tag:theconversation.com,2011:/ca/topics/bank-tax-38824/articlesBank tax – The Conversation2017-06-22T15:12:00Ztag:theconversation.com,2011:article/799562017-06-22T15:12:00Z2017-06-22T15:12:00ZGrattan on Friday: Plenty of ‘rising damp’ in Turnbull government’s approach<figure><img src="https://images.theconversation.com/files/175226/original/file-20170622-11976-1pypuy3.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">On energy security, there is a distinctly 'big government' approach by Malcolm Turnbull.</span> <span class="attribution"><span class="source">Lukas Coch/AAP</span></span></figcaption></figure><p>The Liberals have a new duumvirate at the top of their organisation. Nick Greiner, one-time New South Wales premier, will be installed – in absentia, because he’s in Europe – as president at the party’s federal council on Friday night. Greiner is Malcolm Turnbull’s personal choice.</p>
<p>Andrew Hirst will be given the tick by the party’s executive as federal director. Hirst, who is working with Crosby Textor (the firm that does the party’s polling), is a man of excellent survival skills, having served opposition leaders Brendan Nelson, Turnbull and Tony Abbott, and then Abbott in government.</p>
<p>The two face character-forming challenges.</p>
<p>Greiner, whose credentials include his strong business connections, has to rake in money for a party seriously strapped. Once, the conservatives were usually flush with cash, while Labor cried poor. These days many companies don’t make political donations. Apart from that, a government on the nose doesn’t attract dollars.</p>
<p>Hirst must revitalise a campaign structure that’s much weaker than Labor’s, in an era when the dark arts of political persuasion approach the complexity of neurosurgery, voters are cynical or not listening, and many in the “base” are unimpressed with Turnbullism.</p>
<p>How much easier it would be to ask for money and activate the grassroots if, instead of the Coalition trailing in 14 consecutive Newspolls (the latest this week), it had had a string of commanding leads.</p>
<p>Polls drive today’s politics to an alarming degree, affecting the mood of a party, inside and outside parliament. If the Coalition were doing well, the critics in Turnbull’s ranks would have to be much more accepting of him. Popularity is a warm protective blanket for a leader.</p>
<p>Liberals point to Turnbull’s ascendancy over Bill Shorten as preferred prime minister, but that’s of limited comfort, because they know many voters are disillusioned with the leader they’d hoped would represent a new brand of politics.</p>
<p>As it attempts to limit vulnerabilities and confront pressing issues, the government is sending some confusing signals to the electorate.</p>
<p>There is the whole “Labor-lite” message.</p>
<p>Getting the needs-based Gonski 2.0 through parliament is a substantial achievement. It’s good policy and should limit, albeit not wipe out, Labor’s advantage on schools.</p>
<p>But the policy spends a lot, in tight times, after years of the Liberal schools story saying it wasn’t about more money. The government’s desperation to pass the bill was evidenced by its adding in this week’s negotiations $A4.9 billion to its initial extra $18.6 billion ten-year plan.</p>
<p>The exercise has also seen the Liberals shun their usual cultivation of the Catholic lobby, which has reacted aggressively.</p>
<p>In business and economic areas, the Turnbull government is also saying loud and clear that it is not in the usual Liberal mould.</p>
<p>Remember the old talk of “wets” and “dries” in the Liberal party? The “dries” – economic rationalists – gained dominance many years ago. Both sides of politics dried out, and selling government-owned enterprises became the order of the day.</p>
<p>Now we’re seeing plenty of rising damp, not so surprising with Labor but more so from the Liberals.</p>
<p>The budget’s bank tax was driven by fiscal necessity. But the new rigorous governance regime for the banks – responding to some appalling behaviour – is notably intrusive and a change of tack. The Abbott government tried to unwind protections in the financial advice area.</p>
<p>On energy security, there is a distinctly “big government” approach.</p>
<p>Galvanised by a worsening power crisis and people’s deep concern about rising prices, the government is to use export controls to boost the availability of gas.</p>
<p>In the budget, it announced it wanted to buy out the New South Wales and Victorian shares in the Snowy Hydro, boosting the Commonwealth’s ownership from 13% to 100%.</p>
<p>It is also leaving open the prospect of helping to finance new clean coal generators.</p>
<p>Business is desperately looking for a coherent energy policy to provide certainty for investment. The Business Council of Australia has welcomed the Finkel report’s advocacy of a clean energy target, hoping this could be a path to a settled policy.</p>
<p>But the BCA this week warned: “Companies will only invest in new energy infrastructure if there is a stable policy framework, with minimal government intervention, that will outlast the government of the day … We strongly caution against using taxpayer funds to finance new electricity generation”.</p>
<p>The possibility of financing power plants goes to the Coalition’s commitment to coal. But it’s the outlook for coal that speaks strongly against such financing.</p>
<p>If so-called clean coal can’t attract adequate private investment, it will be because the long-term viability of such projects is considered poor. So it would be rash for a government to jump in with public funds or guarantees that could be rued as the years pass.</p>
