The battle for trust begins – Round 1: the budget

Having received a refreshed double dissolution trigger from the Senate last week, the Turnbull Government has a mere two months to reassert the Coalition’s traditional economic superiority over the Labor Opposition.

This is necessary if the Government is to be re-elected on July 2. Economic management is one of the top issues that voters say influences who they choose to support on polling day.

However, that’s not to say it’s the only electorally influential issue – health, jobs, a fair tax system, housing affordability and education are also high on the list.

When Malcolm Turnbull became Prime Minister a bit over six months ago, he technically had up to a year to sell voters his vision and plan for Australia before having to face the polls at a traditional election towards the end of this year. In choosing to flush out the Senate with a double dissolution election, the PM shortened that timeframe by several crucial months. July 2 was one of the latest dates by which the DD election could be called.

The tighter timeframe might not have been an issue if Turnbull had not squandered much of the period by leaving policy options “on the table” only to rule them out later. Such was the fate of a mooted GST increase, income tax powers for the states and most recently cuts to negative gearing.

The PM might argue that such kite flying is part of having a grown up policy discussion with voters, and necessarily involves keeping options open until one is chosen.

However the traditional, and considerably more tidy process for floating policy options – a green paper to elicit community views and a white paper to detail the final Government position – was jettisoned by Turnbull and Treasurer Scott Morrison soon after they took on their new roles.

Accordingly, voters might see the PM as having a vision for Australia – even if it’s only a vague notion of it being something about innovation and there never having been a more exciting time – but may still have little or no idea what his Government stands for beyond that.

The Opposition has wasted no time filling any such perception vacuum, bombarding voters with the message that Turnbull is a willing human shield, deliberately positioned between possibly corrupt corporates and Labor’s efforts to make the top end of town pay more.

Its call for a royal commission into the banking sector is part of that strategy, even requiring a neat backflip on the party’s previous opposition to holding such an inquiry.

It’s no surprise then that even though voters perceive the Government and Opposition as being quite similar on a range of attributes, the two are considered to be worlds apart when it comes to being too close to big business (Coalition 27 percentage points ahead of Labor) and looking out for the interests of working people (Labor 19 points ahead of the Coalition).

The net result of the PM’s policy meanderings combined with Labor’s tar and feather campaign is that next week’s budget has been set an impossible task.

Perceived competence will undoubtedly weigh heavily on voters’ minds when they make their selection on polling day. However, that attribute will also be assessed against perceptions of fairness.

Firstly, the budget must be economically responsible enough to satisfy the financial markets and economics writers, whose endorsement will be taken by voters as confirmation of the new Government’s economic credentials.

But as we learned with the Abbott government’s first budget in 2014, this year’s economic statement must also be seen to be fair. Meeting this expectation is far more challenging than retaining an AAA rating because the measure of fairness is entirely in the eye of the beholder. Labor has managed to compound this difficulty by creating the perception that any such measure must include “making the wealthy pay more”.

Turnbull’s rookie Treasurer, Scott Morrison, has been charged with the tricky task of navigating this minefield, although he is ably assisted by a number of wise heads, such as the former Costello staffers in his office including Phil Gaetjens, who was also the head of treasury in NSW for four years.

However, the bulk of the budget sales task will fall to Morrison, as it does to every Treasurer, and will be the most challenging test yet of his political salesmanship skills.

It will be crucially important for the Treasurer to engender trust in as many voters as he can during the eight-week period between the budget and the election. Voters need to be confident that he knows what he’s doing and has the interests of all Australians at heart.

That’s why Morrison’s recent deviation into social commentary was a potential misstep for a fledgling Treasurer. Addressing the National Conference of the highly conservative Australia Christian Lobby on the weekend, the Treasurer argued that families must be “strong and functional” for “order in our society and the stability required for a productive and prosperous economy”.

But then he took a step beyond, claiming “all of this is put at risk” when families “fall apart and become dysfunctional”. The homily ended with a list of the “long-lasting negative impacts of divorce,” especially for women.

Voters from non-traditional families are unlikely to feel confident that a Treasurer with such an apparently binary view (marriage good/divorce bad) can produce a budget that is fair for all, regardless of one’s marital status.

Indulgences such as Morrison’s weekend speech also make the re-election task more difficult for the Prime Minister. Having unearthed the “who do you trust” meme from the 2004 federal election campaign, Turnbull would not welcome his Treasurer complicating that decision for voters.

The PM’s apparent preference is for the election to be a simple choice between him and Labor Leader Bill Shorten; a choice recently described by Deputy PM Barnaby Joyce as “between someone who has actually made a quid in their life, made a success in their life, which is Malcolm Turnbull, or the nation being run by Bill Shorten.”

