In a strange way Bill Shorten is akin to a Prime Minister in exile. And we saw exactly how that works in his address to the National Press Club earlier today.
It means the debates about negative gearing, superannuation, corporate tax rates, capital gains tax, the Medibank rebate and other social issues were not settled at the election. It begins all over again.
Accordingly, the politically driven business uncertainty we have experienced in Australia will continue, which will affect some corporate bottom lines.
At least in Bill Shorten’s mind, he either won or drew the 2016 election based on voter support. What cost him the Prime Ministership was the Victorian Premier Daniel Andrews who, on the eve of the election, decided to smash the state’s CFA volunteers by having them controlled by a far-left union.
In the election campaign, on home ground in Victoria, Bill Shorten would have at least achieved a similar swing to NSW but he was unable to campaign properly in Victoria because everywhere he went there were CFA trucks to remind voters of what Andrews had done. The Liberals even won a seat in Victoria from the ALP.
Now, it is possible that the Prime Minister can muster some sort of deal with the nine crossbenchers in the Senate (and/or the Greens), but that is not going to be easy and the Coalition have not revealed great negotiating skills in the past.
If we have three years of inaction and the country loses its triple-A credit rating, then an already-divided Coalition will be thumped at the next election. The Coalition backroom people I speak to know that very well.
And there is a nasty economic side bar. Because the Coalition wants to take to superannuation with a retrospective machine gun, ordinary people have decided they can no longer use it as a savings mechanism to avoid reliance on the government pension.
Where are they taking their money? There is only one place: bricks-and-mortar dwellings. Some of the money that was previously earmarked for superannuation is now set to be invested via the residential home tax shelter, lifting the quality in the family home. But a huge rump is earmarked for the negative gearing of residential dwellings.
As we saw at the weekend, that translates into higher residential prices, particularly in Sydney. In turn, that means if the currency keeps rising then the Reserve Bank cannot use the interest rate weapon to at least curb it. And that higher dollar will hit Australia hard. And, fairly or unfairly, the Coalition government will be blamed.
Remember, the government went close to announcing clamps on negative gearing until Malcolm Turnbull realised sticking with the current arrangements would be an election winner. In fact, the swing in NSW indicates it did not deliver as expected.
There is general agreement that there was a case for small business tax cuts but the whole debate about larger corporation tax cuts was based on tax rate comparisons with overseas that left out franking credits. The lobbyists tricked the Coalition.
Finally, when it comes to the deficit, if the Coalition government wants to cut expenditure all it needs to do is dust off its 2013 election plan, which showed the billions of savings that could be had by ending duplication with the states.
The 2013 plan was drawn up by then shadow Finance Minister Andrew Robb. It would have been implemented had Robb became Finance Minister under Tony Abbott in 2013. Instead, Robb became trade minister where he did a great job but the budget was not fixed as he had planned.
Indeed, duplication with the states has, if anything, grown, and the current government has expanded the ministry.
So, the electorate will be hit because the politicians do not have the talent to curb the waste that Robb revealed was there to be cut while improving services.
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