<p>Despite the signals, that initiative is unlikely to come to pass. One Liberal says that if the government ever tried to invest in coal-fired power stations Turnbull would have “a riot on his hands”.</p>
<p>On Thursday the government received a fresh blast from the big end of town, after the South Australian budget followed the federal lead of garnering revenue from unpopular institutions by imposing its own bank tax.</p>
<p>The BCA blamed the Turnbull government for “letting the genie out of the bottle”, and declared that: “All of these ‘one-off’ government decisions, when taken together, have a chilling effect on business investment which is at its lowest level as a share of GDP since June 1994”. </p>
<p>The BCA claimed that: “Australia is becoming a laughing stock of global investment circles as erratic governments – state, territory and federal – carelessly undermine and chop and change the rules of doing business”.</p>
<p>Of course a discount must be applied to the BCA comments – there is a lot of self-interest involved. It represents the country’s biggest companies, including in the banking and resources sectors.</p>
<p>Nevertheless it is business, particularly big business, that drives job creation and the angst does little for the positive mood the government is trying to encourage.</p>
<p>Greiner is likely to get some tough feedback as he moves round his business network, wearing his new Liberal president tag.</p>
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<p class="fine-print"><em><span>Michelle Grattan owns bank shares.</span></em></p>As it attempts to limit vulnerabilities and confront pressing issues, the government is sending some confusing signals to the electorate.Michelle Grattan, Professorial Fellow, University of CanberraLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/780372017-05-19T04:15:30Z2017-05-19T04:15:30ZVIDEO: Michelle Grattan on the government’s budget sales job<figure><img src="https://images.theconversation.com/files/170067/original/file-20170519-12266-klye.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">
</span> <span class="attribution"><span class="source">AAP/David Mariuz</span></span></figcaption></figure><figure>
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<p>The University of Canberra’s vice-chancellor and president, Deep Saini, and professorial fellow Michelle Grattan discuss the week in politics, including the post-budget polls, how the banks will cope with the budget, Standard and Poor’s Global reaffirmation of a negative outlook, and how the issues with Donald Trump’s administration will affect Australia.</p>
<iframe src="https://www.podbean.com/media/player/jj7pe-6b2773?from=yiiadmin" data-link="https://www.podbean.com/media/player/jj7pe-6b2773?from=yiiadmin" height="100" width="100%" frameborder="0" scrolling="no" data-name="pb-iframe-player"></iframe><img src="https://counter.theconversation.com/content/78037/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>The authors do not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and have disclosed no relevant affiliations beyond their academic appointment.</span></em></p>The University of Canberra’s Deep Saini and Michelle Grattan discuss the week in politics.Michelle Grattan, Professorial Fellow, University of CanberraPaddy Nixon, Vice-Chancellor and President, University of CanberraLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/779952017-05-18T12:49:51Z2017-05-18T12:49:51ZGrattan on Friday: Budget-making is undermined by the continuous election campaign<figure><img src="https://images.theconversation.com/files/169966/original/file-20170518-12263-v0u10l.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">Scott Morrison has been on the campaign trail selling the budget.</span> <span class="attribution"><span class="source">Dean Lewis/AAP</span></span></figcaption></figure><p>The budget did enough to ward off a credit downgrade from the ratings agency Standard and Poor’s (S&P), partly thanks to the A$6 billion slug on those big banks everybody loves to hate. But the S&P report issued this week should make sobering reading for politicians on both sides of parliament and on the crossbench.</p>
<p>The message is that Australia is on notice: external and internal vulnerabilities pose risks. As for that narrative – aka projection – about returning to surplus in 2020-21, S&P will believe it when it happens. The agency spokesman said tartly: “We have seen governments forecast surpluses for many years now and they haven’t materialised … we don’t think further pushback on the surplus target is consistent with the AAA rating here on in.”</p>
<p>Australia faces all sorts of challenges in the post-mining boom years. But it is hard to avoid the conclusion that a major one has been and continues to be the performance of our politicians, across the board. A combination of incompetence and expediency has let down the country in the task of fixing up the budget.</p>
<p>The 2014 budget, following the Abbott government win with a big majority, provided an ideal time for repair. But the government, having drunk treasurer Joe Hockey’s “age of entitlement” Kool-Aid, gave short shrift to fairness and previous promises. This invited disaster and the Senate, including a newly arrived swaggering Palmer United Party, delivered it.</p>
<p>Remember PUP, formed before the 2013 election, fragmenting in parliament, and recently disbanded?</p>
