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 Turnbull - does not have the political skill to win.

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Turnbull - does not have the political skill to win. Empty
PostSubject: Turnbull - does not have the political skill to win.   Turnbull - does not have the political skill to win. EmptyWed 01 Aug 2018, 11:12 pm

Turnbull’s landscape of rocks and very hard places
By Paul Kelly,
August 1, 2018

The Turnbull government is now trapped in the conflict between its beliefs and public opinion — a nasty place for any government — which means it faces the near ­untenable task of compromising its beliefs or turning its back on public sentiment.

Labor is now pushing Malcolm Turnbull into a risky lose-lose scenario over corporate tax cuts. In the hysterical and mad climate that is Australian politics — with Bill Shorten supposedly under dire threat one week and Turnbull supposedly in crisis the next — there are three truths about the tax cuts.

First, their abandonment as an enshrined economic policy would exact a serious toll on the government and the Prime Minister’s authority; second, if the Senate still refuses to honour the government’s 2016 election policy and if the government cannot combat the Opposition Leader’s “better hospitals not bigger banks” framing, then the government cannot take the remaining unlegislated policy to yet another election; third, any change must be a policy modification that still enables the government to run on the principle of a competitive company tax system and retain the economic credibility of what will be its next election theme: who do you trust to keep your job and your living standards?

The government will take its corporate tax cut proposal back to the Senate this month and assess its situation depending on that outcome. The omens are not good. In the constantly exaggerated world of our politics, it is hard to imagine why the Senate would give further ground on the policy when numerous MPs in public and cabinet ministers in private are venting their doubts.

As Chris Bowen said yesterday after many news reports: “How can the Liberal Party expect the Senate to support the full company tax cut package when it no longer does?” Good question. The government would be smart to accept any further compromise deal from the Senate, but such compromise might no longer be available.

But there is a further truth. The idea that Australia can endure an ­uncompetitive company tax system without damage to investment, growth and jobs is untenable. Labor’s campaign theme against the tax cuts captures public emotions, grievance and resentment. But the more it is successful, the more it raises the problem of success — notably, at what stage and at what price does a future Labor government ­embark on the epic policy reversal to cut company tax? The transition from insurgent populist to incumbent is always daunting.

Labor, as usual, outcampaigned and outspent the government at the by-elections. But it managed the expectations far better. The contests in Braddon and Longman should be seen in context. In Braddon, the swing to Labor in two-party preferred terms was 0.24 per cent, far below the average anti-government by-election swing. This result was no problem for Turnbull as such.

The problem was Longman, and that is a far bigger problem than just corporate tax cuts. The Liberal National Party’s primary vote fell more than 9 per cent since the 2016 election to below 30 per cent — losing votes to both One Nation, on almost 16 per cent, and Labor, whose primary vote rose by more than 4 per cent.

The LNP in Queensland constantly underperforms and is outcampaigned. It was never likely to win Longman. It is losing support to populists on both the Right and Left. Turnbull seems unable to ­obtain traction in Queensland, where the One Nation vote is ­lethal. This problem, apparent since the 2016 poll, has not been addressed. Unless it is confronted, the Coalition will lose next year’s election in Queensland alone.

Beyond the by-elections, the government has recently narrowed the Newspoll results to a 51-49 Labor lead. This suggests the Coalition has been making ­incremental progress. But this is not sufficient in Queensland, where the government faces serious structural and cultural obstacles to its re-election.

The by-elections have confirmed what was always likely to happen: that Shorten will lead Labor to the next election. But claims that Turnbull will abandon as a failure his “Kill Bill” tactic are false and pure Labor propaganda. Shorten is vulnerable because of overreach and poor credibility. The by-elections have not changed that for a moment. Shorten’s immense skill, however, is his populist exploitation of public emotion and resentments, and his framing of the Turnbull government. Witness his comments after the Saturday results.

Shorten is always anticipating the next political step. “If Mr Turnbull drops his corporate tax cuts for the big end of town, he should go with them,” Shorten said. He calls on Turnbull to abandon his corporate tax cuts but also says if Turnbull drops “his signature economic policy”, he will be ­exposed as standing for nothing and should quit as Prime Minister along with his failed policy.

“If he hasn’t got the intestinal fortitude to support his own economic values — what he really ­believes — then he shouldn’t hang around either,” Shorten says. In this situation, Turnbull’s loss of authority would be immense. He would be abandoning the policy on which he won the 2016 election. If abandoned outright, what would be left of Turnbull’s economic policy, the credibility of Scott Morrison or Mathias Cormann, of the growth and jobs agenda?

You can imagine the campaign Labor would run on Turnbull as an expedient PM who doesn’t believe in anything. But Shorten also says any retreat by the government on corporate tax cuts constitutes a plan “to bring them in later after an election” were Turnbull re-elected. Shorten’s position is: abandon the tax cuts but don’t ­expect us to believe you or terminate our campaign.

Turnbull’s retreat would be a huge victory for Labor — even if Labor preferred not to have such a win. It would be further proof the Left is winning almost all the debates about ideas. If the Liberals don’t believe in a competitive tax regime for companies, what do they believe in? If the Liberals cannot fight for this, what can they fight for?

Yet the Prime Minister also faces an ­intractable dilemma from staying put. Retention of the policy dooms Turnbull unless the government can transform its communicative skills. The gov­ernment has had three years to sell this policy. It has made progress, but not enough. It has been unable to sell the idea that proper funding of health and education depends on economic growth or that having a competitive corporate tax system is essential to growth and jobs.

These are not radical ideas. ­Indeed, they are highly conventional and were once bipartisan. But Labor has wedged Turnbull by insisting on a false choice — that the option for the nation is better health or tax cuts for banks. That is not a serious choice in ­either fiscal or political terms. But if taken seriously, the answer is ­obvious: Labor must win.

Labor believes it has framed the company tax cut to doom the government. In fact, the debate is more complex. There is evidence the tax cut below the $50 million threshold is a government plus and that Labor’s pledge to repeal this legislated tax cut down to 25 per cent constitutes a political risk for the opposition. There is evidence from Newspoll in recent months suggesting the corporate tax cut policy was gaining far more acceptance.

But where the government loses is when the issue is put, and believed, as better health versus tax breaks for banks. Framed that way, Turnbull cannot win — this is the heart of his dilemma. The government can complain about lies, but unless it can combat that message, it must modify the policy. That would follow a Senate rejection and would constitute a critical test of nerve and judgment.
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