Extract from The Guardian
As tension rises between Malcolm Turnbull and his treasurer, the
states wait impatiently to hear how the $80bn shortfall caused by Tony
Abbott’s first budget will be made up
Of all the real, or perceived, differences between the prime minister
and the treasurer, the one that is likely to matter most to Australians
is about to come to a head.
In one week state premiers and treasurers will meet Malcolm Turnbull and Scott Morrison to find out whether the federal government is going to offer them any more money to deal with the hospitals and schools funding crisis that hits next year, and has been going to hit next year ever since Tony Abbott ripped $80bn out of projected hospitals and schools funding in the infamous budget of 2014.
As the Guardian revealed last month, Turnbull has been reassuring state premiers for some time that the commonwealth was going to stump up interim funding to tide them over while new long-term funding agreements are struck.
But for a long time Morrison has been consistently sending a totally different message, essentially that the states are on their own, saying things like: “I don’t think states are branch offices of the commonwealth. I think they are sovereign governments ... In no business in this country would anyone just accept someone walking into their office and saying the increase in cost is 8%, give me the cheque. We all have to manage our budgets. The states almost without an exception ... are in surplus at the present.”
At a recent meeting in Sydney, senior federal officials told their state counterparts that Turnbull was trying to get a funding deal through his cabinet for both hospitals and early childhood education but was coming up against resistance. The officials also said they still wanted to see movement on the states’ commitment to reduce their own taxes.
This has left premiers somewhat dazed and confused. They say the federal government’s position seems to depend on who they talk to and the private messages have been as contradictory as the public ones.
And they point out that it was the federal government that ditched the whole conversation about changing the mix of state and federal taxes when it backed down on plans to increase the goods and service tax. The states’ commitment at the last Council of Australian Governments (Coag) meeting to look at their own taxes was made in that, now redundant, context. This one is just about how to avoid a funding crisis.
Federal officials concede there have been differences between the prime minister and the treasurer. Sources say the issue has been to the expenditure review committee on cabinet numerous times. But they insist the pair are “working together now”. Well, that’s a relief.
But the joint plan does involve a quid pro quo – states agreeing to making their own taxes more efficient and to longer term reforms before the commonwealth puts its money on the table.
We can only hope the ask is realistic, because there’s a lot at stake in this discussion.
For hospitals, the cuts amount to $57bn over 10 years, compared with the amounts agreed between the former Labor government and the states during protracted negotiations that began with an acceptance that states have no means to fund on their own the huge cost increases as the population ages and medical treatments become more expensive.
In real terms, Victoria has said losing this money is the equivalent of the budget for two major hospitals – or the budget to perform more than 10,000 elective surgeries a year. Queensland has calculated it is equivalent to what is needed to pay for 4,500 doctors and nurses, and NSW has said it just can’t happen.
They are now negotiating a whole new long-term funding agreement based on the idea of a “hospitals benefit schedule” contained in a Coag discussion paper leaked to Guardian Australia.
But at Coag they need to know they’ll get enough money to tide them over while they do this deal – with Baird saying the states need at least $7bn over the next four years for hospitals alone and the South Australian premier, Jay Weatherill, insisting the figure is close to $10bn.
For schools the $4.5bn final two years of the Gonski funding deal are at stake – the deal based on a report that found the poorest and most disadvantaged schools and students were falling further and further behind. Given the Grattan Institute’s report this week that found inequality in schools is growing, that need has apparently not changed. Baird announced last week an offer to spread that money over four years rather than two.
(While these are the most important issues to be discussed at Coag, the agenda is as long as your arm. It also includes Indigenous economic development, reducing violence against women, counter-terrorism, medicinal cannabis, the national disability insurance scheme and Northern Territory statehood.)
Meanwhile the long-simmering tensions between Turnbull and Morrison have suddenly become the talk of Canberra, with columnists being briefed either that Morrison is at fault for constantly talking about ideas that have not yet been decided, or that Turnbull is at fault for not locking in baseline decisions.
Morrison’s much analysed embarrassment at having insisted his budget would be delivered on 10 May just an hour before Turnbull announced that it would be delivered on 3 May owed more to stuff-up and clumsiness than a conspiracy to keep the treasurer in the dark. Having known the 3 May date was likely, if not finally decided, why did Morrison make such definitive statements? Having made the decision on Sunday night, why didn’t Turnbull bring his treasurer into the “small circle” who knew about his dramatic tactic?
But the differences over policy and direction are real, and potentially damaging.
There has been real tension over the treasurer’s tendency to publicly argue the case or hinting or backgrounding about policy options that had not yet been finally decided, such as the GST or personal income tax cuts, which were later ditched, leaving the government looking like it couldn’t hold an idea for five minutes. It also left the electorate confused, to the extent that it was listening at all.
Asked about it on Sky news on Thursday, the Victorian Liberal president, Michael Kroger, was forced to try to argue that tensions between a prime minister and a treasurer were actually a good thing.
He said it was “no secret to say they haven’t been best friends” but “like Bob Hawke and Paul Keating, and John Howard and Peter Costello, you have to have some tension in the relationship”.
“In the history of Australian politics it has been better if there is some tension” and the relationships had been “strengthened by the element of tension”, he claimed, managing, admirably, to keep a straight face throughout.
When a party official has to tie himself in those kind of knots, there’s obviously a political problem.
