A national reform summit will be needed after the election to kick off this conversation. It should be followed by an agreed program of work to inform a new reform agenda.
With almost six weeks to go to election day all the public opinion polls have Labor well ahead. But as the polls tighten – as inevitably they will – stories will abound that Scott Morrison is roaring home in a possible repeat of his “miracle” 2019 election victory.
Recent polls report Labor maintaining a budget-defying lead of at least 54-46.
The Ipsos poll https://www.afr.com/politics/federal/liberals-to-start-from-behind-after-lukewarm-budget-response-poll-20220401-p5a9z4 commissioned by the Financial Review estimated the Labor lead at 55-45 based on the preference flows at the 2019 election.
My prediction of a tightening in published polls is based on a simple statistical observation: at no time since 1975 has either party gained 55 per cent of the two-party preferred vote.
A second reality check is the early flow of money: the election betting has Labor ahead in just nine seats and in most of these only slightly so.
Complicating the equation, independents are challenging sitting Coalition MPs in several normally safe seats, making majority government very difficult for the Coalition.
How will the election campaign unfold?
Coalition tacticians will seek to portray Labor as a risk to the economy. They always do.
Morrison and his economic ministers will insist that taxes, spending, deficits and debts will always be higher under Labor.
The facts say otherwise.
Historical tables published in this year’s main budget document reveal that the highest-taxing government in the last half century is the Howard government, closely followed by the Morrison government.
What about spending?
The Morrison government has outspent the previous Labor government, even if the pandemic years are excluded from its record and the GFC stimulus spending of the Labor government is included in its tally.
And before the pandemic struck, the Morrison government had almost doubled the Commonwealth’s net debt. By the end of this year, it will have trebled the debt.
Future talking points
The Coalition has already had a go at portraying Labor as weak on national security, its surrogates funding mobile billboards depicting President Xi Jinping casting a vote for Labor. And Morrison used parliamentary privilege to brand the deputy Labor leader the “Manchurian candidate.”
Morrison’s anti-China attacks are a strange way of managing Australia’s relationship with by far the biggest buyer of Australian exports.
For its part, Labor will emphasise its caring credentials: Medicare, child care and aged care. And it will point out that the Budget forecasts real wages to fall at least until 2025 as workers’ wages fail to keep pace with the cost of living.
Efforts to goad Labor into announcing expensive new policies by alleging Albanese has adopted a small-target strategy won’t work.
Labor has abandoned the proposal to broaden the taxation of family trusts, the last remaining controversial tax change it took to the 2019 election https://www.afr.com/politics/federal/clearing-the-decks-labor-dumps-plans-to-tax-trusts-20220403-p5aaem
Announcing a large suite of unfunded spending policies would make Labor the big target its opponents want it to be.
Readers of the Financial Review might feel frustrated that neither side has laid out a comprehensive economic reform program aimed at lifting productivity and with it, future living standards.
Since its time in power, the Morrison government hasn’t even acknowledged that Australia has an underlying economic problem.
Australia’s woeful productivity performance during the last 10 years has been masked by favourable prices of iron ore, coal and gas.
At the United States mid-term elections later this year, the Democrats are likely to lose their majority to Trumpian protectionists in one or both houses. Trump or his cardboard cut-out will contest the next presidential election. Responding to Republican nationalism, the Democrats will become more protectionist too.
Reform commitment
In an increasingly protectionist world, hoping our luck will hold, with customers continuing to buy our exports at top prices, is not an economic strategy.
Any successful reform program must start with a national conversation about the problem we’re trying to fix. Hawke and Keating explained at length that Australia’s problem had become an over-reliance on agricultural exports that were getting hammered by a trade war between the United States and the European Union.
Having accepted this reality, the Australian people backed in tough budget cuts and a sweeping economic reform program that yielded the productivity boom of the 1990s.
Morrison has been silent on any such conversation, describing economic reforms as vanity exercises https://www.afr.com/politics/federal/morrison-rules-out-big-reforms-20210201-p56ybd
A national reform summit will be needed after the election to kick off this conversation. It should be followed by an agreed program of work to inform a new reform agenda.
Albanese has committed to such a summit, which he calls a jobs summit. Whatever its name, it’s a start. As is Albanese’s commitment to govern in the reformist tradition of the Hawke-Keating government https://www.afr.com/policy/economy/albanese-must-get-with-the-growth-agenda-20220308-p5a2wy
The Morrison government would be wise to make a similar pre-election commitment. It has plenty of time to do so. Six weeks is an eternity in politics.
Craig Emerson is managing director of Emerson Economics. He is director of the APEC Study Centre at RMIT University, a visiting fellow at the ANU and adjunct professor at Victoria University’s College of Business.