The “courageous” Yes Minister idea of getting the states to raise their own income tax to cover state schooling and health has exploded in Malcolm Turnbull’s face. Not only was the proposal canned by the Premiers at today’s COAG meeting, it has wounded the lame-duck PM in his waddle-up to an election for which he is daily looking less prepared.
The meeting was not a total waste of time, however, with a PM throwing states a few crumbs from his federal budget table, a table once cluttered with options but now almost completely bare. $2.9b will be provided to keep public hospitals operating over the next three years. Tony Abbott had scheduled a $7b cut which builds to $57b over eight years.
Yet this demeaning act of noblesse oblige will not repair any of the damage done by the defeat of his bizarre plan to turn back the clock on taxation. Nor will it fix the state’s problem.
Voters are now rightly fearful that Turnbull’s crazy DIY income tax plan is still at the back of his mind. They will wonder what’s up between him and his treasurer. Above all, has once again, blown hot and cold on a proposal in a matter of days.
Not only does Turnbull walk away from his COAG Captain’s call looking unrealistic, impulsive, in brief a bit like Mr Abbott, he’s got egg on his face. It’s not just that Scott Morrison was left out of the loop again, although that’s a bad look in itself.
We wonder about the poor timing of a major tax reform which properly belongs in a second term in office after everyone has had a lot of time to think about it. And we continue to wonder about Morrison, too.
Not only do we wonder at the relationship between PM and his Treasurer; wonder who is doing the Treasurer’s job, Turnbull’s made it clear that his government thinks the states are wasteful with funds and that they regard federal government as a big ATM machine. It’s a cheap shot that will further damage his image as a capable national leader. And it shrieks of lack of trust.
Few were surprised at today’s failure. Banging on about efficiency and how you would be much more careful with money you had to raise yourself all sounds a bit patronising really. More than a bit far-fetched. Stoking competitive federalism by getting states to pay for their own hospitals and schools may appeal to the IPA but, for the rest of us, the proposal is unfair, unworkable and a bit unreal; in Daniel Andrews’ words a ‘thought bubble.’
Andrews was also quick to point out the government was not offering any extra money. If he were really committed to this brainwave, surely Turnbull would have put back the entire $80 billion which Abbott took away from the states’ education and health grants. Then the PM would have had some basis on which to negotiate.
But, in the event even Mike Baird who loves the concept of greater state autonomy, was prepared to tell the PM that his proposal was a dud. No-one except Barnett was in favour.
There was never any additional money in it. Nor was it fair. Less populous states such as Tasmania and South Australia lack the necessary revenue base to pay for the amenities they deserve and are entitled to as members of the Commonwealth.
But there was also a rush of smoke and mirrors from the political fog machines. Health Minister Sussan Ley came out on cue to read her autocue and bang on about efficiency and better targeted health care. It was left to Daniel Andrews to call it for what it was: a diversion from the savage cuts of the Abbott 2014 budget.
WA Premier Colin Barnett was the only one who looked forward to being able to raise his own income taxes but even he spoiled the illusion with wild assertions about wastage.
Airing the old canard that the Abbott government did not really cut $80 billion at all, he suggested the figure was a contrivance of Bolshevik premiers. Like any useful stooge, he had a colourful personal anecdote ready but it proved nothing, apart from his capacity to smear the COAG process.
“There were little private meetings in different rooms as the then Prime Minister and state premiers scurried from room to room and the $80 billion figure appeared. I didn’t at the time ever believe that was a realistic number or that that could be properly funded.”
Barnett added a bit of jargon dropping which didn’t help. Vertical fiscal imbalance is probably best left to the experts. All it did was make him look superior, as if smart people like himself knew that there was a funding crisis all along. All it means is states spend more funds on services they are responsible for than they can ever raise themselves and they have to get the rest from Canberra. If you can’t say it in plain English voters will only deduce you are hiding something.
Where is this mythic wastage? Where it the evidence that any state was on a spending spree before the Abbott/ Turnbull government came to power just to bring them to our senses. Those who shriek “waste” have clearly never stepped inside a public hospital or a state school recently. The casualty department of Warrnambool Hospital is about to close because of lack of funds. Others are in a similar position.
Was the PM really keen on this radical proposal or was he pushed? Bernard Keane believes that Turnbull is telling the truth when he says the leaking of the idea on Wednesday forced him to put it on the agenda. Once more he’s been caught out by an act of insurrection.
Could it be a tactical move? Wedge the premiers so that when, as they inevitably must, appeal for more funds he can reply he offered a solution but they turned him away? It’s a high risk gambit. Certainly, if nothing else, today’s fiasco has blown the whistle on Scott Morrison’s continued assertion that there is no revenue problem but just an expenditure problem.
For Turnbull, today’s failed proposal is a serious stumble which will cost him credibility in the leadership stakes and which will provide Labor with a wealth of ammunition on his government’s pretensions at management let alone economic reform.