Money Finance News The economy can’t take any more bloodsport politics
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The economy can’t take any more bloodsport politics

Tony Abbott making life hard for Turnbull
Abbott tried to paint Turnbull into a corner. Photo: AAP Photo: AAP
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ANALYSIS

As MPs and Senators file into their respective chambers for the start of the 45th Parliament, the wasted opportunities of the 44th Parliament should weigh on their minds.

That’s because the economic challenges that were already clear when Tony Abbott became Prime Minister in 2013 have mostly not been dealt with, and have mostly grown worse.

Household debt is too high. Resource export prices and therefore tax receipts are too low. The budget deficit is stubbornly large. Inflation is too low. Unemployment and underemployment are too high. That’ll do for now.

All of these were apparent when Mr Abbott came to power, and were even more apparent when Malcolm Turnbull ousted him on the grounds that he wasn’t “capable of providing the economic leadership our nation needs”.

Since that time, however, the litany of bungled or abandoned reforms has grown by the day.

Of the list of 25 bills the government hopes to rush through Parliament in its first couple of weeks – the so-called ‘battle plan’ – only two bills are new.

There’s a bill designed to over-ride a state-level resolution to Victoria’s firefighters dispute, and the ‘Budget omnibus’ bill which itself is largely a collection of stalled savings measures from the last Parliament.

Three wasted years

That’s not to say there weren’t attempts at reform in the last Parliament.

There was the Abbott-Hockey 2014 budget, which aimed to drastically cut public spending just as private demand in the economy was beginning to falter. It hurt consumer and business confidence, not to mention Mr Abbott’s polling numbers.

Then came the ‘nothing to see here’ budget of 2015 – the harshest welfare cuts scrapped, the ‘GP tax’ gone, extra spending on childcare, and the stimulatory spending on infrastructure and ‘jobs and small business’ package. That back-tracking failed to save Mr Abbott’s job.

Prime Minister Turnbull's super reforms still hang in the balance. Photo: AAP.
Prime Minister Turnbull’s super reforms still hang in the balance. Photo: AAP

When Mr Turnbull became Prime Minister, many people hoped he would pursue reforms he had written in favour of when he first entered Parliament – especially the high-end tax breaks for superannuation savers and harmful property tax breaks.

It was not to be. Mr Turnbull has been hamstrung on numerous reforms by the right wing of his own party.

The party room continues to seek to water down the super reforms, lobbying to raise the cap on non-concessional superannuation contributions from $500,000 to $750,000 or scrap the ‘retrospective’ backdating of that cap to 2007.

A decision on that has reportedly been kicked down the road until September 12.

This is appalling stuff. That policy was announced in the May budget, taken to an election and only then debated in the party room. That’s the reverse of the way things should work.

The debate must change

What the right wing of the Coalition seems to be struggling to grasp is that in bad times the Abbott style of ‘blood sport’ politics won’t work.

And bad times are unfolding – national income per capita peaked at the end of 2011, and since then Australia’s terms of trade and hours worked per capita have ground steadily lower.

Senator Nick Xenophon: 'optimistic' about the new parliament.
Senator Nick Xenophon: ‘optimistic’ about the new parliament.

The Abbott style of politics is doubly doomed by the larger, more difficult, cross bench in the Senate ­– the result of Mr Turnbull’s double-dissolution election.

The likes of Pauline Hanson, Nick Xenophon and David Lleyonhjelm are already presenting the Coalition hard-liners with a choice.

They can choose negotiation, economic pragmatism, and providing support for their embattled leader … or they can choose a collapsing government and an electoral spanking.

At a media conference on Monday, key crossbench senator Nick Xenophon was asked whether the current Parliament could work, or whether it was heading for stalemate and collapse – the last thing, of course, that the economy needs.

“We’re optimists. For the good of the country we want it to work.”

And it can work. The Gillard government actually passed its major reforms – carbon pricing, the NDIS, Gonski school funding – by working with the crossbenchers.

That’s the message the right of Mr Turnbull’s government have to take on board.

The economy is too weak right now for any further ideological crusades. Save the bloodsport politics for better times.

Read more columns by Rob Burgess here

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