Coalition the better economic manager? Pull the other one

The spin that only the conservative side of politics knows how to balance the books is the biggest furphy of all.

Prime Minister Scott Morrison visits Wallies Lollies in Box Hill South, Victoria in the electorate of Chisholm on April 16 with Treasurer Josh Frydenberg. Also attending was Gladys Liu, member for Chisholm. Picture: Jason Edwards

It is hard to establish on what tangible basis the Coalition can lay claim to the title of superior economic manager. While such wording implies a binary choice between the major parties, and merely requires the Coalition to best a lethargic Labor Party, I’m not even certain that’s true.

Let’s go through the reasons this government isn’t a worthy flag-bearer for those that came before it. As I see it there are four clear reasons the Coalition should no longer be seen as economically competent: the misuse of how it allocates taxpayers’ money without adequate due process; a lack of meaningful and necessary economic reforms; fiscal profligacy the likes of which we’ve never seen before; and counter-productive policymaking that often makes bad situations worse.

The divisions between Nationals and Liberals are crippling any Coalition claim to fiscal conservatism. The extent of pork-barrelling on display to accommodate the regional junior Coalition partner is obscene. Not that this government confines pork-barrelling to the regions; there also have been schemes that have targeted urban marginal seats, such as the community sports grants program and the commuter carpark scheme.

Funding allocations are no longer determined on a needs basis or via good public policy. Campaigning and political advantage trump all comers, as does back-of-the-envelope decision-making, such as the $400m Great Barrier Reef Foundation grant awarded when Malcolm Turnbull was prime minister.

The net result? Waste and misuse of taxpayers’ money.

We’ve also seen how politicking can make it difficult to recruit quality candidates; recall Scott Morrison’s parliamentary bluster that led to Christine Holgate’s departure as Australia Post chief executive.

Then we have the insipid unwillingness of the conservative parties to pursue meaningful tax and industrial relations reforms. John Howard was the last Liberal prime minister to put his back into such efforts. Waterfront reforms were achieved on his watch alongside a host of other changes before the electorate decided Work Choices went too far.

Since that time there has been no ideological muscle on the right of politics when it comes to IR reforms, and opportunities to enhance productivity and inter­national competitiveness have been lost.

We often hear lip service paid to the notion of tax reform, but in truth the Coalition doesn’t have the stomach for it. The system needs a recalibration. Instead the best we get is the occasional realigning of company and income tax rates to accommodate bracket creep. It is woefully inadequate.

Perhaps the biggest furphy is the spin that only the Coalition knows how to balance the books. Given that debt has skyrocketed on this government’s watch, and did so long before the pandemic made a bad situation worse, the current Coalition government is trading on the earned reputation of the previous one. Not a single minister in this government even sat around the cabinet table of Howard’s administration, learning from the likes of Peter Costello and Peter Reith.

Ideology is rarely a reason for future MPs to choose a career in politics, and this is starkly so when comparing the timidity of the current crop to those who fought the internal ideological battles in the 1970s and ’80s between dries and wets.

It feels like political satire listening to the current economic leaders in the Coalition spruiking their fiscal credentials at the same time they hand down a $78bn budget deficit with no plan to repair the underlying structural problems. As national debt ticks towards $1 trillion, the same names were lamenting a “debt and deficit disaster” when debt was one-third the size it is now.

Consider the 23.9 per cent tax to gross domestic product cap pledged this week. Given that spending is currently 27.8 per cent of GDP, all the government is doing is committing to long-term structural budget deficits without a plan to reduce spending in line with the tax cap simplistically promised. That’s fiscally reckless. But because fear of electoral defeat is the primary concern, the Coalition hopes to cash in on voter misconceptions that it knows how to manage money, rather than cut spending in line with taxation streams so the budget can correct itself.

And remember, all of this is going on in a climate of rapid inflation and soon-to-be rising interest rates. In other words, the spendathon designed to buy votes is exacerbating the inflationary pressures that may cost people their homes when mortgage payments are affected and house prices fall.

Don’t forget one of the policy announcements made early in this campaign was to ease lending restrictions for first-home buyers so they could borrow more with a smaller deposit. These new homeowners will be saddled with rising repayments.

Oh, and wages are stagnant, which means inflation pushing up the price of goods is even more debilitating for most people. The government crows that the unemployment rate is low at 4 per cent, which is a truism. And yes, it would have been nice if the Opposition Leader knew what it was on day one of the campaign. But trivial pursuit aside, you aren’t counted in the unemployment data if you work as little as one hour a week, and underemployment remains a real problem.

Besides, the reason for the low unemployment rate has more to do with the temporary pauses in migration during the pandemic than any economic whiz-bangery€ by the government.

The simple fact is this government has refused to reform the economy meaningfully, it has spent up big and not with prudence, and it has pulled policy levers that have done more harm than good. As it begs, borrows and attempts to steal its way into a fourth term, all it really has left is a legacy from a bygone era to draw credibility and a scare campaign built on Labor’s mistakes in the past. Mistakes, by the way, that are dwarfed by this government’s poor decision-making.

I don’t know if the other lot is up to the task of serious reform and budget repair. I suspect it isn’t. The problems in politics appear generational and institutional, engulfing both sides. The system is working against its own needs to the detriment of all of us. But guess what? Labor can’t be any worse than this lot. And who knows, maybe a stint on the wrong side of the treasury benches will help Liberals in name learn to become liberals by nature. Economically if not socially, given the permanent need to appease conservative tendencies in the Coalition.

Peter van Onselen is a professor of politics and public policy at the University of Western Australia and Griffith University.