with responsibility for International Affairs, and his previous experience includes being chief economist at Bear Stearns prior to their collapse.

Our Treasurers support is wrong headed.

No matter what the strengths of David Malpass, the next World Bank President should not be American.

After World War Two the victors designed many of our global institutions, including the World Bank, and the International Monetary Fund. Major global institutions were headquartered in Europe or the United States, and there was an agreement that the World Bank President would be a US citizen, while the IMF would be headed by a European.

This cosy arrangement was fine for most of the 20th century, but is at odds with our 21st century world.

Trump’s unspoken ultimatum

It has been suggested that Trump would follow his usual negotiating tactics and withdraw support from the World Bank if the next chief is not American, which is presumably why some countries including Australia are likely to support Malpass.

The search for the US nomination was headed by Steven Mnuchin and Ivanka Trump, with Invanka Trump herself mentioned as a possible nomination.

Malpass may be a better candidate than the President’s daughter, but I doubt it.

Malpass has been a critic of World Bank lending to China and at Bear Stearns he ignored warning signs of crisis in 2007.

But it’s not so much Malpass’ dubious credibility that is the problem, but the idea that the President should always be American.

The American might not be the best candidate

Important global institutions should be led by the best candidate. The views and expertise of emerging market candidates, particularly from larger economies such as China, India, Brazil, Nigeria and Indonesia should be taken more seriously.

In recent years the IMF would have been much better led by a non-European. The decision to bail out French and German banks at the expense of the Greek economy in 2012 was a poor decision made by the French head of the IMF.

The IMF rightly supported restructuring of banks and financial markets after the Asian Financial Crisis in 1997, but did not push for the same for European or US banks after 2008.

So what if Australia and other middle powers did not support Malpass’ nomination?

Better off withoug the World Bank?

A US withdrawal from the World Bank would probably see its demise. But so what?

The World Bank has become relatively toothless.

Last year China lent more money to emerging market economies than the World Bank.

And this is the point. China needs to be brought into the World Bank and other institutions more fully, not sidelined.




Read more:
A Trump-aligned World Bank may be bad for climate action and trade, but good for Chinese ambitions


Problems with governance and other issues with China’s Belt and Road initiative would be much better handled by a multilateral agency, whether that is a properly renewed World Bank or a new institution.The Conversation

Mark Crosby, Professor, Monash University

This article is republished from The Conversation under a Creative Commons license. Read the original article.

View from The Hill: Independent push against Frydenberg


Michelle Grattan, University of Canberra

A high profile independent candidate, Oliver Yates, is expected to run against Treasurer Josh Frydenberg in the heartland Liberal seat of Kooyong in Melbourne.

Yates, who lives in the electorate, is a member of the Liberal party
and a former international banker and former CEO of the Clean
Energy Finance Corporation. At present he works for several firms on
renewable energy projects.

Son of Bill Yates, a colourful character who held the Victorian seat
of Holt in 1975-80 and was earlier a member of the House of Commons,
Yates has made swingeing attacks on the Liberals, saying in a recent
Guardian article that the “party is in need of desperate cultural
reform”.

Challenger Oliver Yates.
Clean Energy Finance Corporation

On climate change, which would be central to his campaign, he wrote in
an earlier Guardian piece: “Refusing to reduce emissions as cheaply as
possible is irrational, immoral and economically reckless.”

Frydenberg had a very solid 58% of the primary vote in 2016, and would
not be at risk unless his primary vote was pushed well under 50%. But
Liberals were shocked when at the Victorian election the seat of Hawthorn, which is within Kooyong,
was lost to Labor.

Yates’ expected challenge and an anticipated announcement by former Liberal Julia Banks that she will run against Health Minister Greg Hunt in
Flinders follow the unveiling of Zali Steggall’s bid to oust
former prime minister Tony Abbott in Warringah.

The political crows have been circling Abbott, but until the appearance
of Steggall – a Liberal-leaning born-and-bred local – the political
odds were on him.

Now the Liberal disruptor is himself target of a major disruption,
with the outcome uncertain.

The House of Representatives voting system makes it hard for
independents to break through, so they are still a relatively rare
breed in the lower house. However they are more common than previously
and now the times are more auspicious for them than ever before.

