At The Australian, Paul Kelly sums it pretty well today:
Election 2016 is the contest between Malcolm Turnbull’s economic strategy and Bill Shorten’s people strategy.
Turnbull aims to win by persuading the public to trust him as a superior economic manager while Shorten plays to the people’s angst, daily tribulations and pressure on family living standards.
In a highly optimistic campaign opening, Turnbull offered an economic future of excitement, opportunity and innovation, but finished with the negative clincher: that Shorten’s higher taxes would stop this “dead in its tracks”.
Shorten’s pitch is an update on Labor tradition, casting himself as a man of the people, pledging a “fair go for everyone” and fuelling class envy. He offers a broader mix of social and economic issues, pitching to women, his priorities being schools, health and Medicare, climate change action and jobs.
Their flaws are obvious. Turnbull rightly begins by enunciating his economic plan in detail but his problem over the next 55 days is that his agenda looks too thin, too based on company tax cuts and too short of meaningful rapport with battling households who got no giveaways in the budget. Shorten’s vulnerability is his assault on aspiration and his calculation that the nation’s political culture has changed under pressure to favour higher and redistributive taxes to fund vast social spending agendas that originated under the Rudd-Gillard era.
I would couch it a little differently. This is now an election context between two myths as both parties have reverted to political ritual over reality – that is, are appealing to their bases – as the election is called, rather than occupying the centre that will win the election. Underneath that, however, policy does not support the narrative of either party.
The Turnbull Government’s pitch to transition Australia from the mining boom to a “new economy” is the right message but has close to zero ballast as it resists, indeed trashes, all major structural economic reform. The company tax cut is small, isolated and a largely useless afterthought, its infrastructure agenda is malformed by pork, its super reforms do not go far enough, its innovation agenda is a fig lead, its negative gearing policy is an egregious protection of rent seekers that holds back the post-mining boom adjustment more than any other, it has no overall tax reform policy, little competition policy, no dollar policy, no industrial relations policy and no carbon policy.
The Coalition’s pitch is the truth covering a patina of policy lies that is most clear in its Budget strategy, which is an outright pretense that it has the deficit under control, that in reality only guarantees the loss of the AAA rating by year end.
On the other hand, Labor has a policy platform that does offer material structural change to the economy that will transition Australia from the mining boom to a “new economy” but it has so far failed to sell it in a narrative that prepares the polity for the sacrifices necessary to make it work. Labor’s negative gearing reforms may be about “fairness” but they are much more about ensuring that the post mining boom adjustment is not held back by another round of housing inflation. The reform will cause house prices to fall but it will also take an huge inflationist pulse out of the economy, a pulse that has been killing Australian competitiveness for 30 years. This one reform will permanently lower input costs for business, permanently lower Australia’s interest rate structure and permanently lower the dollar. All of these will trigger a massive new burst in growth in Australia’s non-mining tradable sectors, 40% of the economy. But, like all genuine structural reform, first it will hurt. And if the hurt is not explained in advance then the reforms are vulnerable to political reversal as the polity turns on them.
Labor’s wider platform is more anodyne but it has a better education policy (which is also about investing in the post boom economic adjustment), no wider tax reform policy, is timid on super, has no competition policy, is likely backward in industrial relations and has a good carbon architecture policy that is stuck in neutral.
Labor’s pitch is a half-truth that is too weak to carry the weight of its more substantial policies and thus leaves them vulnerable to electoral reversal when the pain of adjustment arrives, not least in the Budget where Labor will also have to face up to its encouragement of entitlement as revenue falls.
If you were to smash the two parties together you’d get the government we need. Instead, both have turned tribal and are setting themselves up to fail post-election as the economy deteriorates.
It is perhaps no wonder, then, that polls today are split right down the middle with Newspoll and IPSOS directly offsetting one another:
