*Pic: On the rise ... ABC pic of Labor Leader Bill Shorten
“This budget will not be about a fistful of dollars, it will be about prudence, fairness and responsibility to our future generations,” the PM told the Victorian Liberal Party conference in Melbourne this week which gathered to honour John Winston Howard who blew the mining bonanza ... buying votes while generally ignoring prudence, fairness and responsibility to anyone’s future but his own.
Newspoll has Labor 51 ahead of LNP 49 two party-preferred for the first time this week and is unlikely to respond to Turnbull’s budget hints, while his popularity plummets each week. If only they had a category for best prevaricator, bloviator or most patronising toff.
Publicly humiliated last Friday when a scurvy crew of state and territory leaders angrily trashed his latest tax plan, the PM was affronted by the premiers’ outrageous demands that the government repay the $80 billion over ten years OF Health and Education funding Tony Abbott and Joe Hockey cut in the 2014 Budget. Perhaps with a GST hike in mind, PM Turnbull was quick, this week, to claim the high moral ground at the top of the COAG compost heap.
Ignoring entirely his government’s part in creating the funding crisis which is already causing some Victorian hospitals to close emergency wards and ordinary folk to suffer, the PM dismissed the $80 billion as “a fantasy”, although it appears in his own government’s 2014 budget overview:
“In this Budget the Government is adopting sensible indexation arrangements for schools from 2018, and hospitals from 2017-18, and removing funding guarantees for public hospitals. These measures will achieve cumulative savings of over $80 billion by 2024-25.”
Later he led his team to repeat this falsehood and misrepresent the Premiers’ behaviour.
“The reality is … if they’re not prepared to make the case to their citizens through their parliament for higher taxes, they cannot seriously or credibly ask us to raise taxes to give money for them to spend.”
...especially to Tasmania ...
Yet it was the PM himself who seemed less than serious, especially to Tasmania, South Australia and The Northern Territory whose smaller populations would mean they would have to raiser higher taxes. The NT calculates it would have to raise taxes by over 8% to make up for the loss of the tied health and education grants.
Turnbull didn’t care as long as he could paint the states as churlish, uncooperative and immature. He bared his bottom teeth like an anglerfish attracting prey.
“Live within your means,” Turnbull lectured the premiers. A paragon of frugal living himself, his personal commitment to frugal domestic economy includes a Spartan $52 million Sydney hacienda, a lakeside Canberra penthouse, art deco New York apartments, Hunter Valley land holdings and a few lazy million perfectly legally invested in a Cayman Island Trust.
Legal to his back teeth, the PM is not accused of anything but hypocrisy. OK - being hopelessly removed from everyday reality also cuts it. (Just one of his ties would cost you your entire Newstart allowance.)
“Trustafarian” Turnbull’s Cayman Island investments yield income which, he assures us, he pays tax on in Australia, although the whole point of the exercise is to reduce his taxable income. Apart from safety and privacy. One per cent of the world’s population owns half the wealth and they need somewhere special to stash it.
Tax havens are not perfect, however. This week’s leak of 2.6 terabytes of data exposing 11.5 million documents made Mossack Fonseca look a bit ordinary. The world’s fourth biggest offshore law firm, it runs 214,000 shell companies for those, who, through no fault of their own, are born impossibly rich and a few other innocents abroad in the serendipitously named British Virgin Islands. Some of this clientele is now acutely embarrassed.
Plummy UK PM, David Cameron, has hammed up a series of excuses, beginning with how his shares in his late father’s Blairmore offshore Trust, were just a family matter while the laconic Sigmundur David Gunnlaugsson, Iceland’s PM has simply swiftly hung up his ice-pick.
...unwilling to put its money where its mouth is ...
The ATO will go through the records of 800 Australians exposed by the leak, although down in staff numbers and facing further government cuts which will see numbers reduced by a total of 5000 so far. The Turnbull government is unwilling to put its money where its mouth is on catching tax cheats.
Some big company names have surfaced already: Wilson Security, which runs Australia’s offshore detention facilities with extreme prejudice towards those within, is shown to be still linked to Thomas and Raymond Kwok who were implicated in a Hong Kong corruption scandal. Thomas Kwok was sentenced to five years’ imprisonment for bribery.
The Greens have the temerity to call on the government to terminate Wilson Security’s contracts, a case which was strengthened by reports that the firms’ guards had beaten children, a fact which Peter Dutton told ABC’s Mark Colvin was just peddling unsubstantiated rumour and was part of a conspiracy of advocates: “I think these people are being used as pawns, frankly, by some advocates in Australia.” A day later the report was verified.
The odd big corporate name has already popped up in the Panama Papers. BHP Billiton is revealed to have been warned by Mossack Fonseca’s compliance division to get its act together or get out. Its governance controversies meant that it was high risk and needed to produce extensive documentation.
BHP left the firm instead, doubtless to seek another off-shore firm with a lower doc approach which will enable it to continue to pursue those frugal, thrifty practices which so inspire our Prime Minister.
Turnbull’s preaching of thrift sits oddly with his government’s own extravagance. From $153 billion when Abbott assumed office, net debt is now $279 billion a rise from 10 per cent to nearly 17 per cent of GDP. Axing the carbon tax, its hobby horse, has cost over $7 billion per year. Direct Action will cost $1.5 billion over three years. Its White Paper promises to “increase the defence budget to reach $42.4 billion, which is two per cent of GDP, in 2020-21.”
Happily there is another IPA plan. Education Minister Simon Birmingham confirmed this week he will continue to deregulate tertiary education, thus helping those who can afford it to go to university, further entrench educational inequality and ensure more young people will be living beyond their means. Look forward to $100,000 degrees.
