Contributed by Joe Montero
Signs are that the Turnbull government is rapidly shifting into panic mode gear. The catalyst has been the fallout over the exposures over the behaviour of the banks. A Royal Commission has been put into place to side track doing anything, so ineptly that is has backfired.
Making mistakes has become the trademark of this government, and it is a good sign that it is unraveling. Nevertheless, it would be a mistake to pin it all on the ineptitude of the prime minister and his ministers. This is an outcome of the direction in which the government has been traveling, how people are reacting to the outcome, and how thew government is responding. All of this is the legacy of what has been going on since well before Turnbull and his team came into office. The price is now being paid.
In an effort at damage control, there has been a move to turn the coming May budget into a means to try and win back some lost ground in the popularity stakes. Not that there is going to be a great deal there. Two give aways already announced are to raise the income tax bracket threshold for middle and low incomes and not to go ahead with the Medibank levy increase for now.
Both are minimal, and they are likely to join some other sweeteners, before the budget is delivered. The rub is that this is likely to be a case of making a big deal of giving with the one hand and taking much more away with the other. There is absolutely no intention of changing the existing economic policy.
The government has also announced that it will act on the wrongdoings of the banks and shelve its corporate tax cuts. On the first promise, nothing substantial has been put on the table and there is certainly no suggestion that greater regulation of the financial system will be brought in. holding back on the corporate tax cut, was not its decisions, but the result of the failure to get it through the Senate. Malcolm Turnbull and Scott Morrison have made no secret of the intention to bring it back later.
Put it together and this is preparation for an election.
Although formidable, the biggest problem the government faces are not the banks, it is the state of the economy and the rising perception of the Turnbull government’s mismanagement.
Both are a mess. Real economic growth is almost non-existent, if it exists at all. For many, the accepted standard of living is slipping away, as incomes remain stagnant in in nominal terms and fall in real terms. The failure to shift towards a new and renewable economy is also affecting the standing of the government. There is concern about a shift away from compassion and the rise of big brother politics. Rising housing affordability crisis is also having an impact.
Breaking now, is the sorry impact on the government budget, brought about by generous handouts and privatisation. Although on paper the government looks like it operating on a surplus, this has been at the expense of lifting the government’s debt. This will not go down too well, when there is already a great deal of revulsion against the huge scale of corporate tax avoidance, the extent of official corruption and the efforts of the government to cut company tax. The unhealthy state of the economy is seen in the data released of the Australian Bureau of Statistics (ABS).
Net worth, the measure of federal government assets minus liabilities, has fallen by another $79.2 billion to minus $399.8 billion, since Prime Minister Malcolm Turnbull and Treasurer Scott Morrison came into office.
Providing benefits to the biggest corporations operating in Australia has not translated into increased investment driving the economy forward and providing real jobs. The only real growth has been in the speculative economy and the level of private debt. an April report by Focus Economics shows the poor position of a range of important economic indicators
Perhaps this is not strictly the government’s fault. The problem lies within the operating economic system, over which the government has limited control. But its response is making matters worse, and its inability to break away from a failing course, is damaging its standing.
Cuts to expenditure on services will continue. Policies that have attacked real jobs will not be stopped. Above all, a weak economy will continue to operate, still being made worse by continuing failed policies.
Is there an alternative? Firstly, putting an end to the corporate tax evasion industry and ensuring that the biggest businesses contribute to Australia’s future. Under performing operations that have been handed over to the private sector, should be brought back into government ownership.
Increasing government revenues and targeted expenditure can work as an engine to build the economy and do it on a sustainable foundation. This is necessary for future success.
If there is one thing the inquiry into the financial system is showing, it is that the deregulation of the financial system was wrong and their needs to be sufficient regulation to ensure that as well as tackling corruption, there is the ability to ensure that investment is directed to the needs of Australia, and in the first place, this means the needs of people.