But that pales in comparison to the real life problems that would be caused if those tensions hurt the chances of the commonwealth and the states reaching a reasonable agreement on the funding of hospitals and schools.
In one week state premiers and treasurers will meet Malcolm Turnbull and Scott Morrison to find out whether the federal government is going to offer them any more money to deal with the hospitals and schools funding crisis that hits next year, and has been going to hit next year ever since Tony Abbott ripped $80bn out of projected hospitals and schools funding in the infamous budget of 2014.
As the Guardian revealed last month, Turnbull has been reassuring state premiers for some time that the commonwealth was going to stump up interim funding to tide them over while new long-term funding agreements are struck.
But for a long time Morrison has been consistently sending a totally different message, essentially that the states are on their own, saying things like: “I don’t think states are branch offices of the commonwealth. I think they are sovereign governments ... In no business in this country would anyone just accept someone walking into their office and saying the increase in cost is 8%, give me the cheque. We all have to manage our budgets. The states almost without an exception ... are in surplus at the present.”
At a recent meeting in Sydney, senior federal officials told their state counterparts that Turnbull was trying to get a funding deal through his cabinet for both hospitals and early childhood education but was coming up against resistance. The officials also said they still wanted to see movement on the states’ commitment to reduce their own taxes.
This has left premiers somewhat dazed and confused. They say the federal government’s position seems to depend on who they talk to and the private messages have been as contradictory as the public ones.
And they point out that it was the federal government that ditched the whole conversation about changing the mix of state and federal taxes when it backed down on plans to increase the goods and service tax. The states’ commitment at the last Council of Australian Governments (Coag) meeting to look at their own taxes was made in that, now redundant, context. This one is just about how to avoid a funding crisis.
Federal officials concede there have been differences between the prime minister and the treasurer. Sources say the issue has been to the expenditure review committee on cabinet numerous times. But they insist the pair are “working together now”. Well, that’s a relief.
But the joint plan does involve a quid pro quo – states agreeing to making their own taxes more efficient and to longer term reforms before the commonwealth puts its money on the table.
We can only hope the ask is realistic, because there’s a lot at stake in this discussion.
For hospitals, the cuts amount to $57bn over 10 years, compared with the amounts agreed between the former Labor government and the states during protracted negotiations that began with an acceptance that states have no means to fund on their own the huge cost increases as the population ages and medical treatments become more expensive.
In real terms, Victoria has said losing this money is the equivalent of the budget for two major hospitals – or the budget to perform more than 10,000 elective surgeries a year. Queensland has calculated it is equivalent to what is needed to pay for 4,500 doctors and nurses, and NSW has said it just can’t happen.
They are now negotiating a whole new long-term funding agreement based on the idea of a “hospitals benefit schedule” contained in a Coag discussion paper leaked to Guardian Australia.
But at Coag they need to know they’ll get enough money to tide them over while they do this deal – with Baird saying the states need at least $7bn over the next four years for hospitals alone and the South Australian premier, Jay Weatherill, insisting the figure is close to $10bn.
For schools the $4.5bn final two years of the Gonski funding deal are at stake – the deal based on a report that found the poorest and most disadvantaged schools and students were falling further and further behind. Given the Grattan Institute’s report this week that found inequality in schools is growing, that need has apparently not changed. Baird announced last week an offer to spread that money over four years rather than two.
(While these are the most important issues to be discussed at Coag, the agenda is as long as your arm. It also includes Indigenous economic development, reducing violence against women, counter-terrorism, medicinal cannabis, the national disability insurance scheme and Northern Territory statehood.)
Meanwhile the long-simmering tensions between Turnbull and Morrison have suddenly become the talk of Canberra, with columnists being briefed either that Morrison is at fault for constantly talking about ideas that have not yet been decided, or that Turnbull is at fault for not locking in baseline decisions.
Morrison’s much analysed embarrassment at having insisted his budget would be delivered on 10 May just an hour before Turnbull announced that it would be delivered on 3 May owed more to stuff-up and clumsiness than a conspiracy to keep the treasurer in the dark. Having known the 3 May date was likely, if not finally decided, why did Morrison make such definitive statements? Having made the decision on Sunday night, why didn’t Turnbull bring his treasurer into the “small circle” who knew about his dramatic tactic?
But the differences over policy and direction are real, and potentially damaging.
There has been real tension over the treasurer’s tendency to publicly argue the case or hinting or backgrounding about policy options that had not yet been finally decided, such as the GST or personal income tax cuts, which were later ditched, leaving the government looking like it couldn’t hold an idea for five minutes. It also left the electorate confused, to the extent that it was listening at all.
Asked about it on Sky news on Thursday, the Victorian Liberal president, Michael Kroger, was forced to try to argue that tensions between a prime minister and a treasurer were actually a good thing.
He said it was “no secret to say they haven’t been best friends” but “like Bob Hawke and Paul Keating, and John Howard and Peter Costello, you have to have some tension in the relationship”.
“In the history of Australian politics it has been better if there is some tension” and the relationships had been “strengthened by the element of tension”, he claimed, managing, admirably, to keep a straight face throughout.
When a party official has to tie himself in those kind of knots, there’s obviously a political problem.
But that pales in comparison to the real life problems that would be caused if those tensions hurt the chances of the commonwealth and the states reaching a reasonable agreement on the funding of hospitals and schools.
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