Once established, they are hard to shift. So we can expect
independents Rebekha Sharkie in Mayo and Andrew Wilkie in Denison to be
back after the May election.

Banks’ prospects in Flinders would not seem high, although union-commissioned polling has been bad for Hunt, who backed Peter Dutton’s challenge to Malcolm Turnbull.

Banks presently holds the seat of Chisholm. Last year she deserted the
Liberals to go to the crossbench citing the leadership change and
bullying.

Hunt had 51.6% of the primary vote last election; ABC election analyst
Antony Green says that post-redistribution he is on about 50.5%. But
the ALP vote is around 27% and Hunt seems in more danger from Labor
than from an independent.

Two of the most interesting contests involving independents will Indi
in north eastern Victoria, and Wentworth in Sydney.

Cathy McGowan famously tipped out Liberal frontbencher Sophie
Mirabella from Indi in 2013. McGowan, with a long background in the
area, and backed by the grassroots “Voices For Indi” forum, was
completely dug in by 2016. She would have won again this year.

But she had set in place a process for a community selection for a
successor and earlier this month that produced Helen Haines, 57, from
Wangaratta , a public health researcher. McGowan then confirmed she would not stand.

Indi will test whether can one independent can pass on the “community
candidate” heritage to another.

All the McGowan infrastructure is in place for Haines. On the other
hand, by definition an independent candidate must establish themselves
as an individual.

Haines will have to demonstrate her personal credentials, and convince
voters that the local area will have a stronger “voice” in the next
parliament if it has an independent than if its member comes from the
Coalition (Labor can’t win the seat).

McGowan’s “voice” has been enhanced in this parliament because of the
tight numbers. The crossbench has the crucial balance of power in
these last months because the parliament is now “hung”.

The numbers in the next parliament are unlikely to be as close which
would reduce the clout of a crossbencher.

In Wentworth, Kerryn Phelps was greatly helped to her 2018 byelection
win by voters anger at the treatment of the seat’s former member Malcolm
Turnbull. She was also assisted by the Liberal candidate Dave Sharma,
a former diplomat, not being a local.

By the time the election comes in May Phelps – who won by just 1850
votes – will enjoy the advantage of incumbency but have had less than
a year to establish herself as member.

In this contest there are two interesting questions. Will a sizeable
number of the locals have got over their rage about Turnbull, and
reassess their vote? And will some people, in a seat where voters like
to have a high flier, decide to switch to a candidate with prospects
of rising through the Liberal ranks in the next few years?

Some might say the Wentworth contest as one in which the voters are
spoilt for choice.

Wentworth voters reacted against the loss of a former prime minister –
in Warringah, many voters just want their ex-PM to shuffle off.
Steggall, an former Olympian (in winter sports) and a barrister, will run hard on climate change, and attack Abbott’s views in general as out of touch with his constituents. She says Warringah is conservative economically and financially but progressive socially (as shown by a 75% yes vote on same-sex marriage).

As with Indi – although in a much less developed form – there is a
community group backing Steggall – and she says she wants to give
people in Warringah “a real choice for a voice”.The Conversation

Michelle Grattan, Professorial Fellow, University of Canberra

This article is republished from The Conversation under a Creative Commons license. Read the original article.

Frydenberg warns of economic waves ahead


Michelle Grattan, University of Canberra

Treasurer Josh Frydenberg will warn that Australia must navigate difficult
economic currents in coming days, when he delivers a major speech
setting the government’s policy in a framework of “values” and “beliefs”.

Addressing the Sydney Institute on Tuesday, Frydenberg will say the
strength of the Australian economy “is not only helping us deliver
record spending on the essential services people need, but provides
the flexibility and resilience to respond to challenges as they
arise.”

As it approaches the election, the government’s economic pitch on its
record is being linked to the argument that the Coalition is the best
manager in uncertain times.

In the speech, titled “Creating opportunity and encouraging
aspiration”, extracts of which were released ahead of delivery,
Frydenberg repeats Scott Morrison’s warning that storm clouds hang
over the global economy.

