Economic showdown will decide federal election

Scott Morrison has taken a defensive crouch on the economy. This is odd given economic management is a strong suit for Coalition governments in general and, despite its inner turmoil, this one in particular. The Prime Minister’s messaging rests on a series of negative propositions. First, Bill Shorten is weak on border protection. Second, Labor will steal from your savings and raise taxes. Third, voting for a change of government would risk a recession and a return to budget deficits. “The economy you live in for the next decade will be determined by the choices made at this election, just like they were in 2007,” Mr Morrison said, in a reminder to voters of what they discarded after replacing the proven team of John Howard and Peter Costello for the untried Kevin Rudd and Wayne Swan. Back then, Mr Rudd self-branded ahead of the election as an “economic conservative” but governed like an erratic Keynesian; Mr Swan announced a series of surpluses in his 2012 budget speech but the porch light is still on for those missing surpluses.

This election will be a contest between two views of how the economy should be run and, depressingly, which voters can be sacrificed in the charge to victory. The Labor leader’s populist anti-business rhetoric about greedy employers finds willing ears among a populace stung by financial sector rip-offs and profit-hungry employers. Mr Shorten this week declared the election would be “a referendum on wages”. His pitch is a re-regulation of workplaces. In a carefully rehearsed speech to business, the Opposition Leader zeroed in on the prolonged weakness of wages growth, blaming the laws of labour supply and demand. Mr Shorten cosied up to the ACTU’s reckless “living wage” campaign to boost the minimum wage, regardless of the ability of enterprises to afford it; organised labour may cover only 15 per cent of the workforce, but its desire to pursue industry-wide pattern bargaining would wreak havoc in the industrial system and real economy.

In a quieter voice — only people in the top income tax bracket can hear him — Mr Shorten speaks of 1980s
co-operation and accord, of amity between unions and business, working together for the national interest. He may not have Bob Hawke’s charisma or Paul Keating’s chutzpah, but he does have the bluff and bluster to get a deal done quickly. As ever, the fine print is the key. Labor is restoring Sunday penalty rates and will crack down on contracting, skills visas, and labour hire firms. Mr Shorten wants to change the industrial rules, push up costs for business and milk those who have the capacity to pay more. Labor will cut incomes for people who have saved for retirement and those building asset bases. It’s been a long time since redistribution was the overriding goal of an alternative economic platform. Mr Shorten is taking a bet that envy rules the national mood; Labor’s Treasury spokesman Chris Bowen admitted he was plucking the feathers of people who vote for the Coalition.

The December quarter national accounts figures have emboldened Labor and left the government tongue-tied and sombre. The drought and a slowdown in housing construction put the brakes on the economy in the latter half of 2018, with annual growth down to 2.3 per cent. Shoppers are shy. While much was made of the GDP per capita “recession”, there was a rise in real incomes; the wage price index is growing by 2.3 per cent a year. Non-mining investment is picking up. So, too, are export prices and sales of liquefied natural gas. The government sector, public servants and big transport projects, is the mainstay of growth. And yet, employment remains a good story for the economy. The jobless rate is 5 per cent. But Mr Morrison and Treasurer Josh Frydenberg are caught accentuating the negative, not just on Labor’s policies for investment loss deductions, capital gains tax discounts and franking credit refunds. A doom narrative seems to have taken hold within the Coalition, a rhetorical spiral that can become self-fulfilling. The April 2 budget must be a document of policy renewal and fiscal sustainability; its selling must be plausible and frank.

As Paul Kelly writes today, the refusal to tell the public the brutal truth about the long and painful adjustments required for Australia “raises the real danger of more counterproductive measures by governments”. The nation needs a plan to grow the economy, not a class war that diminishes prosperity. Aspiration and enterprise should guide our industrial relations ethos, not a chaotic scramble for diminishing spoils. Australians deserve an election contest that will honestly address the big issues about how to raise our brainpower, productivity and trade competitiveness. We need tax policies that promote investment, growth and employment, not a winners and losers fiscal auction that locks in temporary revenues to long-term spending. Mr Shorten has spent time on the shop floor and in boardrooms. It is inconceivable he does not understand profitable businesses create jobs, invest in future capacity and are the best path to higher wages. Mr Morrison prides himself on being a man of sensible and practical policies. Both leaders should grasp the opportunity to be positive and go for growth.