Memo to Malcolm Turnbull: do not read this column

Malcolm Turnbull appears to believe a fun-loving, optimistic persona will attract the voter support he craves.

So 30 successive negative Newspolls have come and gone but Malcolm Turnbull continues his “happiest ever prime minister” routine. The Prime Minister obviously takes his own advice: “If you want to stay sane, don’t read all the negative stuff.” To him, “the government and the opposition are somewhere between even-stevens, 50-50 … either way it is very close.” Maybe. But when the Coalition’s primary vote is 38 per cent and Turnbull’s satisfaction rating is 32 per cent, this analysis borders on delusional.

Turnbull appears to believe a fun-loving, optimistic persona will attract the voter support he craves. Of course, optimism, positivity and a “Don’t worry, be happy” song have their place. But away from the partyroom and out in the real world, his transactional style and personal need for popularity lead to unwanted distractions and an impression of political ineptitude and ad hoc policymaking.

Bill Shorten offers no salvation. The Opposition Leader sounds increasingly like a comedian recycling old jokes as he repackages Labor’s past follies. But he has an audience that, should Labor win office, will find everything old is not new again. The real beneficiaries are not poor struggling workers but the powerful elites who really pull Labor’s strings.

Turnbull’s preference is to remain above the political fray rather than take the fight to Labor. But then, having signed the Paris climate agreement, introduced a special bank tax, launched a royal commission into banks, foreshadowed an increase in the resources rent tax, attacked superannuation, bowed to the Greens’ demand for an additional $5 billion for Gonski 2.0, increased the Medicare levy to help fund the open-ended National Disability Insurance Scheme, offered support for same-sex marriage and the republic, and uttered hardly a peep opposing the merger of two of our most belligerent unions, his main value proposition is that Labor will be worse.

For the growing number of disillusioned voters running on empty, this is cold comfort. As their predicament worsens they realise they are victims of failed political experiments that promised the world and delivered a pineapple. Their credit cards are maxed out (total household debt stands at an alarming 200 per cent of disposable income), and a third of those with home loans have little to no payments buffer. To them, Canberra’s leadership is remote and out of touch. It is more interested in pandering to minorities on second-order issues, leaving them powerless, insecure and worried about the future.

And they are right. In the US, China and Germany, leading indicators are softening. Pundits may scoff, but the “synchronised global expansion” seems to be in the rear-view mirror. In the world’s largest economy, real consumer spending, the engine room of economic growth, has stagnated since November. Notwithstanding tax cuts, the highly-regarded Macroeconomic Advisers sees real gross domestic product growing at a weak 1.7 per cent.

And, late into the longest economic expansion on record, we find US personal savings at a 12-year low, household debt never higher and American companies never more highly geared. Credit defaults are rising rapidly as inflation and the Federal Reserve are putting upward pressure on interest rates. These conditions are not conducive to global growth re-accelerating, which, despite Wall Street’s attempts to keep alive the most overvalued stockmarkets on record, is a point investors are starting to accept.

Australia is unprepared for a global slowdown. More than a quarter-century of uninterrupted growth has created arrogant leaders who “don’t read all the negative stuff” and show contempt for the laws of economics and unintended consequences.

Nowhere is this more evident than in energy policy, where naivety and disrespect for markets have resulted in Australian families paying the highest electricity prices in the world — two to three times more than US households.

Unsurprisingly, as the full effects of this protracted misallocation of assets play out, we watch households struggling to make ends meet while businesses downsize, close or relocate to more welcoming jurisdictions. Canberra is largely unmoved.

And while the banking inquiry may be popular politically, it is having serious unintended consequences. Predictably, embattled bankers have begun limiting credit. This, like central bank tightening, is a head wind to growth. This risk aversion comes as, during the next four years, about $480 billion in interest-only mortgages will convert to principal and interest loans, affecting 30 per cent of mortgage holders.

With home loan commitments rising at the fastest pace in more than seven years and other non-discretionary expenditure growing faster than incomes, a wor­rying proportion of mortgage holders has become hostage to job security and rising house prices. Now is certainly not the time to consider ending negative gearing.

Australia today is a testament to political irresponsibility. What other conclusion can be drawn when in peacetime, after a decade of strong growth and mainly full employment, we continue to generate such high budget deficits?

On becoming Prime Minister, Turnbull promised an “economic narrative”, yet in office he has delivered nothing that remotely resembles a comprehensive, inter­nally consistent manifesto based on sound economics and market liberalisation. Instead, his government is looking increasingly inward and relying on misguided policies to garner support from special interest groups.

Not only has this divided society on economic grounds, it has undermined belief in a value system that gave us resilience, long a feature of the Australian economy. Come the next recession we will miss that resilience and there will be no China or Howard-Costello surplus to shelter us.

Changing prime ministers will not fix this. It requires a philosophical change of direction that is beyond the comprehension of Turnbull and, seemingly, most of Canberra’s political class.

This leaves hapless voters with the profitless task of choosing between bitter experience and implausible hope.