The accidental success of the Morrison Government

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Lots of weekend pieces to choose from to wrap up the new budget panic. It is coming from fiscal conservatives that haven’t caught the MMT fever. Jacob Greber led them seeking to repair his credentials after some recent terrible reporting:

  • All previous treasurers have committed to returning the budget to surplus in the long run.
  • Frydenberg has destroyed this commitment.
  • This is a shift towards profligate US politics.
  • Backbenchers are shocked by the waste.
  • The AAA rating will be lost.
  • Joe Hockey says the long-term deficits will be beholden to the iron ore price.

Let’s put one bogey to rest. The one thing that the Morrison budget rebranding did not do is base itself on stupid iron ore forecasts. It kept it at $55 so the outlook on that front is all good and offers the prospect of better than expected revenue outcomes for a year or two.

But, yes, the budget game has changed with deeper deficits for longer. There are three reasons for it.

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The first is the RBA’s embrace of Modern Monetary Theory (MMT). It has enabled Morrison to spend like no drunken sailor before him. The RBA wanted it and he gave it to them.

When one examines where the new spending is strongest, the second reason becomes clear. This is a budget of quick fixes for Morrison blunders.

The budget hosed new spending upon aged care which Morrison has cocked up both cyclically in the pandemic and structurally in quality of care failure.

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It hoses money upon women, enraged by Rapegate, to show that Morrison cares.

It hoses money upon mental health and the NDIS to rebrand Morrison and Rapegate Reynolds as empathetic. Recall that until a few weeks ago the NDIS was going to be slashed to address massive rorting.

It hoses money upon low-paid households which have not had a pay rise in a decade thanks to Morrison’s rapacious foreign worker economy.

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Finally, this combined fiscal gusher floats all boats within a Prison Island economy locked out of global commerce thanks to the Morrison Government’s unique vaccine fail. This comes on the heal of Morrison repeatedly attempting to reopen borders before we had the vaccine, which was prevented by sensible state premiers. The fiscal bill for this Morrison stuff up amounts to scores of billions per annum.

That brings us to point three. This is obviously an election budget and the poll will probably come later this year.

Don’t get me wrong. It’s not all cynical news. Some of the spending is productive if implemented well. Especially participation-directed measures. So it’s not a terrible budget in and of itself.

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Moreover, fiscally-led recovery is exactly what is needed after ten years of lowflation and substandard growth. So let’s give MMT a chance.

What is unnerving is that it is all done by accident. Should we be reassured by an 11th hour patch-up job of Morrison’s serial failure to use an orderly policy process? Should we be excited by having to borrow scores of billions more than we should have to cover his endless blundering?

In this way, the dramatic turn for the better in Australia’s foreign policy over the past two years is the leading indicator. As the personality disordered PM blundered through one diplomatic gaffe after another, he’s accidentally triggered a China decoupling that is very much the national interest. Now those gaffes have become official policy.

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It’s now similar for broad social policy and the budget!

I suppose one could put all of this accidental success down to learning from one’s mistakes. Perhaps it’s all of that empathy training. Moreover, in Australia’s corrupt political economy it’s never a good idea to let the perfect get in the way of the good.

But, call me old-fashioned, I still find succeeding because you’re failing at everything pretty poor government. More to the point, according to Newspoll, I’m not alone. Following a very popular budget, Morrison has registered precisely zero polling bounce:

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Obviously, most Aussies don’t follow policy failings as closely as I do. But they do remember totemic moments that capture it: boozing as the nation burns, demanding open borders into a global pandemic, abandoning stranded Aussies, Rapegate, Vaccinegate so on and so forth. Can these things simply be bogged up with 11th-hour pork?

And it raises one last question. If politics is now about spending and not saving money, would Australia rather have Morrison’s endless blundering and budget bandaids, or Labor’s better policy process to begin with?

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About the author
David Llewellyn-Smith is Chief Strategist at the MB Fund and MB Super. David is the founding publisher and editor of MacroBusiness and was the founding publisher and global economy editor of The Diplomat, the Asia Pacific’s leading geo-politics and economics portal. He is also a former gold trader and economic commentator at The Sydney Morning Herald, The Age, the ABC and Business Spectator. He is the co-author of The Great Crash of 2008 with Ross Garnaut and was the editor of the second Garnaut Climate Change Review.