Bill Shorten turns economic discontent into electoral fuel while Scott Morrison heralds a Labor recession
Bill Shorten and Scott Morrison are both promising to reform the economy, but in different ways. (ABC News: Nick Haggarty)
If there was ever a moment when you might have expected the pendulum of opinion about the power of markets and big business to have swung decidedly away from ‘free markets are just excellent’ to ‘why would you trust business?’, it might have been in the immediate wake of the global financial crisis.
It turned out that policy-makers and politicians were too absorbed at the time trying to prop up their economies and stop their banking systems collapsing to really stop and reflect too much.
Then other stuff happened and everyone sort of moved on.
In Australia, it has taken the revelations of the banking royal commission to really see a shift in mood against business to become the backdrop for our policy and political discussions.
The implications of that shift are not just whether people like business and trust it, but in the way they see what is happening in their own lives: how much they are earning, the conditions in which they work, the security they feel.
Are we ‘beating up on business’?
There was a lot of talk by the business people who attended this week’s Australian Financial Review business summit about trust.
Business Council of Australia President Grant King asserted that rebuilding trust would require business and government to work together.
“We need to draw a line in the sand about beating up business and flip to the other side,” he said.
So much to unpack there: government has to work with business to rebuild trust? Why?
And what exactly is going to make people stop “beating up on business” and “flip to the other side”?
There’s always a bit of a lag in shifting sentiment, as the delay in the fallout from the GFC on the narrative about trusting business shows.
So it may take a bit more than wishful thinking to change the forces at work “beating up on business”.
Business could collectively acknowledge the problem, for example, or recognise they may have some culpability for the public mood.
But you can confidently presume that if you asked the business leaders at the summit this week to sign a communique acknowledging the task ahead of them, they wouldn’t do it.
No, there is a period of penance to sit out and persuasion to be done. People are going to have to feel good about the economy, and their own prospects. And the business community is going to have to come to terms with the fact that the presumption that the market is right will not be the dominant paradigm for some time to come.
Shorten turning resentment into policy
They were clearly having a bit of trouble with this reality when listening to Bill Shorten this week as he argued that our industrial relations system is broken: that the minimum wage is not a “living” wage (and we need one); that the award system is now wildly out of whack with market realities; and that the enterprise bargaining system is broken.
Now it is true the Opposition Leader remains a little evasive about the details of how he plans to go about fixing this.
Bill Shorten’s pledge for consensus-building in industrial relations is scant on details. (ABC News: Matt Roberts)
It does, after all, require a significant lift in wages that business, particularly small business, says it can’t afford. Mr Shorten has also talked about reintroducing industry-wide bargaining.
He does insist that, if he wins government, he wants to bring back more consensus and lessen business/labour hostility; he says he is a firm believer in the idea that none of us prosper unless we work it out together.
But his interventions mark an important turning point in our political debate because Labor feels confident enough that it is reading a resentful mood in the electorate — about inequality, low wages and poor job conditions — that it is prepared to put it into defined policy and take it to voters. The Coalition seems to have no answer, except a rather unpersuasive case that, in fact, wages have actually been going up quite a lot.
Things aren’t going all that brilliantly
The Prime Minister, addressing the same summit the previous day, clearly implied voting for Labor was tantamount to bringing on a recession.
There has not been a bigger policy difference between the two sides of politics, he said, because Labor was going to impose an extra $200 billion of taxes on the economy.
Somewhere along the way, the Coalition’s arguments on economic policy seem to have shifted from ‘we are better economic managers than Labor’ to more of a ‘well, this might not be great, but imagine what it would be like under them’.
That’s because things actually aren’t going all that brilliantly in the economy. This week’s national accounts show annual growth at just 2.3 per cent — compared with the (revised down in December) official forecast of 2.75 per cent for 2018-19, and the ongoing forecasts of 3 per cent in the next couple of years.
There are lots of reasons — local and international — why things might not be going so well. But the perils and skills of politics lie in claiming credit for when they go well, but saying “look over there” when they are not going so well. Or, of course, having a policy response to try to make things better.
It’s easy to play around with talk of recessions, but the more significant point is that the economy appears to be getting weaker.
To return to the theme of the week, that looks like it is going to mean some form of market intervention, political or otherwise.
Economists are now talking about the prospect of an interest rate cut — a Reserve Bank intervention, if you like.
Budget on the horizon
In the meantime, though, there is the federal budget next month.
The national accounts raise questions about how the Government resets the growth forecasts and, with them, the forecasts of the budget bottom line.
Much of the assessment of the budget will be based on whether it can single-handedly change the Government’s political fortunes.
But it will be more crucial to the average punter to know how it sets them up for what seems certain to be a very uncertain twelve months (at least) in the economy, and what it tells us about the outlook.
The increasingly desperate transactional politics of the government — everything from the Prime Minister’s visit to Christmas Island to a self-immolation by the Nationals contemplating a leadership change perhaps a month before the election campaign — makes you wonder where the budget may end up.
Just how you make people believe you can make them feel better, when you are already running things and you keep telling them things are actually great, is always an interesting challenge. Making them believe in a timely enough fashion to shift the electoral pendulum is an even more interesting one.
Laura Tingle is 7.30’s chief political correspondent.