Monday, September 11, 2017

Morrison, two years on

Two years in, voters feel much, much better about Scott Morrison's handling of the economy than they did about Joe Hockey's. And with good reason. Morrison doesn't make mistakes.

Which makes him dull. Hockey lived to entertain. Remember "the poorest people either don't have cars or actually don't drive very far in many cases", remember "higher-income households pay half their income in tax", remember "the starting point for a first home buyer is to get a good job that pays good money", remember his assurance that "if housing were unaffordable in Sydney, no one would be buying it", a statement that would have made sense were it not for the fact that investors were snapping up homes so that genuine buyers could not.

Remember his decision to take a holiday a few weeks after his first deeply unpopular budget? Remember his costly decision to sue Fairfax Media over reporting in the lead-up to that first budget? Remember the cigars?

They bought him notoriety, but not respect.

Morrison, on the other hand, began his ministerial career with an obsessively low profile. As minister for immigration and border protection he handed out no information and few quotes. As minister for social services he learnt the ropes, joining the budget expenditure review committee in what became an apprenticeship for the job of treasurer.

He hadn't studied economics, but neither had most treasurers. The Treasury and agency staff who brief him say he picks up ideas quickly and makes them his own. Some, he brought to the job. Within days of replacing Hockey he made it clear that he wanted to cut income tax. Bracket creep was punishing people who worked. Except that bracket creep was lower than it had been in decades. The GST had to be increased to make room for income tax cuts. Except that neither the numbers nor the politics worked and the Prime Minister told him so.

His budget decisions have been conventional. Instead of moving towards balance by cutting spending (most spending is in the form of grants and payments that can't easily be cut) he moved towards balance by forecasting increased tax revenue (ironically, much of it from bracket creep). There's no doubt that if he was put to the test, as was Labor's Wayne Swan during the global financial crisis, he would respond conventionally, and well.

Beyond not making mistakes, he is keen on a bigger legacy. He dropped a hint in his speech to a Bloomberg finance summit in Sydney last month. A year ago he directed the Productivity Commission to undertake five-yearly assessments of national productivity. He has had the first for a couple of weeks. It isn't the usual checklist of painful measures that will never be adopted. It's an entirely new approach, one that in the field of health would pay for outcomes rather than services. The gains in health alone might amount to $100 billion over the next few decades. But it'll need to be handled carefully. It will need the support of the states. When the report is released, he doesn't want to stuff it up.

In The Age and Sydney Morning Herald