Now that the last votes have been counted, leaving the Coalition with the thinnest of majorities, it’s time for the Turnbull government to confront the budget’s structural deficit in earnest. Few independent economists consider the forecast pathway back to surplus laid out in this year’s budget papers to be credible. But with the new Senate likely to be at least as unruly as the last, how will the government get the necessary budget repair measures through the parliament?
Search as he might, prime minister Turnbull is unlikely to find much common ground among the Greens, One Nation, the Nick Xenophon Team, Jacqui Lambie and Derryn Hinch. Yet with the support of the Labor Party, budget repair measures would sail through the Senate.
During the election campaign both Labor and the Coalition rang the alarm bells about a possible downgrade of Australia’s coveted AAA credit rating. Both have a stake in averting it.
Conventional wisdom is that it is the responsibility of the government of the day to navigate the budget’s passage through the parliament and it is the opposition’s role to oppose it. The government will look bad for being unable to secure the passage of key measures, so the thinking goes.
But does that thinking hold in a fiscal crisis? Imagine the damage to opposition leader John Howard’s credibility if, in the face of the balance of payments crisis of 1986, he sought to block the essential Hawke-Keating budget cuts.
Labor is shaping up as the most stable mainstream political party in the new parliament. Bill Shorten leads a united party, has almost nine years of parliamentary experience under his belt and secured more votes than his counterpart in the July election.
The path to the prime ministership might appear to involve more of the same. But nothing in politics is assured. Having won 18 seats and 51 per cent of the vote in 1998, Labor went backwards in 2001 and again in 2004. The task confronting Bill Shorten in the coming parliament is to demonstrate convincingly to the Australian people that he is not only an effective opposition leader but also a viable alternative prime minister.
Shorten could start building his profile as Australia’s prime minister in waiting by inviting the current prime minister to form a cross-party budget committee tasked with seeking agreement on a set of acceptable budget measures. Labor, of course, would rule out measures that tore away at the social safety net or that were manifestly unfair. But it should not be troubled, for example, by reductions in government payments at the top end of the income scale.
While the government leadership might find top-end savings hard politically, with its hard right flank viewing them as another attack on the conservative base following its controversial superannuation measures, they could be presented as the price to be paid to achieve a return to surplus.
Labor, too, would no doubt insist on fair revenue measures being included in any agreed package, such as reducing the 50 per cent discount on the capital gains tax rate.
In exchange, Labor would need to contemplate savings that it would not necessarily support in ordinary circumstances. It would not need to champion them, only to pass them in recognition of the imperative of budget repair.
The idea of a cross-party budget committee is not new. As a shadow minister I informally proposed it to a minister in the Howard government. He rejected it, explaining his view that it is the responsibility of the mainstream political parties to oppose each other. Such, he said, was our Westminster system of adversarial parliamentary democracy.
Both parties are likely to view this proposal as insane, but then again, isn’t the definition of insanity doing the same thing over and over and expecting a different result? If it’s too difficult or naïve for the leaders to contemplate, then an informal, confidential process of searching for common ground on budget repair measures might suffice.
The public wants the budget fixed. If future generations had a vote at the last election, they would have wanted the budget fixed instead of being required to pay for the artificially inflated living standards of the present generation. Getting the budget into shape through structural savings measures is a responsibility of the 45th parliament and no amount of blame shifting will do the trick.