A decision that goes against the Liberals' grain

AUSTRALIANS could be forgiven for thinking that for all that has changed since the election, not much has changed at all.

THREE months after an election that has delivered us a new government, Australians could be forgiven for thinking that for all that has changed, not much has changed at all.

In office sits a government that seems overly fond of intervening in the market and increasing tax takings. In opposition, meanwhile, shadow ministers thunder about the need for reform and for the state to get out of the way.

Yesterday, Treasurer Joe Hockey knocked back US agribusiness giant Archer Daniels Midland's bid to buy east coast grain distributor GrainCorp.

Earlier in the week, he met with state and territory treasurers to discuss imposing GST on overseas internet purchases worth less than $1000. And in an attempt to shore up Qantas, Hockey also floated the idea of buying back - with taxpayer money - up to 10 per cent of the airline's shares to help it compete with competitors like Virgin Australia.

Those on the left who were terrified that an incoming Abbott government would bring about an era of slash-and-burn "fiscal savagery" are, save for the likes of Tim Flannery and members of a few now-liquidated advisory groups, probably breathing a sigh of relief.

But those who dared to hope the Coalition would send a loud and clear message that reform, regulation reduction, and a general winding back of the state's role in the economy have had less to cheer about.

In isolation, each policy may have merits. But taken together they set a pattern that suggests too much caution and a worrying impulse to follow the political wind. Yet if history is any judge, real economic reform requires setting one's sails against it. And despite protests to the contrary, the Treasurer's moves leave open the question of just how "open for business" Australia really is.

A modern, competitive economy cannot turn away foreign capital on the basis of partyroom politics and not have future corporate suitors wondering if their capital may be held up at the border.

Yes, Joe Hockey is right to point out that 130 other deals have made it past the Foreign Investment Review Board, and that is to be applauded.

But none of those deals were subject to the sort of lobbying that set the government against ADM. The Australian Consumer and Competition Commission said it had no qualms about the deal; the deregulation process that local industry was supposed to still require time to get used to kicked off in 2008.

The lesson would seem to be, make enough noise, get the Nationals on side, and everything's negotiable.

To borrow a term from the world of media management, the optics are not good when politics trumps policy.

The decision also gives more weight to the building sense that after years of lobbying by Australia's lumbering, slow-to-adapt retail giants, the government - pushed by state treasurers in NSW and Queensland - may be getting ready to lower the boom on overseas internet sales and reduce the point at which GST cuts in (currently $1000).

When GST was introduced in 2000, it was as part of a broader plan to make the tax base more efficient by eliminating unwieldy levies.

Dropping the GST threshold would be the opposite of this sort of reform. Modelling by Treasury suggests that a lowered GST on incoming international packages would be exceedingly expensive to collect - to the point where, were it set low enough, it would actually cost more than it would bring in.

The end result would be more protectionism, more complicated regulation and, if the retail sector has its way, less freedom of choice.

Likewise the suggestion of the taxpayer, under Abbott, buying back part of Qantas - ironically, sold by Labor - to protect its increasingly dire credit rating. This is trickier, because Qantas faces competition from Virgin Australia, which is controlled largely by government-supported carriers from other nations.

But partial renationalisation should not be an option so early in the debate when it remains an open question as to whether we need a "flag" carrier at all.

Perhaps this is all part of a grand plan, a marathon of reform rather than a sprint, to flush out pro-market sentiments within Labor that can be used as wedges later.

Already Chris Bowen has come out slamming Hockey's decision on GrainCorp as "pathetic" and it is Labor premiers who are against the government taking a cut every time Australians order a cookbook from Amazon.

Maybe armed with these statements, Hockey will be able to force Labor to sign up to a more ambitious program of reform down the track.

We can only hope