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A tale of two Malcolms

By David Leyonhjelm - posted Tuesday, 5 April 2016


Malcolm was a popular Prime Minister at the outset. He had an air of confidence and a convincing manner, plus a belief in his own abilities. And his first term followed a disastrous period of Labor Government that the voting public wasn't quick to forget.

But Malcolm didn't turn things around. Labor had gone on a spending spree, ratcheting up the size of government with grand, feel-good, centrally-planned schemes. When Malcolm secured the reins of Government, he did nothing to unwind this largesse. Instead, taxes and debt crept up.

In the end, Malcolm left the budget in a worse state than he found it. His prime ministership was a huge disappointment to those who believe in small government, lower taxes and less regulation.

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This is actually the story of Malcolm Fraser, but it could well become the story of Malcolm Turnbull if he doesn't get his act together.

Malcolm Fraser inherited Gough Whitlam's foolish and inherently unsustainable ideas of free and universal healthcare and free universities, guaranteed by a federal government in Canberra with no role in delivering health or education services.

These grand ideas lifted federal government spending from 19 per cent of GDP at the start of the Whitlam era to 24 per cent at the start of the Fraser era and 26 per cent by the end of the Fraser era. Malcolm Fraser proved to be a squishy socialist in liberal clothing, a sympathiser with the protectionists in the National Party, a Trojan horse for big government, and a curse for the federation.

Malcolm Turnbull (and Tony Abbott before him) inherited the grand and foolish ideas of Kevin Rudd and Julia Gillard. These included an even bigger role for the federal government in hospital funding and in school education through Gonski, a major move into disability services through the NDIS, and exploding spending on universities and TAFE from Labor's uncapping of the number of subsidised student places.

Malcolm Turnbull and Tony Abbott have so far done nothing to counter Labor's increases in federal funding for state-run hospitals and schools. The complaints from Labor and their supporters about the government's lack of enthusiasm for federal funding has simply been about what might happen from 2017-18, four years after the Coalition took office. In fact, with an election imminent, increased funding in a deal to keep the State Premiers from public whinging is almost inevitable.

Malcolm Turnbull is doing nothing to stop the train-wreck of bureaucracy and duplication that is the NDIS, the cost of which will grow by 67 per cent over just the next three years. Disability funding by the federal government will rocket past combined welfare funding for families, the sick and the unemployed. We either have a disability epidemic in this country, the states have been doing a very poor job of looking after the disabled, or a lot of bureaucrats and service providers will make a lot of money out of the NDIS.

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Malcolm Turnbull has also given up on reforms to contain the blow‑out in tertiary education subsidies - opting not to put the Coalition's university reforms back to the Senate so they can become double dissolution triggers.

Continuation of all these Rudd/Gillard initiatives means government spending is already back to 26 per cent of GDP, while both tax and debt are expected to rise over the coming years.

It is ominous that the only double dissolution triggers of interest to Turnbull are on changes to industrial relations that will have quite limited impact. His reluctance to fight an election on winding back Labor's spending legacy suggests his heart is not in the fight, or he actually supports this brave new world of big government. A fondness for protectionism, resistance to foreign investment and distaste for big business are further reasons for concern.

History would suggest Malcolm Turnbull is likely to win the forthcoming election, and perhaps the one after that, because Labor is still licking its wounds from the Rudd/Gillard era and voters haven't yet warmed to Bill Shorten. But what will Malcolm Turnbull do with these years of government?

Malcolm Fraser was a towering figure. But when he won the keys to the lodge, he shrank. Malcolm Turnbull can preside over a rise in spending, tax and debt - like Malcolm Fraser before him - if he chooses. We must hope he is a bigger man than that.

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This article was first published in the Australian Financial Review.



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About the Author

David Leyonhjelm is the Liberal Democrat Senator for NSW.

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