The Federal Budget 2017- Two Views

Sharri Markson is National Political Editor for The Daily Telegraph. Prior to this, Markson became media editor of The Australian in February 2014 where she was noted for her “aggressive pursuit of stories involving the ABC and Fairfax Media”. With a growing background of electoral backlash against wealth and the gap between haves and have-nots, the Coalition Budget for 2017 has been heralded as a Labor-lite mix of taxes and spending. On Monday 22 May 2017, Sharri Markson joined BuzzFeed’s Mark Di Stefano to give her take on what the budget means for Australia and the government.

 

THE FEDERAL BUDGET 2017 – TWO VIEWS

 SHARRI MARKSON

Among my family and friends, I’m famously terrible at managing my own household budget. I only remember to check my post box to look for a bill when I can’t work out why my electricity has been cut off.  And yet, here I am analysing the federal budget as political editor for The Daily Telegraph. Still, I guess, Paul Keating was late filing his tax return twice. Not to mention Michael Cranston…

Truly, I’m delighted this evening to have the privilege of speaking about one of the things I love most in the world – politics.

I first started reporting on federal politics a decade ago, when I moved to the press gallery for The Sunday Telegraph at the end of the Howard era – our last stable period in recent political history. Since then, I’ve held several roles, but was always drawn back to federal politics. Even while editing Cleo magazine – more focused on gender politics than Canberra politics – I’d leave the glossy world of fashion to go down to a city pub and catch up for a beer with a federal MP.

The federal budget may seem dry to most people – although we had a bit of fun with it in our paper, dressing the treasurer up in a white suit with no shoes and having him in a garden of unicorn and fairies. But for those who cover politics, the day it’s handed down is the single most thrilling day of the year. I’m sad it’s over already.

Sitting down in the lock up, and taking out the hefty pile of budget papers and quickly, desperately, turning to Table One, Book One, to discover the size of the surplus and the depth of the deficit – it’s heart-racing stuff. Seriously.

It’s been two weeks since the budget was handed down. Its sell is underway. Its reaction slowly being gauged. If you ask ScoMo to describe this year’s budget, he’d say it was pragmatic. If you ask Turnbull, he may call it the budget we had to have. If you ask Credlin, she’d say Labor Lite. The banks, they’d say it’s f—, oh, wait, I can’t repeat that in public.

The budget has been roundly characterised as a Labor budget the coalition had to have to avoid electoral defeat. While, the situation is far more complex than that, it is true the path the government has taken to budget surplus is through raising taxes, not cutting them.

You can understand why Morrison and Turnbull went down this path. Political chaos and stalemates in the senate meant the government – elected with a mandate – had been unable to implement their agenda. Like Abbott before him, Turnbull won the election, but this doesn’t matter so much in politics these days. What most of you in the room will know is that this is relatively new in Australian politics, with the major exception of the 1975 dismissal. Yet, despite winning the election, Turnbull’s reform agenda had been blocked or diluted at every path, held hostage either by Labor, the cross-bench or detractors in his own party.

Federal politicians were accused of living in a bubble, seemingly unaware of how this infighting and squabbling was alienating voters. Turnbull could not afford another year of this cycle. Even Abbott understood that, and said as much on radio last week. Turnbull was struggling for authority, not only in his own party, but in the parliament. He needed to reset the agenda and seize parliamentary control with a budget that could win the support of the senate. That could actually have a chance of passing.

However, the question Liberal ministers, and supporters, have been left with is this:

What does the Liberal party stand for under Turnbull? What are its central tenets? And how much of Liberal ideology should the party give up for the end-game of winning. Of staying in power.

This is how I see it. Two waves of thinking are shaping our country at the moment.

On the one hand, fiscal profligacy is the order of the day – no matter how big the deficit might be, there’s no appetite for spending restraint. On the other, you have a rising tide of what can broadly be called social conservatism. This manifests itself in populism, nationalism and protectionism. Both forces are shaping the government’s direction. Both forces shaped the government’s budget.

It’s said voters get the government they deserve. Well, in this case, they also got the budget they deserve. Which brings us to this budget, which is about embracing a social conservativism at home while putting up walls to the forces of globalisation abroad. A growing sense that we are all either haves or have-nots is infecting our politics at every level – including the budget. This means there’s a lurch towards nationalism – occurring at this most globalised moment in world history. This reflects itself in many ways. There’s concern about immigration levels.

