Malcolm Turnbull has just picked some big political fights, including a couple that will follow him to polling day even though they are about ideas that lasted less than 24 hours.
Caught between Tony Abbott’s untenable $80bn in cuts to hospitals and schools and his own cabinet’s unwillingness to increase federal spending or taxes, Turnbull found a bit of extra money and then raised an almighty ruckus with a wild plan to solve the rest of the problem.
He did find $2.9b for public hospitals over the next three years. (Abbott was cutting projected funding by $7b over those three years and $57b over eight years.) NSW premier Mike Baird said he thought this was “fair and reasonable”. The other premiers conceded it was better than nothing. It’s probably enough to keep public hospitals going and head off an election campaign attack by the premiers.
But Turnbull is offering no new money for schools, instead saying he’ll reach an agreement with the states next year over what to do about the $28b cut over seven years in the Abbott budget.
And in response to the big question – where do we find the money for essential services in the longer term – he stood in a Penrith park and floated the radical idea that states get their own share of income tax, and over time, the power to raise or lower those taxes. The states have rejected the idea out of hand, but that won’t stop Labor’s attack.
He also proposed that the states eventually take over the funding of schools entirely. That didn’t last to the end of the week either, but invited the inevitable charge that the Coalition plans to abandon public education.
The bad news for the nation is that every state premier can see Australia has a revenue problem, that at some level a government has to raise extra taxes to pay for hospitals and schools in the longer term. But they weren’t prepared to accept the power to do that themselves. Turnbull insists the federal government won’t be increasing taxes either and claims, implausibly, that the funding gap can be filled by “stretching our dollars further”.
Labor strategists can’t believe their good fortune. Hospitals and schools are their chosen electoral battlegrounds.
Some Liberals argue they have managed to offer very little new money to make up for Abbott’s $80bn in cuts and now have the perfect counter to the states’ charge that they haven’t got enough funding to run hospitals and schools. Turnbull’s answer will be “I offered you a slice of income tax and the power to control it yourselves and you declined it.” Under the guise of “ending the blame game” they think they have managed to shift the blame for the fact that the nation is not raising enough revenue to pay for the social services it needs, and they think that shift is justified.
Other senior Liberals are deeply concerned, because it is highly debatable whether this tactic will work. Voters just want politicians to deliver functioning health and education systems, not quibble about whose fault it is that they are failing. And Turnbull has taken a hell of a risk to execute the plan.
Just months ago Liberal strategists were saying Turnbull’s strength was going to be that he was seen as the economically competent one who was taking a steady approach in challenging economic times, that he was deliberately running a small(ish) target strategy because when voters are uncertain about the economy and weary of political dysfunction and upheaval, they don’t want big change or grand plans, they just wanted competent, sensible government. The plan, then, was to paint Shorten as the risk and Turnbull as the “safe hands”.
Six weeks ago, cabinet secretary Arthur Sinodinos, asked on Sky news about the government’s retreat from changing the GST, said the government was all about offering “modest incremental reform which gives the country a capacity to go to the next stage in terms of growth”.
Turnbull seems to have moved on to a political “plan B”. Tragically, no one seems to have a plan B for how to fund our schools and hospitals. The blame game continues.