Perceived competence will undoubtedly weigh heavily on voters’ minds when they make their selection on polling day. However, that attribute will also be assessed against perceptions of fairness.

Not only will next week’s budget be expected to strike a balance between the two, so will the entire election campaign. Accordingly, the leader who proves the best at juggling these often conflicting expectations will take his party to almost certain electoral victory on July 2.

Parliament returns, but has the plan turned against Turnbull?

Against the background of two unfavourable opinion polls, Prime Minister Malcolm Turnbull will today launch his crazy brave strategy aimed at forcing the Senate crossbench to approve contentious industrial relations reforms or risk obliteration at a double dissolution election on July 2.

The latest Newspoll shows no improvement in the Government’s primary vote over the past fortnight, while the monthly Ipsos poll echoes the decline observed by the more frequent opinion polls over the same period.

Accordingly, Newspoll continues to put Labor ahead at 51-49 per cent after the hypothetical allocation of preferences, while Ipsos places the two at 50-50 for the first time since Turnbull replaced Tony Abbott as prime minister.

Even without such a reminder of having failed to meet voter expectations, the PM would be well aware that this week’s manoeuvres are a high-risk strategy.

Having prevailed on the Governor-General to “summon” the Parliament to resume during its scheduled break, at no little expense to the taxpayer, Turnbull will be expected to justify the move.

The onus is on the PM to demonstrate how the IR bills in question are so important, and the Senate so obdurate, that he is warranted in sending the country to the ballot box to resolve the deadlock.

In the first instance, Turnbull will point to the findings of the royal commission into union governance and corruption, noting the need to fight the union “culture of lawlessness” in the construction industry.

Regrettably for the PM, the edge has been taken off that argument as growing evidence of corporate bad behaviour, particularly in the banking sector, points to a similar culture in the business sector where some organisations and individuals appear to think they are above the law.

In the retail business that is politics, voters will respond more strongly to issues for which they feel a direct connection. Given the testy relationship many people – or their family or friends – have with the banks, it’s hardly surprising that today’s Ipsos poll found 65 per cent of voters support the idea of a royal commission into “the behaviour of Australian banks”.

It would be fair to say that fewer voters have experienced bad union behaviour, and a smaller number would therefore see the need to clean up unions as a pressing issue.

That also appears to be borne out in the polls. While there’s no equivalent opinion poll on the trade union royal commission, the Essential poll found in October last year that 42 per cent of respondents believed the TURC was a legitimate investigation of union practices. And just last week Essential found 35 per cent of respondents supported the re-establishment of the Australian Building and Construction Commission, the ostensible reason for Parliament being recalled, while 16 per cent were opposed.

So while there’s a solid foundation of public support for the ABCC, clearly it’s more popular to bash the banks (or “big business”) than it is to bash the unions.

Populist politicians have fallen over themselves and each other in the rush to offer the truckies a sympathetic ear, usually through a megaphone, and in front of the media.

That’s why the emergence of the Road Safety Remuneration Tribunal as an issue is a godsend for the Prime Minister.

Just over a week ago, the Federal Court dismissed an attempt by business lobby groups, the National Road Transport Association and the Australian Industry Group, to stop the imposition of minimum pay rates for about 35,000 truck owner-drivers.

The RSRT was established by Bill Shorten as Workplace Relations Minister in 2012 to promote safety in the road transport industry by setting minimum safe rates for employee and owner-drivers. The link between truck driver remuneration and safety was made by the National Transport Commission in 2008.

Unsurprisingly, Labor and the Transport Workers Union support the new minimum pay rates. However owner-drivers are enraged by them, claiming the increase will send them to the wall.

Populist politicians have fallen over themselves and each other in the rush to offer the truckies a sympathetic ear, usually through a megaphone, and in front of the media.

Having seen the opportunity to portray embattled small business operators as being bullied by the union movement, the Prime Minister and his Workplace Relations Minister, Michaelia Cash, have also made every effort to inflame the public stoush.

Not long after the Federal Court decision, the PM vowed to scrap the RSRT, saying it was designed by Bill Shorten “to advantage the Transport Workers Union” and that it did not do anything effective on safety. Instead, the PM claimed, the tribunal “undermines owner operators … small business [and] family businesses.”

The legislative agenda for this week’s parliamentary sitting, which was wiped clean to clear the way for the industrial relations bills, now includes two additional bills – one to delay the proposed new pay rate, and another to scrap the RSRT altogether.

And then last weekend Turnbull and Cash stood proudly before a convoy of protesting truckies who’d travelled to Canberra to converge on the lawns outside Parliament, to decry Bill Shorten and the TWU for putting “these families out of business” and sending “their mortgages into default”.

The PM told the rally that Shorten would not back down on the RSRT even if he wanted to, because “he is always doing the bidding of the big unions” and that the tribunal was only ever a “recruiting effort for the Transport Workers Union”.