The burden of unpaid HECS has been positioned in the news this week as a way of making us feel sorry not for the students who can’t get jobs to pay back their loans but for the government which holds all of this debt.
No wonder it proposes to get students to repay loans faster and lower the income threshold whilst it may remove HECS access for TAFE students, entirely. Despite its lip-service to its innovation agenda, it talks of raising University entrance standards. It is axing 350 CSIRO scientists, gutting the climate science unit and backing out of funding schools.
Fittingly, debt-ridden Victorian student protestors interrupted yet another Liberal dinner in honour of the architect of much of our current social, political and fiscal mess, St John Howard, who came to power twenty years ago with the slogan “for all of us” a form of words whose meaning his government spent years refining.
Howard changed the basis of federal funding for private schools to enable well-established, well-endowed schools for the privileged to attract millions more from government funding, accelerating the drift away from state schools and helping create, “for the rest of us” a residualised system, less and less equipped to provide equality of educational outcome with its favoured, private neighbour. The trend will accelerate under Turnbull’s school funding proposal.
Howard’s welfare-to-work policy pushed single parents and Australians with a disability down to the lower Newstart allowance, a saving which benefited older, upper middle class punters.
Howard’s introduction of The Job Network, alone, stripped one billion out of funding to help long term unemployed. His Work for the Dole scheme echoes the Turnbull government’s view that it is only your attitude that holds you back, whether you are a dole bludger who refuses to look for work or a state premier who wants to fritter the kitty away on indulgences like health and education but who won’t get out there and raise your own bloody taxes.
Expect company tax cuts in the budget.
“Live within your means,” is music to lot of public ears. Even Ombudsperson for Small Business, Kate Carnell, is heard gurgling sweet nothings over her boss’s hard line with the states, although it did not stop her urging the PM to cut company taxes, despite The Panama Papers confirming that the biggest struggle faced by many companies is how to sock away its profits. Expect company tax cuts in the budget.
Continuing the moralising, BHP’s spin off, Whyalla steel-maker Arrium which began with a 1.2 billion debt from its parent was roundly condemned by many for its “poor investment decisions” namely its decision to mine iron ore as well as make steel, which in reality like those of the government itself consisted of misreading the end of the mining boom.
“Fiscal vandals” and “not adults” sneered Tony Abbott’s pet pen-pusher Greg Sheridan who is also Australian Foreign Editor, appearing on Q&A Monday, helping the government promote its superior tone.
Greg might have been talking about the banks who have moved swiftly on Arrium to recoup what is likely to be 65 cents in the dollar on the $4 billion plus the little South Australian miner and steel-maker owed the Big Four. After flogging the bankers with a limp lettuce leaf, the PM backed off, helping Bill Shorten steal a march by announcing a Royal Commission into banking should Labor come to power and labelling Turnbull’s tax plan double taxation.
To be fair to the PM, his cunning plan was not his own but an IPA leftover. Yet even Tony Abbott had seen fit to leave it well alone leaving Malcolm Turnbull with the need to pay back his tormentors and to lead an increasingly skittish government once more into the breach this week by claiming to have won a strategic victory.
Less was said of his cunning plan to back out of funding state schools while vowing to continue to fund the privileged private sector. The PM himself hammed it up on TV pretending to have discovered something he archly called “clarity”. By this he meant he had tricked the state premiers all into revealing their true positions. He knew where they stood.
...a “moment of clarity”...
Turnbull’s rout had become a magnificent victory by Monday, according to Turnbull himself who presented his defeat as a “moment of clarity” that revealed the states “lacked the stomach for reform” and must “live within their means”.
It was a line which Joe Hockey, looking on fondly from his comfortably refurbished, palatial ambassadorial residence in Washington wished he’d had the guts to use.
Industry Minister Christopher Pyne was everywhere Thursday boasting an $80 million contract to buy Arrium steel to build roads would save Whyalla from being wiped off the map, although it needs $4 billion. Only exports can keep it afloat. The SA steel-maker was forced into voluntary administration by banks who are sensitive even to their modest exposure to mining suddenly want their $4 billion back and their own administrators installed.
Arrium, previously OneSteel and a former BHP subsidiary, set up with a 1.2 billion debt, is a casualty of falling commodity prices, cheap Chinese imports and an LNP industry policy confined to closing down car makers and Ardmona while finding billions for submarines it won’t build locally. It last traded at 2.2c and is worth $65 million.
As he jetted off to China where he could offer a few pointers of his own on the Chinese Premier’s cultivation of a Maoist cult of the leader’s personality Turnbull would spearhead another massive invasion of 1200 SME business types dwarfing the record 350 who invaded Indonesia last November when Douglas Robb was in the top Trade job.
Once again our army of business types is intent on landing a deal with a nation which requires little from us but which must be allowed to sell us ruinously cheap steel and which is staring down the barrel of an imminent recession it will inevitably share with all the rest of us.
However well it may airbrush its official statistics, China’s economic growth is faltering. Luckily our former Trade Minister and special envoy Andrew Robb has a cunning plan to cash in by servicing the political elite’s well-being.
“First it’s their diets, then it’s their health care, and then it’s ensuring their kids’ education. These are our strengths.”
Let’s hope the Chinese don’t look too hard at our government’s domestic health provision. Or that they remain in power to buy our services. The Panama Papers show prudent senior Chinese members and their families are long-standing Mossack Fonseca clients. They would see it as their responsibility to their family’s future generations.