Friday, May 15, 2009

Who’s Bluffing Who?

Amidst a sea of headlines devoted to the Rugby League sexual conduct controversy, it’s easy to forget that there have been other things going on this week. Following Wayne Swan’s second budget on Tuesday night, opposition leader Malcolm Turnbull has delivered his right of reply speech in the parliament. As would be expected of a former high flying lawyer, Mr. Turnbull delivered a well crafted speech with confidence and eloquence. Newspaper headlines responded by reporting that the Opposition Leader has called the bluff of the Government. But has he really given us anything of consequence to consider?

The first point that Mr. Turnbull made was that the Treasurer made no mention of the deficit in his speech. Could it be that Wayne Swan is embarrassed by the sheer size of the $57.6 billion worth of red ink on the nation’s books? It is certainly easy to interpret it that way. Mr. Turnbull then accused the Prime Minister of rushing towards an early election, and then proceeded to provide the ammunition to do so, by promising to block the proposed introduction of a means test for the private health insurance rebate. Not content with offering a possible trigger for a double dissolution election, Mr. Turnbull further proposed an alternative way to find the $1.9 billion savings that the government expects from the private health insurance rebate change. He suggested increasing the tax on tobacco by 3 cents a cigarette.

Reporting this response as “calling the government’s bluff” gives the impression that a game of poker is being played here, and in some senses it is. But the prospect of an early election is a genuine one, and while both sides claim not to desire one, circumstances could easily conspire bring it about. More importantly, there are good reasons to think that an early election would be in the government’s favour, despite the reluctance of voters generally to reward what is often seen as a “tricky” political tactic that costs the taxpayers money and inconvenience. The trick is, therefore, to make it look like the opposition’s fault.

Ever since the idea of an early election first arose when the alcopops tax was rejected in the Senate, I have pointed out that an early election could well suit the government. At that time there was considerable speculation about the Liberal leadership, and the possible intentions of Peter Costello. That is still an unresolved issue, leaving the Liberal’s less than well equipped to present a united front in an election fight, should it be called early. Secondly, the government still holds a clear lead in the opinion polls, and despite what they all say about the only poll that matters being the election itself, it is obviously far better to be in front than to be behind.

Thirdly, and perhaps most importantly, all of the economic indications point to conditions becoming far worse next year in the lead up to the scheduled election. Although this year’s budget was supposed to be tough, next year’s will most likely need to be much tougher. Additionally, while the government still enjoys a great deal of credit for its stimulus policies which are generally perceived to be working, unemployment is still expected to rise next year, and conditions to deteriorate. By the time the scheduled election rolls around at the end of next year, the government may have lost its luster. By then, people may well believe that Malcolm Turnbull was right and that the big spending stimulus policies were a waste of time. By then, more people could well be placing the blame for the recession on the government. On the other hand, if the government is re-elected late this year it could remain in office until early 2013, well after the projected economic recovery arrives.

That’s why an early election could well suit the government. Rush to the polls now, before the really bad news hits the proverbial fan. But in order to get away with it, Kevin Rudd needs it to look like Malcolm Turnbull has left him with no choice. By opposing a measure central to the budget, Malcolm Turnbull could be seen as doing exactly that, which is why so many newspapers used the reference to a bluff. Under the circumstances though, I wonder who’s really doing the bluffing? The popular Prime Minister who is threatening the early election, or the opposition leader who is still well behind in the polls?

I said it a few months ago, and I still have the same view. Don’t be surprised if we are all asked to go back to the polls before Christmas.

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