By Mark Kenny
It was little-known tensions between Malcolm Turnbull and Treasurer Scott Morrison that prompted the Prime Minister to push previously secret Treasury modelling into the public realm on Friday - earlier than originally planned.
Sources say relations between Mr Turnbull and Mr Morrison have become strained over the extent of tax reform policy, with the Treasurer keen for more ambitious reform including significant income tax cuts which would be paid for by a politically unpopular 50 per cent hike to the GST.
There are also differences between them over the scandal engulfing the now dumped human services minister Stuart Robert.
Mr Morrison pressed the Prime Minister not to buckle to extreme opposition and public pressure by sacking the embattled Queensland conservative, to whom Mr Morrison is close.
Prime Minister Malcolm Turnbull and Treasurer Scott Morrison.Credit: Alex Ellinghausen
Mr Turnbull however, informed by his own departmental head, Martin Parkinson, formed a different view. Dr Parkinson had found Mr Robert's shareholdings - whether known or not - could have led to the appearance of a conflict of interest making his behaviour "inconsistent" with the ministerial standards.
A wider reshuffle is now expected on the weekend.
Labor had demanded Mr Robert's scalp, having accused him of a clear breach of ministerial standards by behaving as a minister while accompanying a millionaire businessman and Liberal Party donor in China in 2014. Mr Robert had been on leave at the time and maintains he was acting entirely in a private capacity.
While a source said Mr Morrison and Mr Turnbull were working effectively, the signs of a deterioration of trust between the pair, at such an early stage of the reconfigured government, suggests future difficulties.
Illustration: Ron Tandberg
Fairfax Media understands the Prime Minister was concerned that Mr Morrison would commit the government to a more difficult path on tax reform than was politically tenable when he makes his first appearance at the National Press Club as Treasurer, on Wednesday.
It was for that reason that a decision was taken to release the modelling this weekend. However, even that timetable was altered on Thursday to ensure Mr Morrison's hardline approach did not become policy through other comments made by the Treasurer in media interviews.
Coalition MP Stuart Robert's links to the company have come under scrutiny.Credit: Andrew Meares
The modelling showed that the economic gains from a GST hike were minuscule compared to the political pain likely to afflict the government heading into the 2016 election. Labor had been mounting a powerful scare campaign against the GST hike, warning it was a great big tax on everything and would harm middle Australian households and the poor, in order to cut taxes for the rich and boost company profits.
In an exclusive interview with Fairfax Media on Thursday, Mr Morrison explained why he favoured tough action now to make room to income tax cuts without adding to the deficit.
"If you have higher and higher taxes" as a result, "it will be a drag on growth," he told the Sydney Morning Herald's Peter Hartcher.
"We have to find a way to mitigate that now."
Mr Morrison is yet to hand down a budget. His forthcoming Press Club speech is expected to set out the parameters of his economic thinking which will inform the design of the crucial pre-election budget.
Friction between prime ministers and treasurers is not uncommon in Australian politics and, while it can lead to political problems, such strains have also produced some of the most successful reform partnerships. Paul Keating and then prime minister Bob Hawke had a notoriously strained relationship yet managed to pull off some of the biggest reforms in Australian economic history. John Howard also was forced to manage Peter Costello's ambitions and resentment, yet together they introduced the GST and managed to meld politics and economics in such a way as to give them nearly a dozen years in office.