He also cast doubt over the link between pay rates and transport safety, calling the connection “spurious”.

The RSRT debate might appear to be about safe rates of pay for truck owner-drivers, but in reality it is about Turnbull’s hope to become a popular champion for small business against the unions.

By buying into the issue, the PM has admitted that corporate malfeasance has blunted his attack on union corruption, thereby casting a shadow over the legitimacy of his rush to a double dissolution election.

Turnbull might have to ditch the double dissolution

Over the Christmas break Prime Minister Malcolm Turnbull reportedly war-gamed the political year to come, with “all options” apparently considered.

This anecdote was relayed last month to indicate the amount of pre-planning that went into the PM’s audacious strategy to outwit the Senate, involving the Governor-General recalling Parliament to establish the justification for going to a double dissolution election.

But to what extent did Turnbull’s scenario planning really canvass all the options? Did the prime ministerial ego permit consideration of sub-optimal situations such as that in which Turnbull currently finds himself? And if so, did he leave himself options beyond going to a double D?

The most easily foreseen factor in Turnbull’s scenario planning would have been the subsidence of the PM’s popularity rating to that of mere mortals. Turnbull may have hoped his stellar run in the opinion polls would be sustained until closer to the election, but he would have been a fool not to expect it to fall at all.

However, could Turnbull have anticipated that, a bare six months after taking on the top job, Labor would be back in contention for the upcoming election? This is the trend being suggested by the swarm of opinion polls now being covered by Australia’s political media.

It may have also been relatively easy for Turnbull to predict he would remain ahead of Labor Leader Bill Shorten in the opinion polls as preferred PM. But did the PM credit the Opposition with being able to keep its nerve in the face of his initially stratospheric popularity, hanging on to its less than inspiring leader in the name of party unity?

According to one media report on the weekend, such a change was barely averted last month when a “contingency plan” to change Labor leaders was shelved in light of Turnbull’s ongoing poor form.

Similarly, would Turnbull have anticipated that voters would tire quickly of his “float and drop” approach to policy consideration, where options are raised without warning for public “discussion” only to be summarily discarded once they become too challenging to defend?

As a result, there may be a growing perception that the PM only waffles and dithers. In contrast, Shorten has appeared to become increasingly sure-footed, aided by a more streamlined appearance (yes, looks are important in politics), improved elocution, sharpened lines and a modest collection of populist policies that have so far evaded any serious scrutiny from the media or Government.

In addition to the foreseen developments are the ones that were less likely to be anticipated, such as the release of the Panama Papers and the exposure of shady behaviour by Australian corporates.

Combined with the revelations of the Liberal Party’s dodgy fundraising practices and the indulgent, self-destructive behaviour of Government MPs, these events have – rightly or wrongly – framed the Prime Minister as the protector of corporate crooks and the leader of a parliamentary wing made up of spoilt and entitled brats.

If the PM has truly considered all the options, doing a deal with the Senate crossbench on the ABCC and skipping the DD should definitely be on the table.

Given these circumstances, would it be a mistake for the PM to go to a DD election even if the Senate gives him the trigger? Analysis by the ABC’s psephologist, Antony Green, has projected the new Senate voting rules paired with the halved Senate quota at a DD would clean out some of the micro party MPs who currently sit on the crossbench. Others with a higher public profile may survive.

But if Labor continues to close in on the Coalition there is also a greater chance of a hung parliament occurring in the House of Representatives. As a result, Turnbull may well end up swapping one crossbench for another, or even ending up with two.

If Turnbull didn’t war-game this scenario over Christmas, he certainly should be doing so now.

It is not impossible to navigate legislation through the Parliament’s two chambers when the Government has only a minority in each – as the Gillard Government showed – but the dual minority status does make it difficult for the Government to argue that it has any mandate for reforms that it took to the previous election.

Consequently, there is yet another scenario the PM should be war-gaming right now. Turnbull has said he’d rather the Senate passed the Government’s legislation to re-establish the Australian Building and Construction Commission, thereby avoiding the need for a DD election.

Several of the crossbench Senators have demanded the ABCC bills be amended to transform the proposed regulator into a federal ICAC, which is an entirely different beast. But by committing to a Senate inquiry into the establishment of a federal ICAC (which, incidentally, Labor does not support) Turnbull could possibly win the six crossbench votes needed to pass the ABCC bills.

This would also give the PM a plausible justification for passing up the chance to go to a DD, and secure up to five months more time for the Government to re-establish its favourability with voters before heading to a normal election.

In fact, a media report last month suggested the Liberal Party’s pollster, Mark Textor, advised the PM to forgo the early election and avoid calling an election altogether unless his approval rating was trending up again.

