Judging by the recent pronouncements of federal ministers, politics seems set to dominate over policy again next year. If the government gets its way, the two by-elections of late-2017 will be followed by five more in the first half of 2018, four involving Labor MPs and the other an independent. The government will use its restored parliamentary majority to refer the five to the High Court while blocking the referral of any more of its own who remain under a citizenship cloud.
In the lead-up to the South Australian election in March, the Turnbull government will continue its political attack on the Weatherill government for its pro-renewables energy policy, stymying any prospect of a national bipartisanship approach. And, based on the precedent set by the government in the Sam Dastyari case, the federal opposition will seek to hound out of parliament any Coalition member who behaves badly.
Yet last Saturday's Bennelong by-election and Monday's mid-year economic and fiscal outlook (MYEFO) contain sobering policy messages for both major political parties. Each has hailed the 5 per cent swing against the government as a terrific result. But Bennelong was unusual for several reasons. First, instead fielding a newcomer, the government candidate was a well-known incumbent, minimising any swing against it.
Second, as in the New England by-election, there was no anti-government hostility associated with the calling of the Bennelong by-election, as would be the case of an early retirement from parliament. If anything, voters were sympathetic to the incumbent being forced to go back to the people so quickly.
Third, traditional supporters of the government knew they could not afford to lodge the usual protest vote, since the loss of Bennelong would destabilise the government. In all these circumstances, a 5 per cent swing against the government is nothing for the Coalition to celebrate.
But nor should Labor be popping the champagne corks. Concealed by the aggregate swing were huge variations among polling places – ranging from a two-party-preferred swing to Labor of 12 per cent to a small swing to the government.
These variations can be substantially explained by a single factor – ethnicity. Polling places with a large ethnic Chinese population swung strongly to Labor. A repeat of anything like that in ethnic communities around Australia in the next federal election would result in the Turnbull government losing at least three of the four seats needed for a change of government – Chisholm, Banks and Reid.
However, some booths with large, well-off Anglo populations swung against Labor or barely at all. Labor's story that it would spend more than the Coalition clearly failed to appeal. Simply promising to spend up does not work. Queensland electorates, in particular, are not enamoured with big-spending governments. That's why Labor did poorly in Queensland in the 2016 federal election.
Which brings us to MYEFO. The Turnbull government tipped out to the media for Monday morning headlines a story that through its hard policy work it is cutting gross debt by $23 billion. It turns out that gross debt will not be cut at all, but will increase by $82 billion by 2020-21.
By taking credit for Treasury's changed projections about the state of the economy up to four years from now – projections that must be clouded with uncertainty – the government is continuing the practice of achieving a projected surplus by assumption. Instructively, of the 12 surpluses projected in various budgets since 2010 not one has materialised.
As for its hard work, the government's decisions on spending will actually worsen the deficit by around $2 billion over the forward estimates. Not that the government is getting much help in the senate from Labor and the cross benchers in reining in spending.
Out of the projected surpluses from 2020-21, the government has foreshadowed personal tax cuts for low- and middle-income earners – or more truthfully, taking less tax from them through bracket creep than it had planned to do in the 2017 budget. Since debt continues to accumulate, even under the rosy Treasury assumptions, these tax cuts are being generously paid for out of the incomes of future generations, who will not get a vote at the next election.
Australia continues to live beyond its means, expecting future generations to pay for present living standards. Yesterday's MYEFO continues the fantasy that government debt is under control and that the budget will automatically kick back into surplus towards the end of the four-year budget period. As has been the case for most of this parliament, politics is again trumping policy.