“Persistent trade tensions, high global debt levels and a contraction
in growth in several key economies has changed the global outlook,”
Frydenberg says.

“The German and Japanese economies recorded negative growth in the
September quarter, while China has seen its growth slow to its lowest
rate since 2009.

“Domestically, the drought is having an impact, the housing market has
softened, there are signs that credit growth has been constrained and
the pick-up in wages growth remains gradual.

“It’s against this backdrop that our economic plan with its focus on
growth, aspiration and budget repair, takes on even greater
significance as we navigate the currents ahead.”

The speech is heavy on the key place of “values” and “beliefs” which
Frydenberg says drive the government’s economic plan.

The “values” are: “encouraging the individual and their enterprise;
upholding personal responsibility; maximising choice; supporting
families; backing small business, rewarding effort and hard work;
upholding the rule of law and ensuring a safety net which is
underpinned by a sense of decency and fairness”.

These values “go to the heart of what the Liberal and National parties
are all about,” Frydenberg says, declaring they are as relevant now as
they were in the time of Liberal founder Robert Menzies. “They are in
our DNA, they define our national purpose”.

The “values” underpin a series of “core beliefs”, which Frydenberg lists as

. That the invisible hand of capitalism delivers far more than the dead hand of socialism.

• That government is not the solution to every problem.

• That fairness is achieved through equality of
opportunity, not equality of outcomes.

• That government has no money of its own. It’s the
people’s money and every dollar of tax is a dollar less in their
pocket.

• That we should be optimistic and outward looking,
confident in the knowledge that our people are our greatest
competitive advantage.

• That communities work from the ground up, not the top down.

• That intergenerational equity requires fiscal
discipline as the next generation should not have to pick up the tab
for the last.

• That people should be encouraged to be self-reliant,
but know that if they need it, the safety net will be there.

Frydenberg accuses Labor of having class warfare at the heart of its
policies “from tax to trade to industrial relations. It’s a dark
shadow not a light on the hill.

“Labor is promising one of the most radical, aggressive and dangerous
tax and redistribution agendas Australia has ever seen – putting at
risk our prosperity and harmony and taking us back decades,” he says.The Conversation

Michelle Grattan, Professorial Fellow, University of Canberra

This article is republished from The Conversation under a Creative Commons license. Read the original article.

Frydenberg lashes out at Malaysia’s prime minister for anti-Semitism



File 20181116 194491 1os4w4n.jpg?ixlib=rb 1.1
Malaysian Prime Minister Mahathir Mohamad expressed his displeasure to Scott Morrison this week over Australia’s proposed move of its Israel embassy.
Wallace Woon/EPA

Michelle Grattan, University of Canberra

Treasurer Josh Frydenberg has launched a strong attack on Malaysian Prime Minister Mahathir Mohamad, declaring he has “form” in being anti-Semitic.

Frydenberg, who is Jewish, was responding to Mahathir’s criticism of the Morrison government for considering whether to move the Australian embassy in Israel from Tel Aviv to Jerusalem.

Mahathir said on Thursday he had pointed out to Prime Minister Scott Morrison during their meeting at the East Asia Summit in Singapore that “adding to the cause for terrorism is not going to be helpful”.

Frydenberg told a news conference that Mahathir “has called Jews hook-nosed people. He has questioned the number of people that have been killed in the Holocaust.

“He banned Schindler’s List as a movie being shown (in Malaysia), though it showed the amazing story of a righteous gentile who saved many people from persecution.”

Frydenberg made similar comments earlier in the day to ABC, saying Mahathir had “form” on making derogatory comments about Jews.

Frydenberg said Morrison was “absolutely right” to begin a process of considering where the embassy should be.

Indonesia is also highly critical of any embassy change, which was
reiterated in the talks Morrison had with Indonesian President Joko Widodo this week. The Indonesians have delayed the signing of the free-trade agreement until Australia makes a decision on the embassy.

Taking a decision on the embassy will be difficult and potentially divisive for the government. Members of the right in the Liberal Party and in the commentariat have been urging the move, but the pragmatists and many in the foreign policy establishment believe the government should stick with the status quo.

