Malcolm Turnbull must drop populist pose and face realpolitik

If there is one moment in politics when a PM can be courageous, it must surely be after winning an election.

If there is one moment in the frenzied, increasingly hysterical, political and governing cycles when a prime minister can be courageous enough — in both the ‘Yes PM’ and even more the literal senses of the word — to figuratively stand in front of a populist wave and state ‘NO,’ it must surely be in the weeks after having just won an election, even narrowly.

Yet, confronted with the largely media-driven hysteria over the so-called failure by the banks — by all the banks, not just the nasty big ones — to ‘pass on’ the full 25-point Reserve Bank official rate cut, the ‘PM from Goldman Sachs’ folded like a cheap suit and moved indeed to place himself at the very head of the wave.

Even more shamefully — and worse, self-destructively both to good policy and good politics over the remaining, perhaps,
135-150 shabby and embarrassing weeks of this government’s life — the treasurer joined him as co-leader of the populism. Then this week, Scott Morrison doubled down with his rejection of the ‘yellow investment peril’. Maybe, almost certainly, Malcolm Turnbull thought it was ‘clever’ to join the bank-bashing and to promote another one of his ‘inspired (non) solutions’ — making the bank CEOs appear before the House of Reps Economics Committee just like the RBA governor — and so divert the opposition’s call for a Royal Commission.

What a smart PM supported by a competent, secure, treasurer would have — should have — done, was to emphatically call out the populist nonsense. That there was no 25-points to pass on; that it was entirely and legitimately for the banks individually to decide all their rates, both lending and borrowing. More fundamentally, both the PM and even more so the treasurer should have explained that the slightest move by government towards trying to ‘set’ these market rates would be a step towards financial catastrophe and economic chaos.

Now of course this, to be kind, misstep is in the sweep of political history entirely ephemeral. Turnbull’s spineless populism in August 2016 is no more going to win him the election in 2019 than some robust rationalism now would have irredeemably condemned him then. He’ll win, more likely lose (if he makes it to polling day), on many more issues, closer to it.

But the message it all sent was both profoundly negative and far more permanent. And it was then rewritten even more emphatically in indelible ink by Morrison’s decision to reject the Hong Kong and Chinese bidders for Ausgrid. Now it might be true that Morrison made the “right decision for the right (national security) reasons”. The disastrous impact of the decision is in the way its seeming populism followed so closely on the heels of the real populism of the rate buckle; and so reinforced a whole series of negative memes which define the aimlessness and ineptitude of this government and this PM and to which the treasurer has willingly and wilfully signed up to.

Not heading this off so much earlier (Rudd for UN secretary-general) in the broader context of seeming extended drift. Pulling major policy decisions out of thin air, unannounced and certainly not analysed, discussed and debugged (taxing high-end superannuation).

Does the PM have the slightest idea of the challenges and opportunities presented by our future relationship with China, in the context of where the boom has left both us and them? Beyond a sort of hazy expectation we will keep digging up large volumes of WA and Queensland and freezing both offshore and onshore gas and shipping it all off? Plus an even hazier expectation of lots of ‘innovation?’

That you actually have to develop really quite complicated political and policy strategies to maximise the hoped-for upside and to minimise the, for want of a better word, ‘difficulties’? And that you should have started on developing such strategies the moment you became PM in September last year? Indeed, well before that date, as the basis of actually delivering on your promise of good government?

These strategies have to be integrated with all the other policy demands and objectives and be anchored in both the geopolitical and financial realities — such things as global monetary and fiscal policies and outcomes; the unfixability of the budget deficit and our $85 billion current account deficit which has to be funded every year by, well, foreign investment.

All of this has to also not just be anchored in the reality of the Senate but co-ordinated with a sophisticated strategy to win specific (and differently composed) majorities for specific measures. There is one exception: under no circumstances should the PM — should the combined party room let the PM — forge any ‘easy’ Senate majorities with the nine Green senators. It is impossible to conceive of any rational policy outcome of such unions.

The PM should have known from the day he called the election and certainly from election night the broad profile of the Senate he would have to work with. Does anyone believe that he has even turned his mind to the issue, even in broad terms, far less the required complicated, subtle sophistication?

In the absence of effective bifurcating of different majorities and playing each group off against the others, the single greatest danger is that the only legislation which will get through the Senate is that which is bipartisan with Labor.

Some of that would be the usual ‘functional’ and essentially non-political sort. But the rest would be essentially Labor’s agenda. Like the high-income levy in 2014 and now almost certainly the superannuation tax attack in 2016.

Labor is not going to endorse the sort of policies a Coalition government should be proposing. Senate majorities for those start with Pauline Hanson and One Nation. The depressing conclusion is that this is likely to be a do-nothing government.

That’s also the best we can hope for.