In what seemed like a thought bubble in a doorstop at Penrith Panthers Football Club, Turnbull announced handing back income tax powers to the states.
Julia Gillard left the Australian government with a few time bombs. The vision for schools contained in Gonski was fine and good, it just had to be paid for. So too the National Disability Insurance Scheme and the funding of decent hospitals as we age and get sicker.
It was too hard for Joe Hockey and Tony Abbott, so they snipped $80 billion over 10 years off the budget in the out-years. Turnbull agrees and wants to hand access to income tax back to the states.
Shorten says it’s a funding issue which Turnbull has squibbed and doesn’t deserve to be PM. Turnbull has made it an issue of federation, about functions appropriate to levels of government.
Eltham talks mainly of the complexities of different tax rates for national firms, and people who work across borders, also the inequities between rich and poor states. Turnbull says poor states would be compensated, meaning the “begging bowl” activity together with complaints about unfairness would continue.
In recent years we have been moving towards individual institutions, eg hospitals and schools, taking responsibility for service delivery according to national standards. They don’t much care where the money comes from.
Central to Turnbull’s argument is that states will have incentives to become more efficient. Jericho says those incentives are already there:
- As I noted, the states already have budgets, credit ratings and elections. The incentive to deliver health and education as efficiently as possible is there because state governments also spend money on other areas, infrastructure, for one. They also know that if they can somehow deliver services more efficiently they can deliver lower taxes that they already raise, such as payroll tax rates and stamp duties.
Peter Lewis thinks Tunbull’s proposals will help Labor by eroding the LNP’s natural advantage in economic credibility. It’s about the Fingerhut Effect. If you ask people anywhere “Which party is better at managing the economy”, right-of-centre parties tend to enjoy a significant advantage.
- But when you bring people into the equation and ask, “Which party is better at managing the economy for ordinary people like you”, the advantage slips away and the result sees an advantage to the party to the Left of centre.
Turnbull is linking Labor’s strengths in health and education to the issue of economic credibility. Add in talk of tax cuts for business and the election becomes an issue of interests rather than competence.
- Labor has the opportunity to construct a winning campaign around Turnbull’s modern Prometheus, based on the simple questions: Whose side is he on? Who is he managing the economy for? Who do you trust to represent your interests?
In context, Lenore Taylor is right, it’s a distraction, one designed to get Turnbull through the election. The premiers say there has been no discussion, they read it in the paper along with everyone else earlier this week. It’s not how a mature and competent government would go about changing how the federation works.
This man is erratic and dangerous.
An adult nation should have a coherent social and economic vision for education and health. Turnbull is taking us back a hundred years.
I should mention that Peter Martin likes the idea. Economists sometimes have strange views. As one radio call back person said last night, it sounds wonderful until you come to implement it. Another with a Canadian accent warned against using Canada as a model for anything.