And not just about refugees, but legitimate migrants, increasingly blamed for high house prices and congestion in our suburbs. Thus even skilled workers are in the frame with the abolition of 457 visas – a visa program that has allowed Australia’s start-up sector to thrive, to even exist, as new companies

rely on skilled programmers from overseas. Businesses – from small restaurants in tourist areas to complex start-ups – are tearing their hair out over the reforms.

There’s protectionism. There’s always been a protectionist edge to Australia – one of the so-called Five Pillars of the Australian settlement – and it was only relatively recently that this began to be unwound in earnest. But an increasing number of voices, in major and minor parties, are asking whether free trade is all its cracked up to be, spreading the suspicion that the benefits of free trade are unevenly spread.

Ironically, it is Labor, which in the 1980s began the process of unwinding protectionism, that is now sounding the alarm bells most loudly. Recall Bill Shorten’s widely panned television commercial talking about Australia first and only Australians. The divide, the conflict between the haves and have-nots, has intensified and, lest One nation pick up steam by focusing on the regions, the government has had to accommodate them.

Trump seized on this rust-belt sentiment successfully. Hanson is having some success in Australia and the fact she’s not having greater success is not because people in regional Australia do not feel marginalised, it’s because of her personal political failings. The disconnect between the inner city world and the suburbs and regions is strong. In the suburbs, people have ambitions for their children, there’s frustration when people rort the system and when their taxes are wasted. Times are tough.

Which brings us to the second attitude prevailing in Australia which is leading to fiscal profligacy and economic bloating, that’s shaping our country, and has influenced the federal budget. Mia Freedman in her new book Work Strife Balance writes about how people these days don’t like women who are successful and, to be liked, you need to speak about your vulnerabilities and flaws. True to form, Freedman has opened up about her parenting flaws, her marriage difficulties early on, her anxiety and even shares photographs on social media of what she calls her confronting stomach. Yet, she rarely talks about her incredible achievements, including the international company she’s built, lest she is accused of being ambitious.

The sentiment she has tuned into in women and mother’s groups, is actually a national phenomena, not just a female thing. Success is not celebrated. Aspiration has been replaced by derision. In Australia today, there is a strong animosity towards the wealthy and successful.

Voters hold onto a view that if you’ve accumulated wealth, you have cheated the system and should share your wealth with the rest of Australia. Economic redistribution has long been a Labor tenet, and tall poppy syndrome is common in Australia, but now these notions are cultivated by our political leaders on both sides. They have been encouraged to flourish.

This attitude strongly shapes federal government policy and certainly politics. The wealthy are punished by income and company tax rates that are among the highest in the world. In response to Shorten’s demand that the two per cent temporary deficit tax levy be kept on high-income earners, along with the Medicare levy increase, Keating said it would mean the proposed top marginal rate of 49.5 per cent would result in the state confiscating almost half of people’s income over $180k.

Think of the tone with which Bill Shorten spat out the words “millionaires” in his budget reply speech. It was with the same disgust as if they were criminals, not people who may be contributing greatly to our country. That’s how low Australia has sunk; it’s now popular for a politician to denigrate those who dare to succeed and dare to save.

This populism brings with it the real concern that Australia will become a country of massive mediocrity, rather than attracting world leaders in science, technology, start-ups or medicine. If business leaders and wealth generators and brilliant minds have chosen to live in Australia, it’s not because of our tax policy or approach to cultivating investment and business – it’s because of our nation’s lifestyle, safety, incredible beauty and weather. And even today when mining magnate Twiggy Forrest gave away $400 million, an ABC broadcaster said he should have kept his donation secret.

We’re oblivious to the fact we’re at risk of becoming an unproductive country defined by a population who have a sense of entitlement. Work-life balance is seen as a right. Welfare is seen as a right, even if you’re not one of the community’s most vulnerable. Ironically, for all the social conservativism I mentioned before, we are economically turning increasingly socialist.

The budget papers show this year’s revenue is $444.4 billion. Our expenses are $464.3 billion. The amount spent on social security and welfare is $164.1 billion – that’s more than the money spent on health, education and defence combined! Australians don’t think they should pay in full for their own doctors’ bills, education, medicine or transport. They even now think the government should help them get into the housing market! The ethos of hard-work is slowly being replaced by a sense that employers owe you something.

