1 week Ago By David Crowe
Jim Chalmers knew exactly what he wanted from Angus Taylor when they faced each other in a debate this week: an answer without a cast-iron pledge on the level of federal spending. So the treasurer used the Sky News debate to challenge his opposite number about the Coalition’s vow at the 2013 election that there would be no cuts to health or education. This was an easy question for Chalmers when the pledge from Tony Abbott, as Liberal leader on the night before polling day, is remembered as the biggest broken promise from that era.
Taylor was ready for it, but not ready enough. Illustration by Simon Letch Credit: Chalmers asked Taylor to repeat the same pledge: no cuts to health or education. Taylor replied by insisting all the Coalition cuts would be in other areas.
He said this would be done by law: “We will bring a bill into the parliament to guarantee spending on essential services, including health and education, because they are essential services for Australians.” But there was a gap in the guarantee and Chalmers exploited it quickly. Taylor avoided a simple statement that there would be no cuts.
By the next morning, the Labor campaign team were sending the video of this moment across social media to raise fears about the Coalition hacking into hospitals and schools. Taylor had a chance to throw Chalmers on the defensive as well. He asked the treasurer to apologise to voters for failing to deliver the $275 cut to power bills Labor promised three years ago.
Chalmers dodged, as he and Anthony Albanese have always done. But this would not have surprised voters after years of dispute about the claim. Taylor’s answer, on the other hand, provided fuel for a Labor scare that will grow more ferocious every day.
This is central to the campaign because all modern elections turn, sooner or later, on the spending promises and budget policies on either side. In fact, the fiscal argument has even more power this year because of the way Donald Trump hangs over the election. The United States president is everywhere as an agent of chaos in the global economy.
The debate between Jim Chalmers and Angus Taylor was dominated by a man who wasn’t there – Donald Trump. Credit: Sky News At heart, the argument about the budget is about who can build a higher wall and deeper moat against that chaos. Trump’s 10 per cent tariff on Australia is a minor threat compared to the havoc from a global downturn, or even recession.
Who is best to defend the country against that economic shock? So far, Taylor and his colleagues are yet to gain the advantage. They claim they can run a better budget but are incredibly slow to offer any evidence. Happy to keep complaining about Labor, they chose not to reveal many of their own ideas apart from their nuclear energy plan.
Now they try to fatten the pig on market day. Peter Dutton has been more prudent than Anthony Albanese on budget policy with one measure. The opposition leader countered the prime minister in budget week by offering a $6 billion cut in fuel excise in response to the $17.
4 billion personal income tax cut from Labor. The Coalition should be able to produce a better bottom line in its election costings. At the same time, however, Dutton repeatedly says he would consider extending the excise relief.
He could throw fiscal rectitude out the window after victory. The truth is that Dutton and Taylor have no convincing argument, at this stage of the campaign, about their capacity to build a stronger budget and a more resilient economy. Their pitch on Thursday, for instance, was about directing “windfall” revenue gains into a Future Generations Fund and a Regional Australia Future Fund.
The two funds would receive 80 per cent of any gains in tax receipts above expectations – for instance, if iron ore prices are higher than the official forecasts (which is usually the case). The weakness in this plan is obvious. The promise is to use the funds for several purposes – reducing debt, building infrastructure and creating jobs in the regions.
So how much, exactly, would be used to cut debt? That will be up to the politicians. The idea looks like a way to replace Labor spending programs with Liberal and Nationals ones. A genuine pledge would be to make sure revenue gains fall to the budget bottom line so they could reduce the deficit or boost the surplus, and therefore pay down debt.
There is a lack of seriousness in these sorts of proposals. The press release sounds wonderful; the concept changes nothing. The national finances are now littered with off-budget funds that turn spending into an “investment” and transform debts into assets.
The Future Fund stands alone as a significant achievement. The rest are dubious copies because they require the issue of more federal bonds so the money can be stored in a cashbox and spent on health, housing, clean energy, industry or other special programs. Each one has its merits.
Put together, they offer new ways to disguise spending. Dutton and Taylor could have set out a more rigorous approach to fiscal policy, but this would have meant giving up the “announceables” of the two new funds. They could have spent the past year using the resources of the Parliamentary Budget Office to explore a deeper rethink on spending and saving, but this would have entailed more political risk.
In choosing not to take that risk, they lose traction when claiming they can offer a better way. The Coalition’s biggest savings proposal, to cut 41,000 federal jobs, is certainly bold, but it is now beset by doubt. Dutton’s backflip this week on working from home came with a clarification that the public service cuts would be achieved by attrition, not mass sackings.
But how much, exactly, will this save over four years? That remains a secret. Dutton and Taylor have fallen into the habit of incremental revelation: they perform the dance of the seven veils with every policy. It should have been possible for Taylor to rule out cuts to health and education – not just “guarantee spending” – when Chalmers asked the obvious question in their debate.
Perhaps Taylor will do so in the weeks ahead. But the message on the night was that this remained an area of uncertainty in the Coalition budget policy, as if the commitments were yet to be nailed down. Dutton has run a steady race for three years, and looked at times like he was trouncing Albanese, but he enters the final three weeks as the laggard.
The key problem is policy. Dutton’s complaints about Labor were never going to be enough to speed him across the line, because all opposition leaders have to convince voters they have a better plan. They have to close the deal – and Dutton is running out of time to do it.
David Crowe is chief political correspondent for The Sydney Morning Herald and The Age . Get a weekly wrap of views that will challenge, champion and inform your own. Sign up for our Opinion newsletter .
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