Following the change in leadership of the Federal Government in September, Evidente published a post suggesting that the new Prime Minister would struggle to execute on any new economic narrative for four reasons: the stark reality of a hostile Senate, persistent weakness in commodity prices, Australia's income recession and the government's revenue problem. I concluded that the great expectations for Mr Malcolm Turnbull's Prime Ministership would unlikely be met.
After a bounce in popularity that lasted a number of months, the additional support for the Government and Mr Turnbull appears to have diminished, with various opinion polls in the past month showing the Coalition and Australian Labour Party are neck and neck after preferences, although primary support for the ALP remains low by historical standards.
Mr Turnbull has struggled to articulate an economic narrative, let alone execute on an economic vision for the country. Other than the launch of the $1.1 billion National Innovation and Science Agenda in December, the Government has failed to boost its credibility on matters relating to economic management and probably conceded ground to the ALP on this front.
After testing the level of community support for a widening of the Goods & Services Tax base and/or lift in the GST rate from its current level of 10%, the Mr Turnbull quickly backed down on any proposed reforms. More recently, his government has struggled to articulate a coherent response to the ALP's proposed abolition of negative gearing for existing housing, which currently allows investors to claim tax deductions on mortgage repayments for established dwellings.
Two more recent developments have dominated the political landscape in recent weeks: the passing of the Commonwealth Electoral Amendment (CEA) Bill 2016 which reduces the prospects of a hostile Senate after the next federal election (slated for the second half of the year), and the publication of the book The Road To Ruin - How Tony Abbott And Peta Credlin Destroyed Their Own Government , by political columnist Ms Nikki Savva, which traces the demise of the former PM, Mr Tony Abbott.
Electoral reforms to marginalise micro-parties
The CEA Bill effectively implements a partial optional preferential voting system above the line for Senate elections, including instructing voters to vote for at least six parties or groups in their order of preference. At present, a voter may vote for a political party or group by putting the number '1' in one box above the black line of the Senate ballot paper (see exhibit below). By casting a vote this way, voters allow the order of preferences to be determined by the party or group they are voting for.
This effectively gives each of the political parties power to engage in deals with one another to exchange preferences. The key concern stemming from his approach is that a number of independents have been elected to the Senate with a tiny share of the votes thanks to opaque and complicated preference deals between parties. Mr Ricky Muir of the Motorists' Enthusiasts Party for instance, was voted into the Senate following the 2013 federal election despite receiving only 0.5% of the popular vote.
The reform to electoral laws empowers voters at the expense of political parties by allowing voters to vote for no less than 6 parties above the line. Votes will be allocated according to the preferences of voters, not based on preferences of political parties. Unless voters deliberately vote for micro parties, they are likely to be marginalised by the electoral reforms in the upcoming federal election. Thus the reforms ought to reduce the likelihood that the Senate will remain hostile.
A less hostile Senate should raise the prospect that the elected government will have a mandate to implement its agenda. The Abbott Government clearly under-estimated the ability and willingness of the micro-parties or cross-benchers in the Senate to block key measures proposed in the 2014 Budget, including the $7 GP co-payment and deregulation of higher education. The Turnbull Government's fast re-treat on GST reform also owes much to the stiff opposition from the Senate cross-benchers.
Mr Abbott's Road To Ruin
For a while now, Senate cross-benchers have typically failed to respect the mandate of the elected government. But according to Ms Nikki Savva's new book, The Road To Ruin, Mr Abbott failed to grasp the importance of engaging and negotiating with the cross-benchers in the lead up to the 2014 Budget. Nor did Mr Abbott or the Treasurer, Mr Joe Hockey, effectively communicate a case for budget repair or articulate an economic vision for the country.
The most successful Australian political partnerships in recent decades - Hawke/Keating and Howard/Costello - had the ability to articulate an economic narrative and press the need for economic reform. Ms Savva notes that Mr Abbott had demonstrated little interest in economic matters during his political career and that Mr Hockey was probably out of his depth.
It is instructive that in defending his record as PM, Mr Abbott has recently cited that his government stopped the boats, and abolished the mining and carbon taxes. Yet Ms Savva notes that the Trans Pacific Partnership deals negotiated with various Asian countries were not prioritised as a badge of honour by Mr Abbott. Further, Mr Abbott fails to mention that his government commissioned the Financial System Inquiry, which has enhanced the resilience of the financial system by boosting the amount of equity finance in the bank sector's liability mix. Ms Savva highlights Mr Abbott's almost obsessive focus on matters relating to national security at the expense of other important policy priorities.
Ms Savva adds that Mr Abbott failed to heed calls from colleagues and sundry to replace Mr Hockey with Mr Turnbull as Treasurer, and suggests that Mr Abbott and his office were 'completely paranoid about Turnbull.' In short, neither Mr Abbott or Mr Hockey were able to connect to, or effectively connect with members of the community on their anxieties around economic issues.
Ms Savva's most searing critique is reserved for the unwillingness of Mr Abbott and his Chief of Staff, Ms Peta Credlin to consult with colleagues about key decisions, and the unusual co-dependant relationship they shared. Ms Savva draws on evidence pointing to Mr Abbott's apparent lack of self belief and that Ms Credlin astutely understood that in his mind, she represented his crutch. This would explain why after the first leadership spill in February 2014, Mr Abbott failed to heed widespread calls from within the party to either remove Ms Credlin or reduce her authority in the Prime Minister's office.
The two failed to grasp that the machinations of Opposition were markedly different from the politics of Government. Mr Abbott not only allowed Ms Credlin to be the gatekeeper in his office, but allowed her to effectively centralise power; Ms Credlin micro-managed most communication that was directed to Mr Abbott. Mr Abbott either marginalised or ignored MPs who expressed frustration at Ms Credlin's micro-management.
Beyond the next election, the prospect of a less hostile Senate should help to enhance the authority and mandate of the government of the day. Nonetheless, whoever is elected PM, will need to articulate an economic narrative for the country that pushes the case for structural reforms to boost productivity growth and address the wedge between growth in government spending and tax revenue. This would go some way to restoring community and investor confidence in Australia's political culture after being at a cross-roads for almost a decade.