While saying that “no one is pre-empting the outcome” of the consideration, Frydenberg in effect made a case for moving from Tel Aviv.

“Australia already recognises Israel’s sovereignty over West Jerusalem. It’s where the Israeli Parliament is. It’s where the Australian ambassador presents his or her credentials. It will be the capital of Israel under any two-state solution,” he said.

“People who say ‘do not put the embassy in Jerusalem’ are making the point that we need to maintain more leverage over the negotiations between Israel and the Palestinians. The reality is that those negotiations have frozen. ”

Frydenberg said Israel was the only country in the world where Australia did not put its embassy in the nation’s capital.

He also criticised what he saw as “a double standard within parts of the United Nations and the Human Rights Council when it comes to Israel, compared with the treatment of other countries.

“The UN General Assembly has passed more anti-Israel resolutions than nearly all resolutions against other individual countries combined.”

Frydenberg said it was inevitable Australia and Indonesia would have
different views on the relationship with Israel.

“Indonesia doesn’t have diplomatic relations with Israel. Next year
Australia is enjoying 70 years of diplomatic ties with Israel. Of
course we are going to have a different view about that relationship.”

Morrison, now in Darwin to meet Japanese Prime Minister Shinzō Abe, said of Frydenberg’s remarks that he was “filling in the history of (Mahathir’s) record on various issues over time”.

Morrison repeated that Australia decided its own foreign policy, not
other countries.

The 93-year-old Mahathir, recently re-installed as Malaysia’s prime minister, was the object of criticism by then-Prime Minister Paul Keating a quarter of a century ago. When Mahathir refused to attend an APEC summit, Keating condemned him as a “recalcitrant”. Mahathir demanded an apology. The incident embittered relations between the two countries.The Conversation

Michelle Grattan, Professorial Fellow, University of Canberra

This article is republished from The Conversation under a Creative Commons license. Read the original article.

Turnbull beats Abbott over NEG, now Frydenberg has to win Victoria


Michelle Grattan, University of Canberra

Malcolm Turnbull has secured a decisive party room victory over Tony Abbott, taking the government’s signature National Energy Guarantee policy another step towards implementation.

Tuesday’s Coalition party room, in a 155-minute debate, gave strong support to the plan. But sources variously said four or five MPs – Abbott, Andrew Hastie, senator Eric Abetz, Tony Pasin and George Christensen – had reserved their right to cross the floor when the federal legislation for the emissions target comes to parliament, and others expressed doubts and criticisms.

In a statement after the meeting, Abbott said at least a dozen had expressed “serious concerns about the NEG or about turning the non-binding Paris targets into law”.

During the debate, Abbott pointedly referred to “merchant bankers’ gobbledigook”.

Tuesday’s party room mood reflected that most Coalition MPs accept that to save marginal seats and give the government, embattled in the polls, its best chance of survival, they need to unite behind Turnbull and the government’s policies.

During the meeting, several MPs told the dissidents they should reconsider their position and show cohesion.

The fate of the NEG scheme now depends crucially on the Labor states – notably Victoria – giving consent to it, and on the parliamentary numbers for the federal emissions reduction legislation.

The government is likely to need Labor support to get the emission legislation through. The legislation will be introduced this parliamentary fortnight.

Labor’s position is that it does not want this legislation debated until the states have made their decision on the NEG. When it is debated, the opposition will seek to amend it for a higher target. It has not said what it would do if, as expected, its amendment failed.

The Victorian Energy Minister, Lily D’Ambrosio, said after the Coalition party meeting: “We’ll study the Commonwealth NEG legislation thoroughly to see what concessions Malcolm Turnbull has given the climate sceptics in his party room.”

“We have said all along – we won’t let Malcolm Turnbull put our renewable energy industry and Victorian jobs at risk. We’ll continue to work through the COAG energy council to address our concerns.”

Energy minister Josh Frydenberg has a phone hook up with state ministers late Tuesday. They are set to release draft state legislation for the NEG mechanism.

But the states are not due to consider their support for the scheme again for some weeks, after failing to sign up last Friday. It is a race against time for the federal government, because Victoria goes into caretaker mode in October for the November election.




