This morning The Shovel ran with the headline ‘Malcolm Turnbull has used his extra hour this morning to propose, then withdraw, two new tax policies.’ I smiled wryly – clearly The Shovel perceives its audience as progressive types who would only live in states where daylight savings is a thing. But more importantly, like all great comedy, the headline was funny because, let’s face it, it just might be true.
It feels like every week or so for the past few weeks the Prime Minister has announced the prospect of a bold tax reform. Each announcement has been followed weeks, days or hours later, by another announcement killing off the prospect of the same reform. We’ve flown the flag for raising the GST, income tax cuts and, this week, a dual taxation system. This would have seen the states able to levy income tax, in addition to that levied by the feds, for the purpose of raising their own funds to pay for services for which, under the rules of our federation, they are responsible. The most significant of these are the hospital system and school education.
I’ll leave other, better informed, commentators to debate the relative merits of any of these particular ideas, especially given that each has been dismissed. I’m more interested in the political strategy which is driving the Prime Minister to release his ideas in such a way. Thankfully I’m not a Canberra insider, so I can’t claim that my analysis is based on any primary information sources – rather just a keen observation of politics, society and personality.
In that spirit I reckon there are a couple of possible explanations for what Malcolm is up to. The first is perhaps the most likely, especially in relation to the state taxation proposal. Maybe it’s just a negotiation strategy. He wants a particular outcome from the states – for them to stop asking the federal government to raise more money through tax, and accept responsibility for funding schools and hospitals within current revenue. So he goes for something he knows they’ll find less palatable – the possibility of having to sully their own electoral prospects by raising their own taxes, and they fall back to the position he was hoping they’d reach in any case. If that’s the strategy, well played Malcolm.
Another possible explanation for his approach is more interesting, and based on what we know of the man. Malcolm is something of an entrepreneur. He has had several, very successful careers – merchant banker, lawyer, public face of the republican movement and now politician. Like many entrepreneurial characters, Malcolm has repeatedly demonstrated an early commitment to bold new ideas. Coupled with the optimistic belief that the devil, if he is in the detail, will be exorcised by hard work and clever thinking, this approach has proved incredibly lucrative for him. Professions like merchant banking and law reward the pursuit of bold ideas with hard work and clever thinking.
I can hardly believe I’m saying this but I think what Malcolm might have overlooked in the transition from these professions into politics is the different way that power operates in the political sphere. As the high flying banker, or the suave lawyer taking on the British government in the Spycatcher case, he was reliant primarily on the power of his intellect and the power of his position. In court, in particular, his position was lent the weight of the authority of the judicial system – not inconsiderable backing for his intellect.
I’m sure that, as Prime Minister, Turnbull has retained his intellect, and I’m not about to argue his position doesn’t lend him a degree of authority. However, as Turnbull has discovered, delivering an emissions trading scheme, reforming the taxation system or re-making our federation are beyond the power of one person to achieve on the strength of a commitment to the bold idea and preparedness for hard work – even if the person is the Prime Minister.
Certainly the Prime Minister can lead the country to make major reforms – Hawke and Keating made huge strides in the deregulation of the economy and floated the dollar, Howard introduced the GST and Gillard gave us the NDIS and Gonski. However none of these ideas were sprung on the electorate as a genuine prospect before any of the hard work and clever thinking had been undertaken. Bold ideas introduced in haste are almost always doomed to failure (think Hawke’s Australia Card, John Hewson’s GST and Gillard’s Citizens’ Assembly on Climate Change).
I used to think the main challenge for Turnbull was that, as an entrepreneurial type, he is relatively progressive, and yet he leads a very conservative party. When he became Prime Minister I commented that he was like the lipstick on a pig. In the last couple of days Paul Keating has described him as ‘fundamentally a cherry on a compost heap.’ Keating will always be able to say it better than anyone…
But Turnbull’s approach to taxation reform has made me think that perhaps his major challenge is that he leads a conservative nation. Collectively, Australians are inclined to regard the latest bold idea with scepticism and look for flaws in the logic in an effort to keep from introducing significant change, when all of the possible outcomes cannot be known or predicted. Really transformational reforms often seem to percolate in discussion papers, white papers, green papers and debates around the country for a long time before the electorate will vote for them.
I can see that Malcolm the entrepreneur could be frustrated by the need to repeatedly prosecute a case he has already argued and won in his own mind, or perhaps with a few trusted friends and colleagues (notably, not including Treasurer, Scott Morrison). He’s ready to put it out there, fail fast, learn from his mistakes and keep innovating. The trouble is, as Prime Minister, he serves at the pleasure of his party and, ultimately the electorate. To retain his powerful position he needs to convince a conservative electorate of the merit of his bold ideas if any of them are going to come to fruition. Recent history has shown that the only reliable way to do this is through long and detailed engagement with the electorate on the ideas in question.
The challenge for Malcolm is now, five minutes before the budget and ten minutes before an election, he has promised bold reform to an economy in transition but, so far, shown little willingness for long and detailed engagement with the electorate about what he might actually do.
