Can Malcolm Turnbull put Australia’s economy back on track?

MALCOLM Turnbull’s big pitch is about economics. So can the man with the $180 million fortune put Australia’s back on track?

Exterior of Malcolm Turnbull's residence at Point Piper, Sydney.

MALCOLM Turnbull’s big pitch is about economics. Economic leadership and economic confidence were the first two points he made as he applied for Australia’s top job.

“It is clear enough that the government is not successful in providing the economic leadership that we need,” Turnbull said on Monday afternoon, announcing the spill to the media.

Exterior of Malcolm Turnbull's residence at Point Piper, Sydney.

So can a man with around $180 million and a giant mansion by Sydney Harbour put Australia’s economy back on track?

Turnbull is betting his leadership on it. He’s saying he has the power to fix the economy, because of his background in investment banking, his personal finance savvy that made him the richest politician ever (until Clive Palmer got elected, now he’s second-richest), and his policy knowledge.

“The Prime Minister has not been capable of providing the economic leadership our nation needs. He has not been capable of providing the economic confidence that business needs,” Turnbull said.

If we are choosing a new Prime Minister on the basis of business confidence that is a bit weird. It puts a lot of faith in the boffins at NAB who make the business confidence index every month! The young maths whiz who puts together that spreadsheet is probably checking his numbers in a panic right now.

But there might be something to it. Last time Australia changed PM we got a bump in business confidence.

When Mr Abbott was elected, businesses were suddenly more confident than they had been for 2.5 years. The engines of commerce revved up. But then Australia’s engine slipped into neutral.

Business is always prepared to give a new administration a break. But hope and dreams are not enough. Businesses need action.

The first Budget put together by Mr Abbott and his Treasurer Joe Hockey was such a disaster that hopes of progress evaporated. The second budget was a little better, but economic troubles in China meant it had minimal positive impact.

Business confidence right now sits at +1. It’s not in negative territory. But it’s well below the +8 we had this time last year.

Mr Abbott and his ally Joe Hockey don’t get a third chance to make another Budget to fix the mess. Instead, on the second Tuesday in May, when the Budget is announced, it will be by Australia’s richest ever Prime Minister - Mr Turnbull - and the person he picks as Treasurer.

We can guess a few things about the next Budget. If his promises amount to anything, the Budget won’t be full of captain’s picks and Mr Turnbull’s own ideas.

“We need to be truly consultative with colleagues, members of Parliament, senators and the wider public,” Mr Turnbull said on Monday.

Ideas could come in from ministers from all states of Australia and even from regular people.

Malcolm Turnbull speaks to the media after winning the leadership ballot at Parliament House.

If Turnbull keeps his word, the Treasurer will also have a big influence on the next Budget. Selecting the next Treasurer is vital. Scott Morrison is the clear front-runner for that job.

He might have to brew up some big new policies. Mr Turnbull talked a lot about challenges and opportunities. That’s how you talk when you want to make a splash. He may be looking at changes to tax in particular – perhaps to superannuation or even a carbon tax at the next election!? Time will tell.

Policy matters. But ultimately, the PM and Treasurer don’t make Australia’s economy grow. Growth comes from us. The people of Australia who work in businesses, own businesses and are customers of businesses. We are influenced by government policy a bit, but it’s not the only thing we pay attention to.

If another economic crash is coming, it wouldn’t matter if Superman was PM. Malcolm Turnbull, like so many Prime Ministers before him, will make or break his reputation on an economy he doesn’t fully control.

And as Tony Abbott learned, a reputation can be lost quickly – far more quickly than an enormous fortune.

Jason Murphy is an economist. He publishes the blog Thomas The Think Engine. Follow him on Twitter @jasemurphy.