Will Turnbull Betray Us?

Just when Turnbull has reinvigorated the Liberal Party’s base, made members think we really do stand for our values again, and generally done a great job, the following story appears. I hope and pray it is not true.

Crikey report:

The Coalition is willing to negotiate with the Government over the stimulus package and its primary concern is the Government’s $12.7b tax bonus handout, Malcolm Turnbull has said.

Turnbull this morning told the Coalition joint party room that while he was happy to take a short-term political hit, he was willing to negotiate with the Government to pass the package. Turnbull initially declared last Wednesday that the Coalition would not support the package at all. On the weekend, Turnbull called on the Prime Minister to negotiate with him.

The Coalition has consistently argued that tax cuts rather than handouts should be used to provide a short-term stimulus. Coalition MPs today debated what would yield the best multiplier effect in terms of stimulus.

However, Turnbull’s position today leaves the Coalition open to supporting the majority of the package — the $28b infrastructure component providing funding for school and housing projects. It comes a day after Newspoll revealed a slump in support for both the Coalition and Turnbull.

The tax-bonus isn’t perfect. It has a LOT of flaws – particularly the payments that go to people who don’t pay taxes. But, at the end of the day, it is returning tax dollars to people who have earned them, and as such, is easily the less odious part of Rudd’s package, and can almost be considered tax cuts. Indeed, these rebates at least let people spend their own money, whereas the alternative is the government spending your money for you. Which is what the so-called “infrastructure” spending is. So if this is true, these tax rebates would be purged, and the spending provisions – exactly the opposite of what we need, and the course of action that that exacerbated the financial crisis when it was tried in Japan etc – will be kept.

I hope, I really hope, that this is all untrue. I still have faith that the party will hold the line. But at times I worry.  I worry for the Liberal Party, but more importantly, I worry that my generation shall become the “indebted generation”.

Let us hopethere is nothing to this and Turnbull sticks to his course of calling for the tax cuts that we desperatly need to stimulate the economy!


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13 Responses to “Will Turnbull Betray Us?”

  1. Justin Says:

    I disagree. The rebates are fairly horrible because they’re pointless spending which provides no long term gain for the taxpayer and just creates a hole in the budget which they’re going to have to pay interest on. Ergo it’s more like forcing a $950 debt onto my credit card than an actual tax cut.

    The infrastructure projects, while you might oppose them on ideological grounds, may well pay for themselves through having a better skilled up population or increased patronage on public transport.

  2. Tim Says:

    Just to clarify, I don’t like the rebates, I agree with the fact that they’re horrible, and certainly don’t mean to defend thm.

    I just think that – to the extent that at least part of them goes as a rebate to people who have paid taxes – they are a lesser evil than the actual increases in infrastructure spending (much of which isn’t going to infrastructure, but anyway).

    Although I may have overestimated the % of people who’ll be getting them as tax rebates and not as welfare cheques. In any event, I tend to think taht people spending their own money is better than the govt spending it.

    ALL of KRudd’s package is crud, and ALL of it should be opposed.

  3. JaketheMuss Says:

    I think I’m going to write a blog post on why your analysis of the cash payments is flawed.


  4. Tim Says:

    It still doesn’t invalidate my point that we should NOT comprimise though!

  5. JaketheMuss Says:

    We shouldn’t compromise or we shouldn’t make the compromise that the article above suggests?

  6. Tim Says:

    We shouldn’t make any compromise. We should stick to tax cuts.
    I just mentioned the “tax rebates” as I think they’re marginally less bad than the overspending in that at least part of them will give people their tax dollars back. But i’m more than happy to be demonstrated wrong on that.

    We should stick to the initial, very sound, policy that the party room agreed on.

  7. Trout Says:

    Tax cuts generally aren’t all that great with these situations as they operate with a long and variable lag. In other words, it takes longer for tax cuts to actually stimulate the economy when compared to government spending. I’m all for tax cuts, complimented with lower government spending, in boom periods. But in the current situation, government spending seems to be the go. Nonetheless, there is one major problem with fiscal stimulus packages that I haven’t mentioned in my previous comments. That being, governments that (correctly) conduct expansionary fiscal policy in recessions have a tendency to (incorrectly) keep spending large amounts of money once the recovery has occurred. Although for the economy’s sake I hope it doesn’t happen, there’s little doubt (in my opinion) Rudd will fall into this trap.

  8. JaketheMuss Says:

    That’s very interesting Trout considering that the Secretary of the Treasury and the Secreatary of Finance and Deregulation completely disagree with you (despite not ‘publically’ advocating tax cuts).

    Their argument against tax cuts has only ever been the multiplier, and not some ‘magical lag’. In fact if you read the senate hearings you’ll find that on numerous occasions they say that tax cuts would have a greater short term stimulatory affect than spending, and that this package in particular has significant roll out problems with regard to the infrastructure spending (I believe they indicated that they would struggle to get it going in 6 to 12 months).

    All that despite the fact that they can’t give policy opinions.

  9. JaketheMuss Says:


    My problem with this package is that there are no tax cuts, and the infrastructure spending is maddeningly ridiculous.

    Fix those problems and I’d be quite happy with a neoclassical halo-halo.

    (That’s right, I just communicated in Tagalog and nobody knows what that means. That’s how I gets down.)

  10. Tim Says:

    I’m not disputing there is some role for infrastructure spending by government, particularly in the current Australian context where for various reasons the government has shut out the private sector. But there is useful infrastructure spending, and there is useless infrastructure spending. this falls into the latter catagory. Secondly, infrastructure spending if worthy should be done for its own sake, not as part of a discredited Keynsian stimulus, while at the same time driving us deep into debt which will have to be paid for by high taxes later.

  11. JaketheMuss Says:

    I concur.

  12. Stimulus Package: Fail time? « Pimpin’ For Freedom Says:

    […] split it up, I’d say the real worry is the infrastructure spending, which is shockingly bad. According to a Crikey report posted on Tim Andrews blog, Turnbull is zeroing in on the […]

  13. Balke Says:

    Regarding stimulus packages and the economy, where do you get the best grocery savings

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