Wriggle room of this kind may be even more important if the federal budget is not received particularly well by the voters.

Granted, forgoing the DD means the Government will be saddled with a feisty and cranky Senate crossbench for another three years, but some of the alternatives – a hung parliament, no mandate, or even an election loss – are palpably less attractive.

If the PM has truly considered all the options, doing a deal with the Senate crossbench on the ABCC and skipping the DD should definitely be on the table. It would be the “float and drop” to surpass all others, but perhaps the key to the Turnbull Government’s survival.

Turnbull’s crazy-brave strategy on health, education

Whether or not the Prime Minister intended it to be the outcome of his income tax folly with the states last week, Malcolm Turnbull now appears to be using the premiers’ refusal to raise their own taxes to turn Labor’s greatest strength into a liability.

Education, health, jobs and the economy are traditionally the principal issues that influence the way people vote. Labor is considered to be superior on schools and hospitals, while the Coalition has the edge when it comes to economic management.

This latter point is borne out by last month’s Ipsos poll, in which 43 per cent of respondents thought the Coalition had the best policies for managing the economy, while only 25 per cent nominated Labor.

However, in a worrying sign for the Government, health appears to have eclipsed economic management for the first time as one of the three most important issues voters said would influence the way they vote at a federal election.

According to an Essential Poll taken last month, 43 per cent of respondents said “ensuring the quality of Australia’s health system” would decide their vote, while 37 per cent said “management of the economy” would influence theirs.

This means the Government has to sharpen its sales pitch on health and hospitals, or blunt that of the Opposition.

Opinions vary as to whether the PM genuinely offered state and territory governments the chance to levy their own income tax at the COAG meeting on Friday.

Turnbull certainly made the most of their subsequent refusal, telling journalists on the weekend the states had no credibility because they knocked back the opportunity and that “if they’re not prepared to make the case to their citizens through their parliament for higher taxes, they cannot seriously or credibly ask us to raise taxes to give money for them to spend”.

According to the PM, “if the states are not prepared to take responsibility for raising more of the money they spend, then what that means is we must live within our means.”

These comments are an attempt by the PM to drag the goalposts from one field to another, recasting health and education spending as a measure of good economic management.

In case we missed this point, the PM emphasised it on the weekend, claiming the states’ actions provided a “great and revealing moment of clarity” that exposed the Gillard government’s commitment to provide $80 billion in future funding for health and education as a “fantasy” because the budget deficit proved “the money was never there”.

Turnbull’s approach is therefore not only an effort to shrug off Labor’s claim that the Government’s refusal to commit to the $80 billion expenditure is a material cut in health and education spending, but also to paint the Opposition’s recommitment to the measure as economic vandalism.

The tactic comes straight from the playbook of one K. Rudd who managed to turn years of well-received government handouts against PM John Howard by declaring at Labor’s 2007 election campaign launch that “this reckless spending must stop!”

It was counterintuitive if not risky for a leader from the party of Gough Whitlam to denounce excessive government spending, but Rudd’s admonition struck a chord with the public in a way that ultimately turned the tables on Howard.

Of course, parsimony was only a passing phase for Rudd, who went on to embrace Howard’s spendthrift ways in an effort to fend off the global finance crisis.

And it is likely Rudd lifted the idea from Howard, who audaciously campaigned against Labor’s Mark Latham with the counterintuitive “who do you trust?” on economic management despite having taken on water in the children overboard affair.

Now Turnbull is trying this crazy-brave approach. If the PM can successfully neutralise Labor’s natural advantage on health and education he can potentially reduce voter’s election choice to “who is best placed to pay for their promises without hurting me or the economy?”

Then it will come down to the Coalition’s spending cuts versus Labor’s higher taxes.

The premiers’ decision last week plays into that dynamic, allowing the PM to emphasise his Government’s belief that the federal tax burden is already high and its unwillingness to increase its net tax take.

Turnbull told the media after the COAG meeting on Friday: “We are determined to … use the resources we have more efficiently. And we believe all levels of Government can do that… The focus should be on outcomes, not … harking back to unfunded promises that were made years ago.”

The PM further developed the point yesterday, fending off a question about Tony Abbott’s behaviour to emphasise that voters would choose between himself and Bill Shorten on polling day.

“The choice is between a government which has an economic plan for growth, for investment, for innovation, for greater productivity, stronger competition for open markets, for better jobs,” Turnbull said.

The alternative, according to the PM, was a “Labor Party that wants to defend the shocking industrial lawlessness in the construction sector … increase taxes on investment … stand in the path of entrepreneurship and … run up more and more debt to fund $50 billion of unfunded promises.”

This is an oddly conventional line for an unconventional plan of attack. And it will fail if voters decide they want quality health and education systems, regardless of the cost.