Turnbull and the politics of Malcolm in the middle

When Malcolm Turnbull swept into the prime ministership, he promised us a fresh start. Gone were the days when governments would rule things in and rule them out. Instead we were going to have a nice big juicy debate about tax reform. Not only would everything be on the table, the big stuffed pig of the GST would be the centre piece. The media and the business community salivated at the thought if such a "grown up debate".

But who would have thought that Tony Abbott would tip the table over. Who would have thought that "Mr No", the man who raged against the devastating impact of "great big new taxes", would have a tantrum and ruin the party before it even began? Not Malcolm Turnbull.

If Turnbull is surprised, or disappointed, he is hiding it pretty well. While the Cheshire Cat grin that haunted Abbott has clearly gone, he still looks calm. Indeed, so confident is Turnbull that even though the tax reform buffet that he promised has been spilled all over the floor, the Prime Minister is now considering bringing the party forward.

An early budget to facilitate an early election might have political benefits, but if it does they are not the ones that only six months ago the Prime Minister was aiming for. Whether the budget is held early or not there isn't time to catch and kill another pig as big as the GST. But talk of an early budget and early election, sucks the oxygen from any genuine tax reform debate and gives the bureaucracy, and the cabinet, less time to develop good new policy.

If Turnbull had acted fast, he could have used an early election strategy to lock in his tax reform strategy and make the election about the economy and industrial relations. But some dithering from his team, and some undermining from the Abbott team, now means that the PM faces a huge choice he should never have had to make. Does he reform the tax system and try again to pass the union-busting ABCC bill, or does he focus on changing Senate voting laws and scraping over the line at an early election?

It didn't have to be this way. Back before Tony's tantrum, when everything was on the table and the newly installed Turnbull was soaring in the polls, there was a real opportunity for some bipartisanship on tax reform. It was only a few months ago that Treasurer Scott Morrison and Labor leader Bill Shorten shared a concern about the "excesses" of negative gearing. Indeed, even Joe Hockey agreed that something needed to be done about tax concessions on superannuation.


Imagine if Turnbull had invited Shorten in to his tax reform kitchen. Imagine if they had both agreed on significant reform to the tax treatment of investment housing, superannuation and capital gains based on the recommendations of the Henry tax review.

Now imagine that they fought the election campaign on whether the extra revenue should be used to fund a cut in the corporate tax rate, a cut in personal income taxes, or an increase in spending in our kids' education, or our parent's health care. Imagine living in a functioning democracy.

But imagine all you will, because, like Tony Abbott, Mr Turnbull would prefer to have a fight than a feed. Modern politics is so dominated by the marketing strategy of product differentiation that it is virtually impossible for political strategies of embracing your opposition to get a look in anymore. Throwing bombs from long range takes some skill, but it takes real strength to both embrace your opponent and then crush the life out of them.

The big problem for Turnbull is that while he squandered his honeymoon period gearing up for a fight with the ALP, Abbott spent the summer gearing up for a fight over the heart and soul of the Liberal Party. He might not have the resources of the Prime Minister, but ironically he does have a disgruntled army of backbenchers to work with. Having been wounded by a backbench, he understands its power better than most.

Tony Abbott may not be prime minister any more, but he is still running the Coalition's tax policy. Never lacking in chutzpah, the guy who lifted taxes for high income earners (remember the deficit levy?) and petrol taxes when he was prime minister is back to raging against the evils of tax now that he is on the backbench. He dared the Prime Minister to bring big new revenue measures to the party room and the PM backed down.

One thing that Turnbull is in charge of is the timing of an election, so given his failure on the tax reform front it is hardly surprising that he has put his effort into the political front. Next week, in the last scheduled sitting week before the budget, and possibly the election, the government's No. 1 priority will be the passage of new laws to change the way the Senate is elected. By wiping out the right wing micro parties, the new laws are designed to give Turnbull a much easier time passing legislation through the Senate than Abbott ever had.

But while the timing of the election is within the control of the Prime Minister, the laws that govern that election are still within the power of the Coalition backbench. The deal between Turnbull and the Greens to wipe out the micro parties has raised a few eyebrows among the conservatives, the bushiest of which were John Howard's. Speaking on the ABC's 7.30 last week the former PM was at pains to highlight that the big winners were the Greens. This week's talk of a lower house preference deal between Turnbull and the Greens has only enraged disenfranchise right wingers further.

As anyone who has ever met with a minister will know; in politics, time is a scarce resource. The government and the Greens have done a deal to manage the use of time in the Senate next week. The deal says that in the last sitting week before an early election, the proposed new laws to wipe out the independents on the Senate crossbench will take precedence over all other matters. That means no time to debate the contentious (but Abbott faction favourite) ABCC bill and, most likely, the inability to pass that bill at any joint sitting of Parliament after a double dissolution election.

But would Eric Abetz and Cory Bernardi really prefer to spend next week rushing through new Senate voting rules that helps the Greens than they would fighting for their cherished ABCC bill? Malcolm Turnbull is betting that they will. Maybe this time he will be right.

Richard Denniss is the chief economist for the Australia Institute.

Twitter: @RDNS_TAI