What a monumental turn around. In a newspaper interview this week, Prime Minister Malcolm Turnbull has shrugged off the Abbott-Hockey debt and deficit rhetoric and signalled more debt to come.
“What we’re trying to achieve is to ensure that Australians who do live today in a high-wage, generous social welfare net economy, will be able to do so in the years ahead and in an environment where wages will be higher and we’ll have a bigger tax base and we’ll be able to provide for those in need more effectively,” he told Fairfax Media.
Contrast this with some of the verbal diarrhoea that came out of the mouths of both Abbott and Hockey when they convinced the more gullible amongst the electorate both before and after the 2013 election, that austerity was necessary to rein in Wayne Swan’s debt and deficit disaster.
Turnbull went even further when he said, “Everything, every single element, is on the table, and I know that always means that someone can then run a scare campaign, but I’m sorry, we’ve got to stop … this is part of the political tradition I’m determined to end. We have got to be able to consider policy options in an unfettered way.”
The significance of this statement and his acknowledgement that both revenue and spending options are on the table, cannot be ignored. While signalling a reversal of the previous administration’s scare mentality and adopting an expansionary mindset including borrowings for public transport projects, he has also, deliberate or otherwise, checked Scott Morrison for suggesting we only have a spending problem.
What are we to make of this policy about-turn?
My reading is that Malcolm has decided he will be his own man and if the party doesn’t like it, they can’t do much about it without making themselves a laughing stock. While the extreme right wing of the party might like to think it has its leader on a short leash, the opposite is the case.
Turnbull, it would seem, has decided that he will crash through or crash. To make public his intentions in such flamboyant language is a challenge to those who still cling to the ultra-conservative mindset that would hold the nation back.
Citing public transport as the flagship of future expansion is a good start. Who among us would deny a pressing need to upgrade and prepare ourselves for future population growth that will require some radical thinking in the area of mobility.
Victorian Premier Daniel Andrews will be delighted as will Mike Baird in NSW. Both have big plans for improving transport in our two major cities. Turnbull has foreshadowed that roads, urban infrastructure and ports, previously considered state responsibilities by Abbott and Co, are now up for Commonwealth funding participation through additional borrowings.
The burning question, ‘where is the money coming from’ has been answered before it has been asked. The former Goldman Sachs CEO knows how money works, unlike his parliamentary colleagues and is not afraid of debt.
This will not be good news for the banks. Such projects, normally financed within the private sector’s financial houses, will have the Commonwealth participating for part of the return on investment.
“We don’t need the same internal rate of return as Macquarie Bank would, obviously, but if we have a piece of it, then we’re able to invest more, frankly. Then we’re much better off being a partner rather than simply being an ATM, for which you get generally scant thanks or recognition,” Turnbull says.
Tony Abbott and Joe Hockey never understood this, nor does the conservative wing of the government that never wanted Turnbull as leader. They will be alarmed at his recent comments and will fight tooth and nail to stop him. But they cannot ignore his popularity and his importance in keeping them in power.
That is why he will win and so too the unemployed. While the private sector is twiddling its thumbs Government must take up the slack. That is not a theory, it is an accounting rule for a national economy. It is exactly what is needed today. Joe Hockey failed as Treasurer because he expected the private sector to do the heavy lifting.
At today’s historically low interest rates, issuing public debt has never been cheaper and when invested in projects that add value to the nation, promote growth, increase employment and by extension, increase tax revenue, everyone benefits.
Turnbull’s approach to inclusivity will enrage his conservative colleagues, but he knows there’s little they can do about it now.