Election a disaster for small government

Simon Cowan

08 July 2016 | Ideas@TheCentre

money dollars tax spending SCWhatever remains unclear about this election, one thing that is clear is that the electorate has rejected the vision of economically rational small government, at least in its current presentation.

Faced with a choice between Labor’s nakedly ‘tax and spend’, big government offering and the Coalition’s tax cut and business-led growth and jobs, scores of voters (both left and right) rejected the Coalition message.

Far from being scarred by minority government as a result of 2010, voters are actively courting populists and fringe parties, seemingly to tear up the orthodoxy; particularly economic orthodoxy.

Trump and Brexit are indications of a new alignment forming on the right – socially conservative but leaning more towards economically nationalism than smaller government, with a healthy protest vote chucked in. Our election suggests this movement has significant backing here.

Despite the Coalition’s problems, the election was hardly a stirring triumph for progressive politics either. The Greens primary vote is nearly 2% below its level in 2010 – while Labor’s primary vote sits just above 35%; 2% below the level Mark Latham achieved in 2004, in a defeat that handed both the House and the Senate to the Coalition.

Labor’s success comes, at least in part, from being perceived as the least worst major party by the disaffected Left and Right. Labor’s message of more spending now, with taxes on ‘others’ later, is much more compatible with the populists cause.

However, by defying election orthodoxy and admitting that deficits will continue to go backwards for the next four years, Labor did expose that the emperor of fiscal restraint has no clothes. Voters care more about what’s in it for them than they do about fixing budget problems.

Given the instability in the lower house, not to mention the number of crossbenchers in the Senate holding brickbats for any cuts in entitlement spending, there is simply no way the government can deliver the tough budget necessary to restore fiscal balance in these circumstances.

For those who believe in small government it is time to return to the drawing board. We need to understand why two decades of economic success, driven by economically rational reforms of Hawke, Keating, Howard and Costello, is increasingly rejected by voters in Australia and elsewhere.

We keep changing messengers with little effect, maybe it’s time to listen to voters on the message.

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