<p>As we watch Clive Palmer in court these days, we might wonder how, for a brief time, he could have gained so much political power. The answer was money, the Senate voting system and a disillusioned electorate. Opinions will differ, in relation to individual measures, whether these senators used their clout for good or ill, but they certainly helped destroy the budget.</p>
<p>Having blown itself up in 2014 the Coalition, first under Tony Abbott then under Malcolm Turnbull, went into retreat on budget repair. Voters, stressed by cost of living pressures and fed up with politicians, won’t be persuaded anymore of the need for tough decisions. The government hangs its battered repair hat on that shaky projected on-the-horizon surplus.</p>
<p>Turnbull has had more success with the Senate than Abbott; this budget has been crafted in considerable part with the Senate in mind, so the government hopes its main initiatives will pass relatively unscathed. The bank levy has bipartisan support. But Labor has signalled it will try to limit the planned increase in the Medicare levy to those with incomes of more than A$87,000 and so that is likely to be at least in play.</p>
<p>Whatever happens with the Medicare levy increase – which doesn’t have to be legislated quickly because it only starts in 2019 – the Senate seems to have no intention of approving the second tranche of the 2016 company tax cuts, which remains government policy.</p>
<p>When they consider budget measures, the opposition and the crossbench should have in mind the S&P warning, as well as other factors. </p>
<p>Certainly S&P has the Senate firmly in mind, saying that “enacting further savings or revenue policies could remain a challenge, given the Senate’s unwillingness in recent years to legislate many of the government’s fiscal policy measures or doing so after considerable delay. This dynamic, which could continue, presents further downside risk to the outlook for fiscal balances”.</p>
<p>There is no broad agreement about how far the Senate should go when dealing with budgets. Only questions. Should a government be accorded the right to get its main measures through, albeit with some amendments? Is an opposition justified in trying to obstruct any measure it regards as bad, regardless of the wider budget picture? Is it appropriate that crossbenchers elected on relatively few votes can be in a pivotal position to thwart a government or demand expensive concessions in return for support?</p>
<p>Abbott says the Constitution should be changed to allow blocked legislation to be considered by a joint sitting without the present requirement of a double dissolution. There is an argument for such a change, but it wouldn’t get through a referendum.</p>
<p>Certainly there is a case for oppositions more often to contest measures without seeking to block them, leaving judgements for election time.</p>
<p>Political self interest will always be a major factor in how players approach budgets – it’s unrealistic to think otherwise. But the permanent election campaign that now dominates politics encourages everything to be fought to the death, whatever the economic and fiscal cost. At some point, the price becomes very high.</p>
<p>With an eye to fiscal credibility and the AAA rating, the government came up with its levy on the five major banks. The banks have forfeited much of their social licence so are an easy target. Regardless of the merits or otherwise of the levy, it is fruitful politics. Who once would have thought Scott Morrison would so relish bank bashing?</p>
<p>Accepting the budgetary imperative for the levy, the way the government is conducting its stoush with the banks is unedifying.</p>
<p>When Ken Henry, former Treasury secretary under both sides of politics and now NAB chairman, bought into the row, the government made things personal, suggesting he was politically biased. Not that Henry can’t look after himself – in February he delivered a swingeing critique of politicians dug “into deep trenches from which they fire insults designed merely to cause political embarrassment”.</p>
<p>The government’s insistence that the banks sign a confidentiality agreement, preventing them from publicly discussing details of the levy legislation during the extremely brief consultation period, was wrong in principle and hypocritical. After all, the budget is – rightly – insisting the banks must be more transparent.</p>
<p>Apart from its blatant political purpose, the government’s aggro approach appears to be stoked by its frustration with the banks over various issues, including the Australian Bankers’ Association appointing former Labor premier Anna Bligh as its chief executive.</p>
<p>It would be better to deal with the banks’ blowback in a more restrained manner. After all, one of the government’s points against a royal commission has been that it would send a bad message to investors abroad. Surely it has to guard against doing the same itself by talking down the banks.</p>
<p>On the other hand, maybe it is starting to wonder why it didn’t give in to the calls for a royal commission. That would have been as popular with the public as the levy is.</p>
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<p class="fine-print"><em><span>Michelle Grattan owns bank shares.</span></em></p>A combination of incompetence and expediency has let down the country in the task of fixing up the budget.Michelle Grattan, Professorial Fellow, University of CanberraLicensed as Creative Commons – attribution, no derivatives.