Read more:
Labor states keep the National Energy Guarantee in play but withhold agreement


With Victoria the main obstacle, Frydenberg said: “It’s time Daniel Andrews stopped walking both sides of the street and put the interests of Victorians first and the businesses of Victorians first. And he would do that by signing up to the National Energy Guarantee before he goes into caretaker mode.”

The pro-coal MPs were reassured in the party room by the government’s acceptance of the Australian Competition and Consumer Commission recommendation for the federal government to underwrite new despatchable power projects.

After the meeting, Abbott released an angry statement in response to the “rampant hostile briefing of journalists while the meeting was underway.”

“Yes, as the Prime Minister said at its close, there was party room support for the minister’s position. Much of it though, was of the ‘yes … but’ variety: congratulating him for the work he’d done in difficult circumstances and saying that the NEG was the best way through a bad situation.

“But most then added that what really mattered was actually getting prices down – not just talking about modelling – and actually getting more despatchable power into the system via ACCC recommendation 4 [on underwriting].

“Unfortunately, most explanations of how the NEG (as it stands without price targets) might theoretically get prices down sound like merchant bankers’ gobbledigook.

“It was a real pity that the meeting broke up before the chairman of the backbench committee, Craig Kelly, was able to finish his contribution.

“Yes, there were lots of pleas for unity but as one MP said, we’ve got to be loyal to our electorates and to party members too, and not show the ‘unity of lemmings’”.

“Yes, there was lots of regard for the ‘experts’ and for ‘business leaders’ but as one MP said ‘I’m not here for the technocrats’.

“I heard at least four lower house MPs formally reserve their position on the legislation and at least a dozen express serious concerns about the NEG or about turning the non-binding Paris targets into law with massive penalties attached.

“This is the big question that the party room didn’t really grapple with: when the big emitters are not meeting Paris, why should we? Especially, as even the Chief Scientist said, the difference meeting our target would make is ‘virtually nothing’”, Abbott’s statement said.

The Business Council of Australia called on “state and territory leaders to now get on with the job of implementing the National Energy Guarantee by releasing the draft legislation.

“It’s up to Victoria and Queensland, along with the other states and territories, to stop playing political games with people’s power bills.

“COAG Energy Council must stop dithering and finally act to end the decade of dysfunction that has plagued our energy sector.”

UPDATE

The ConversationIn a phone hook-up on Tuesday night the COAG energy council agreed to release an exposure draft of the National Electricity Law amendments needed to establish the mechanism for the NEG.

Michelle Grattan, Professorial Fellow, University of Canberra

This article was originally published on The Conversation. Read the original article.

Grattan on Friday: Dutton and Frydenberg struggle with the currents in shark-infested waters


Michelle Grattan, University of Canberra

Peter Dutton and Josh Frydenberg, both aged 47, are two of Malcolm Turnbull’s cabinet high flyers with dreams of eventually flying a lot higher.

Political life has been going very well for Dutton. He sits atop his mega home affairs portfolio. He’s open about his longer term leadership aspirations. But everything would crash if he lost his ultra-marginal Queensland seat of Dickson.

The 9-point drop in the LNP primary vote in adjacent Longman would have sent shivers up his spine. He already faces a massive “Ditch Dutton” GetUp campaign, in which 30,000 calls have been made so far to find out voters’ concerns, and 20 locals meet fortnightly to plan events.

Like Dutton, Frydenberg has plenty of ambition. Though he’s further down “future leader” lists, at present he has the government’s toughest policy job, trying to “land” the National Energy Guarantee (NEG).

As a key deadline looms next week, Frydenberg is surrounded by hostile forces stretching, bizarrely, across the political spectrum. Think Tony Abbott under the doona with the Victorian Andrews Labor government.

Dutton might be the tough man, the right wing ideologue, but he’s also pragmatic.

He opposed same-sex marriage, but pushed for the postal vote that delivered it. He just wanted the issue settled. So it’s unsurprising he appeared to signal this week that if the tax cuts for big business can’t be legislated in the next parliamentary sitting, they should be off the agenda.

The government needed to “negotiate in good faith” with the senators, he told the Seven Network. If that failed his advice was, “we shouldn’t give [Bill Shorten] the ammunition to try and strike back against us”.

