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Malcolm Turnbull's leadership challenge: a policy and authority vacuum

The Prime Minister has a party room that is sleep-walking into disarray just months before an election.

As an apparently random selection of MPs got to their feet at Tuesday's weekly party room meeting, some smelled a rat. A common theme about what Malcolm Turnbull and Scott Morrison should definitely not do on tax, brought a growing sense of unease among other colleagues. 

The speakers warned Turnbull and Morrison off tinkering with tax concessions such as negative gearing, because not only would it harm the property market, but even crimping what Morrison had referred to as "excessive use," would muddy the Coalition's attack on Labor's plan.

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However it was when Tony Abbott weighed in for his first policy discussion in the party room since being replaced by Turnbull, that it became clear this spontaneous feedback was not impromptu.

Abbott's contribution was the coup de grace, reminding Turnbull that he had been promoted exclusively because he is a better salesman. In other words, forget about lazy options like winding back tax discounts on capital gains tax and superannuation, and return to the core project of cutting government spending. You can't lower taxes by raising them, he warned as he declared it was "... time for the leadership to take on the savings challenge again".

Malcolm Turnbull is right to defer tax reform.
Malcolm Turnbull is right to defer tax reform. Photo: Andrew Meares

Russell Broadbent had little doubt what was going on. The veteran Liberal waited for the right moment  and then rose to point out a few home truths, such as the salient fact the  very same party room had recently elected this precise leadership team. Already it was withdrawing its mandate.

Morrison, he noted, had been given a task of identifying tax reform options in the hope of finding enough savings to return bracket creep to average weekly earners – and perhaps to lower company tax, and reduce the  deficit too. He should be given time to do it. Broadbent's sage intervention was a wake-up call to a party room that is sleep-walking into disarray just months before an election.

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Such is the new mood of anything goes, that Turnbull and Morrison have had their options constantly trimmed through the tax reform process via the skilled application of public pressure from colleagues. So far this has seen the official removal of the GST option and now apparently the removal of negative gearing, and capital gains, as options too. Generous superannuation concessions which allow those with high disposable incomes to "park" earnings in super accounts at vastly reduced tax rates, and later to draw tax-free income from those savings, are ripe for adjustment on equity grounds. Labor's policy in this area is measured and would offer the government cover for something similar – or even identical.

Yet Abbott's message, backed by a sizeable wedge of party room colleagues, is don't do this either. He even came armed with the attack lines for the "brilliant" communicator, Turnbull: a tax on super is an attack on elderly Australians; a tax on capital gains is an attack on battlers trying to get ahead; and, a tax on negative gearing is an attack on families.

The unedifying tax reform process is arguably Turnbull's most pressing immediate problem. Yet it is both cause and symptom. Turnbull as PM lacks the authority to demand patience or command unity, and his government, in the absence of a tax reform agenda, desperately wants   the policy theme around which such oneness of purpose may ordinarily arise. It is a remarkable situation for a still very popular prime minister.

The conundrum is this: delivering the core policy direction needed to inspire his party requires the leadership authority that a prime minister installed in a mid-term crisis, by definition, lacks. And yet to secure that unquestioned legitimacy in his own right via a solid election win, requires firm discipline and a united team.

Right now, the Coalition party room is closer to Brown's cows than to the Howard government idyll which the same MPs lionised on the 20th anniversary of Howard becoming a prime minister​.

MPs show none of the reluctance of that era to campaign on issues such as tax options, and to offer their own commentary in contrast to the official line. Whether it is the previous week's orchestrated "values" attack in the party room on the Safe Schools anti-bullying program, which compromised the government's focus, or the remarks about election timing offered by several people who should know better.

Even the unalloyed positive of last week's Defence white paper release has now been severely compromised by the egregious leaking of an earlier draft and claims openly corroborated by the former PM no less, that this was correct. This is right up there with the devastating leaks against Julia Gillard prior to the 2010 poll which nearly killed the government and yielded the three-year farce of minority government. Whoever leaked the white paper was trying for at least as much damage.

Notwithstanding the AFP investigation into the divulgence of top-secret national security papers, there is a sense that MPs feel no reason to keep their own counsel and expect no punishment for not doing so.

The policy and authority vacuum, is most obvious over negative gearing. Morrison fluffed his first response to Labor's policy claiming it raised insufficient funds. He's since found his length even if others, such as the former tennis star-turned MP John Alexander, accidentally reached over the net with his view this week that the Sydney property market is overheated.

Perhaps the most glaring marker of the political problem is that the government answers every question in Parliament on housing affordability by attacking Labor's answer.

With the July 2 double-D election firming as a near certainty, voters, and frankly many within the party room, would like to know what the government's answer is. 

Mark Kenny is Fairfax Media's chief political correspondent.

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