Monday, 2 March 2015

Why the Government is in Trouble again.

Before I begin I believe a word of caution should be taken given the Ipsos poll.

It is clear a lot of pundits have completely forgotten about what a 'rogue ' poll is. It is a reasonable assumption to make that either people polled in this poll either assumed a change of Liberal leadership or it is a rogue poll. It is incompatible with the Newspoll for example.

In opposition the Liberal/National coalition would hammer the government about spending like a drunken sailor ( which we have seen is not true) and their economic incompetence.

Once in they tried to blame the ALP for the increased deficit that occurred in their first MYEFO and ignored what was in the PEFO.
This was unsuccessful.Their first budget was seen as badly unfair. Most of the spending cuts or tax increases occurred in future years when they assumed the economy would be growing reasonably well.
Only It didn't. The terms of trade continued to fall and so Nominal GDP which is ALL Important continued to be weak.
Hockey looked very hypocritical in saying the reason for the budget blow-out was the lack of revenue given is persistent criticisms of Wayne Swan saying the same thing.

We have had mainly ,but not only, since the budget mixed messages from the government, different messages from within the government, the government saying they didn't break promises when clearly they did indeed this government appears to be as poor at politics as the previous one.

Perhaps the current crop of politicians can only do Opposition but flounder when in government.

The worst of the above is two fold. The electorate believed them when they said spending was the problem. This means there is a very easy answer. Cut spending.
However once in Government they found out they could not do this because it would slow the economy down and in fact perversely increase spending because of automatic stabilisers.

Combine this with a stubborn attitude where they refused to acknowledge they had broken their promises and thus the future is dire for the government even if the economy improves. More so since now Abbott has become a figure of embarrassment.

Quite clearly since the spill motion Abbott has behaved in way that is detrimental to the government. He clearly is very poor under pressure. In this he is no different to any other leader in history.

There will be another spill motion at some stage and Abbott will lose it. The leaks confirm this and they are coming from cabinet.This is all occurring when Turnbull is not making any overt or covert run.
The only question worth pondering is whether a new Leader could overcome their present difficulties.

I think Turnbull might but I doubt Bishop could.


Someone has e-mailed about why the ALP didn't have better outcomes when commodity prices were still strong.

Tax as a percentage of GDP during their terms were:
You have to go to the Keating years to get figures like this.

Thus we see strong commodity prices never led to stronger tax growth as in the Howard years.
If the ALP had revenue like in the Howard years most budgets would have been in surplus!

Update 2

Here is Kevin Bonham on poll-roundup-ipsos-stalls-re-spill