A couple of days later, under an extraordinary barrage from 2GB’s shock jock Ray Hadley – “I hope one day you can come on the program and say what you really think” Hadley told the minister – Dutton was more constrained.

In government circles, the big business tax cuts have gone from being vital for Australian competitiveness to a serious political handicap that many in the Coalition are becoming desperate to be rid of.

As Treasurer Scott Morrison put it: “There are two issues here. It’s the right economic policy. The politics is a separate issue.” Indeed.

The trouble is, how does the government rationalise their ditching, after all ministers have said? How to recast the jobs and growth story? How to explain wilting under pressure, to the business community and to international investors, given Australia has a high corporate rate among OECD countries?

And will voters, already distrustful, be cynical? Will a backflip solve the problem with them?




Read more:
VIDEO: Michelle Grattan on the government’s uphill battle with company tax cuts and the NEG


The leading “true believer” on business tax policy is Finance Minister Mathias Cormann, who in the wake of the byelections continues to ring and text the crossbench. One crossbench staffer likens Cormann to the child begging for an ice cream – he’s constantly tugging at the senators’ sleeves.

The government may end up willing to compromise, by excluding the giant companies from the cut – that is the banks, which have become the bogeymen, although other companies would be caught. But if it did that, winning support from, for example, Victorian crossbencher Derryn Hinch, it could lose Liberal Democrat David Leyonhjelm.

Meanwhile, the media are like sleeve-tugging kids too, pursuing ministers with awkward questions about the policy’s future. Yet with parliament not meeting until the week after next, this hiatus will continue a while.

More immediately, the government is on edge over the NEG. The federal, state and territories’ Council of Australian Governments energy council meets on Friday of next week to agree to the details of the mechanism – or not. If it did, the federal legislation for emissions reductions would be put to the Coalition party room the following Tuesday. After that, if all went well, the COAG energy council would give the final tick off.

Last minute obstacles loom, although whether they will be serious, even disastrous, or just inconvenient remains to be seen.

This week Victorian energy minister Lily D’Ambrosio declared her state wouldn’t “rush into” signing up to the NEG, and questioned the federal Coalition party room’s support.




Read more:
Victorian minister plays hardball with Turnbull on the NEG


The government desperately needs the NEG and the associated narrative on power prices settled for next year’s election, but a more immediate election is intruding.

The Andrews government, facing the people in November, is under immense pressure from GetUp and the environment lobby not to sign up next week. GetUp has had ads running in Victoria and Queensland against Turnbull’s “dirty power plan”; Victorian ministers and backbenchers will receive a barrage of calls, with state cabinet meeting on Monday.

Now the Labor governments in Victoria, Queensland and the ACT are set to ratchet up demands to make the NEG plan “greener” – which would run right into the Abbott naysayers in the federal Coalition party room.

The Labor jurisdictions might agree to progress the NEG but make endorsing the needed state legislation contingent on their demands being met.

The hit Turnbull has taken to his authority from Super Saturday emboldens Abbott and his allies. As soon as modelling for the NEG was released on Wednesday Abbott slammed it. “Pigs might fly”, he said to the suggestion the scheme would bring down prices. “This is just wrong, it’s completely implausible, it’s utterly incredible”.

The NEG “still needs an enormous amount of work,” he declared.

From the government’s point of view, the fate of the NEG is more important than that of the company tax cuts. As Dutton said on Thursday, “energy is the most important issue at the moment”.

If the big business tax cuts have to be jettisoned, that will dent the government’s economic credibility; the policy’s supporters will say it would have consequences for investment (Labor would dispute this).

But if the NEG is stymied, the investment consequences would be major because there is no suggestion the government has a fallback plan.

If Turnbull were hit with a double whammy – having to abandon the company tax cuts and unable to get the NEG – that would be a serious policy flunk.

The ConversationThe next few weeks will test whether Frydenberg can gain that moniker Christopher Pyne claimed but couldn’t grasp – “the fixer”.

Michelle Grattan, Professorial Fellow, University of Canberra

This article was originally published on The Conversation. Read the original article.