Aussies believe the music should never stop and they don’t need to contribute in any way to community. This sentiment is only getting worse through the selfie-generation and their fickle attitude towards jobs and inability to save and be frugal and understated. There are now generations – including mine – who have never experienced economic depression or recession, have never lived through difficult times. All they know are low interest rates, high employment, strong economic growth conditions of the  mining boom. They are unaware of the great threat if the economy is not managed properly. There’s a part of the population who live on debt – and they don’t have a problem with the country’s debt ceiling rising either.

This attitude is obvious when you speak to Christian Porter or Alan Tudge about our exploding welfare sector. They recently applied a new system to compare tax returns with what people claimed their salary was when they applied for welfare. This would seem sensible, but oh the uproar. Linda Burney referred Tudge to the AFP – the police! – for correcting the erroneous claims being published in the Fairfax press, who were defending those framing the system by claiming they only received $5000 salary when it fact it was $100,000. Fairfax and Labor were defending welfare frauds.

Some politicians quietly believe this self-entitlement could see Australia on the same trajectory as Europe, just 20 or 30 years behind. Voters want governments to spend more, and when the message comes back that the country cannot afford it, the answer is, if only Google or Facebook paid greater tax. This sentiment has shaped the government’s budget, and it’s certainly shaped Labor’s messaging as well. The Coalition’s budget was popular. It didn’t dare hurt any sector. Apart from the Medicare Levy rise, which it figured Labor couldn’t campaign against because it was Labor policy from the Gillard 2013 era, its taxes were aimed at big banks, multi-nationals and foreigners.

A Coalition team who campaigned on “no new taxes” wouldn’t have believed just a few years later they’d be introducing a budget with $22 billion of new taxes. But the Coalition has learnt the hard way that Australians today have little acceptance for spending cuts. They won’t accept any argument for belt-tightening. The Coalition was forced to abandon its goal of spending restraint or face electoral defeat. There was little else to do but raise taxes – a proposition that goes against the very core of economic conservatives.

The government’s new-wave of policies since the election reflect this dual wave of thinking in Australia right now. Economic hard-heads in the party are despairing over the fact debt is not being tackled more aggressively in the budget. Critics have argued that if the Coalition gives in to Labor and adopts all their policies, what’s the point in being in power? Are the days of spending restraint over? Will any political party ever have the strength of numbers, the overwhelming mandate to make tough decisions and claw back spending?

Ministers I’ve spoken to ask how they can honesty tell their electorate the Coalition is about smaller government when their policy setting are the precise opposite. Ministers are pondering deep questions about whether they’d rather stay in government, unable to implement their true agenda, or lose government filled with conviction that they stayed true to what they believe in.

The battle this government is having is not that it’s handed down an ill-considered budget but with people on the right of economics, who would rather a pure form of liberal economic management. The truth is the treasurer has been left with no real other option. Sick of trailing Labor in Newspoll, sick of being derided in the media, fearful of not winning the next election, the Turnbull Government has handed down a budget the electorate want. He also needed to pacify Shorten, who was claiming to own the fairness ground. The government was unfair, mean and tricky – a repeat of Labor’s messaging from 2001.

The Liberal Party actually undertook $250,000 of Crosby Textor research prior to the budget, to ensure its budget was aligned with what Australians expect of their government. What responsibility do political leaders have between pandering to what the electorate wants, or helping them move toward a new way of thinking? Should leaders try to change a society, to convince them of the need for budget repair? Joe Hockey went down this path, but between giving his key Age of Entitlement Speech overseas and dropping it to the under-read SMH, his message was lost.

Australians are less concerned about big government and debt – and yet the government is being judged on trying to balance the budget. It’s a tough situation to be in. The question, is this year’s budget a success, will be measured on two fronts. Firstly, its reception among Australians. And, secondly and most crucially, whether it is passed. The measure of success has to be whether the budget passes the Senate, otherwise there is little point of a budget at all – it’s simply a fantasy document. And this is yet to be determined.

While the budget does raise the concerns over what it stands for, the fact of the matter is if you want to be successful in politics, you have to be pragmatic. Menzies was very pragmatic. The key to successful government, whichever party, is you have to be pragmatic and not get too far ahead of the population.

Politicians can try coerce the public to accept a position, but they can’t jump ahead of them or they will lose the population entirely. It’s a lesson Turnbull has learned and can be seen in spades in the 2017 Federal Budget.